So the Department of Education is going to get a 6.2 percent increase in funding in the next budget, even though it is within the budget slice that is to be "frozen." As I explained yesterday, though, the budget "freeze" is simply a rhetorical gambit. The administration intends to go about its usual budget processes while attempting to keep the overall level of domestic discretionary spending at the same level. And it's not even likely to happen, since many members of Congress are skeptical of the White House's ideas.
The Financial Times article linked to above says that liberals are "reacting angrily to the president’s new focus on fiscal discipline." That's wrong, and informed by silly prejudices -- what liberals are mad about is that this is a completely unserious way to address the long-term deficit problem in the midst of a recession. The Defense Department shouldn't be exempted, revenues should be on the table, and the administration basically shouldn't be acting like deficit peacocks. I would even take this discretionary spending freeze seriously if they painted it as an exchange for moderate Senate votes on putting the health-care bill through reconciliation -- the same health-care bill that, incidentally, would do a lot of good on health-care reform. (One could hope against hope that this is happening behind closed doors.)
Again, what's most pernicious about this isn't the policy choices, so long as the administration tries to focus on fighting for reductions in programs that are actually worth reducing rather than letting Congress use sleight-of-hand and cuts in programs that don't have politically powerful constituencies. Conceding the debate to people who think that a budget freeze is meaningful -- when inflation and increasing growth make reasonable budget expansion necessary -- is a mistake. Another example comes in this article:
“The president made these decisions like a family would sitting around the dinner table,” a senior administration official said. “It can't spend more money than it has ... it has to make some decisions about what is vital.”
Progressives have spent the last year arguing that the government cannot act in the same way as a family during times of recesssion. It's absolutely key that the government uses its borrowing abilities to stimulate the economy until the private sector returns in force. While I'm sure this phrasing polls well, it has absolutely nothing to do with the budget process. The administration is sacrificing policy for politics with this move, just like they did with Ben Bernanke's renomination. And given Republican and Democratic opposition, it's not clear that this move will even pay off.
-- Tim Fernholz
