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Obama Allies Struggle To Defend Spending Freeze

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Some of President Obama's strongest allies in the labor world and the Democratic community struggled on Tuesday to defend his plan to implement a three-year freeze on discretionary "non-security" spending.

SEIU President Andy Stern, who is closely allied with the White House, did his best to put a good face on the plan but expressed doubts about its effectiveness. Noting that the freeze in spending will only become operational in 2011, he argued that the administration has enough time to spend money on job creation initiatives and government programs that can turn the economy around.

"We are in 2010 and there is a lot that can be done (between now and then)," the union boss told the Huffington Post. "You can do state and local fiscal relief, you can do jobs, you can do many things this year. So I want to see what they are doing this year. You can always fix the future. You can't change the present."

But Stern also emphasized that if people thought a spending freeze was going to solve the nation's fiscal problems, they didn't "get the nature of what needs to be done right now to get people back to work."

"The only way to solve the deficit is have more people working," he concluded, during a forum on the American working class at the Center for American Progress.

It seems highly unlikely that the current Congress has the votes or the stomach to pass a major new jobs bill, except possibly for the middle-class tax credit package that the White House is now proposing. All of which gets to the major concern aired by economists studying this discretionary spending freeze -- at a time of 10 percent unemployment and economic recession, cutting off the valves of government spending has been blasted as poor policy and political posturing.

The CAP -- perhaps the most plugged-in think tank in Washington D.C. today -- released a report just last week in which it concluded that lawmakers who think "we could get the budget back to sustainability if we only cut out earmarks, or say that the solution is to simply freeze discretionary spending, are just peddling fiscal snake oil."

At the forum, CAP's president, John Podesta -- who served as the director of Obama's presidential transition team -- was asked to rationalize the president's spending freeze proposal in light of his own organization's scathing report.

"I served in an administration that lived under discretionary caps and had a statutory pay go. I think that worked. But my own view is that if you just isolate one element of the budget, you can't really get the job done. So I think there is some merit in what they are trying to do, making choices between discretionary spending -- stuff that works, enhance that. Stuff that doesn't, get rid of [it]. I'm a believer that that is a smart way to approach governing and government," Podesta said. "With respect to a long-term path... you can't get from here to there simply on the discretionary spending side even if you think that is an important thing to do."

But in a reflection of how this proposal has placed Democrats in a bind, while Podesta did his best rhetorical jujitsu (praising the theory behind the plan while expressing skepticism about the results), the blog under his organization's umbrella went on the attack. Think Progress published a post, at roughly the same time that Podesta and Stern were speaking, which depicted the spending freeze as a poorly-thought-out page out of the GOP playbook:

[M]any economists have blasted the plan for its potentially anti-stimulative effects and its focus on spending that is not the root cause of the country's long-term deficits. Nobel Prize winning economist Paul Krugman wrote that the freeze is "appalling on every level...shifting attention away from the essential need to reform health care and focusing on small change instead." Former Labor Secretary Robert Reich said that the freeze "will make it impossible for [Obama] to do much of anything for the middle class that's important." U.C. Berkeley economist Brad DeLong added "this is a perfect example of fundamental unseriousness: rather than make proposals that will actually tackle the long-term deficit...come up with a proposal that does short-term harm to the economy without tackling the deficit in any serious and significant way."

"And at its core, Obama's decision cedes to the right-wing both the idea that blanket cuts are necessary and the notion that cuts should be focused on domestic programs while defense spending goes untouched. And already, the right-wing is claiming the freeze as a victory, with the National Review's Jim Geraghty writing, "if the arguments in the coming years are between spending freezes and spending cuts, then we've already won.

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