Obama Employs Mr. Freeze
President Barack Obama, trying desperately to regain momentum and America's confidence, has announced one of those old political standbys — a three-year spending freeze. Of course, we are more accustomed to seeing the idea floated by Republicans (it is second only to tax cuts as their way to solve all problems) but as Democrats struggle to fight off a midterm bloodbath, the populism continues apace.
Pronouncements of a spending freeze are rarely serious policy prescriptions and more often a bit of political theater. This is the former, as it discounts spending on entitlements such as Social Security, Medicare/Medicaid payments, national security, and defense spending. (Otherwise known as everything that costs a lot of money).
In fact, it only projects to save $250 billion over 10 years, which really is a pittance when looking at our budget problems. So is it a good idea? The economists say no, and call me crazy, but when politicians make sweeping economic proposals I'll trust economists before trusting: 1. Journalists, 2. Political strategists, 3. Small business owners, or 4. Talk radio and TV blowhards.
So what are (liberal) economists saying? Take a look:
Brad DeLong: "For some time I have been worried about fifty little Herbert Hoovers at the state level. Right now it looks like I have to worry about one big one."
For those who don't know, economists calling someone Herbert Hoover is the equivalent of a basketball fan calling someone Adam Morrison — not good.
Mark Thoma: "The long-term budget problem is due to primarily one thing, rising health care costs. Everything else is dwarfed by that problem. If we solve the health care cost problem, the rest is easy. If we don't solve it the rest won't matter."
Paul Krugman: "And it’s a betrayal of everything Obama’s supporters thought they were working for. Just like that, Obama has embraced and validated the Republican world-view."
So the (liberal) economists don't like it. Is there a saving grace? If you choose to believe Jared Bernstein, economic adviser to Vice President Joe Biden, the announcement is a more pronounced version of cuts Obama already attempted in his last budget, but couldn't get because of special interest lobbying. So instead of a scalpel approach, the administration wants to use broad language of a "freeze" and put the onus on Capitol Hill to control spending or give in to the lobbyists.
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