Under intense pressure to address reckless spending, record deficits, and exploding debt, the Administration will reportedly announce a plan to freeze some non-defense, discretionary spending at current levels beginning in FY 2011. According to those reports, the freeze would apply to approximately 12 percent of FY 2010 government spending and could reduce projected spending increases in FY 2011 by up to $15 billion. While viewing this modest freeze as a welcome concession by the President that the policies of uncontrolled spending have failed, many Members may believe that a much more extensive approach to cutting spending is necessary to considerably reduce the enormous deficits facing our nation over the next ten years.
Freezes After Huge Increases: The President's plan to freeze some expenditures comes after a year of unprecedented discretionary increases which inflated current spending levels. In March, 2009, the President signed a $410 billion omnibus spending bill for FY 2009 that increased non-defense spending by $32 billion or 8.3 percent above the previous year. Less than two months ago, in December, he signed yet another, $447 billion omnibus which increased non-defense funding by 12 percent. Not all of those funding increases have taken effect, but the President has not proposed any rescissions. Between FY 2009 and FY 2010, non-defense discretionary funding increased 17.4 percent. In addition to the huge increases in regularly appropriated spending, Congress passed a $787 billion "stimulus" bill which included $311 billion in "emergency" discretionary appropriations. According to the House Budget Committee Republicans, if "stimulus" funding is included, non-defense discretionary funding has increased by 57 percent since Obama took office.
Freezes Only a Portion of Discretionary Spending: According to reports, the Obama proposal will exempt discretionary "security" spending, including defense, homeland security, veterans, and foreign aid discretionary spending. Therefore, the discretionary spending subject to the freeze would be limited to portions of the Agriculture, CJS, Energy and Water, Financial Services, Interior, Labor-HHS-Education, Legislative Branch, and the Transportation and HUD spending bills. According to CBO, those eight appropriations bills account for less than $450 billion or roughly 12 percent of the $3.5 trillion the government will spend in FY 2010. While any type of spending freeze is a step in the right direction, the President's proposal would be too limited to considerably reduce deficits, which will average $905 billion annually under Obama's budget and $672 billion annually under current law over the next ten years.
Ignores Huge, New Spending Programs: According to press reports, the proposal would exclude spending initiatives that might be passed between now and the start of FY 2011. This could include the potential cost of implementing a government takeover of health care, the $49.9 billion in discretionary costs associated with a national energy tax, and a second "stimulus" bill which could cost in upwards of $150 billion. In addition to the huge mandatory costs of the Democrats' government takeover of health care, according to the Republican staff of the Appropriations Committee, the legislation could cost $150 billion in discretionary funding, costs which are not reflected in the CBO's scores. Two CBO letters sent to House and Senate Congressional Leadership prior to consideration of their respective health care bills stated, "CBO has not completed an estimate of all the discretionary costs that would be associated with the legislation. Total costs would include those arising from the effects of the legislation on a variety of federal programs and agencies as well as from a number of new and existing programs subject to future appropriations."
Excludes Mandatory Spending: The spending freeze would not address mandatory spending, which will account for $1.9 trillion or 55 percent of all spending in FY 2010, according to CBO. For instance, Medicare is projected to be $528 billion or 15 percent of total spending, and CBO estimates that Medicaid will cost $270 billion and account for 8 percent of all federal spending. Funding for other smaller mandatory programs accounts for an additional $621 billion or 17 percent of federal spending in FY 2010. In addition, the freeze would exclude any funding designated as "emergency spending," including mandatory and discretionary portions of the "stimulus" bill, which total almost $500 billion. None of these funds would be considered for a freeze under the proposal.