Monday, January 25, 2010

Idiots, More.

Who knew the “idiots” series would require another entry so quickly? But apparently it does: the Obama administration is proposing freezing discretionary spending for the next 3 years in non-security areas. It’s a profoundly unserious policy proposal that fails from a policy perspective; worst of all, the pandering it represents reveals a terrible appreciation of politics.

Start with the policy. Here’s the claim that administration officials are making:
President Obama will propose freezing non-security discretionary government spending for the next three years, a sweeping plan to attempt deficit reduction that will save taxpayers $250 billion over 10 years.

When the administration releases its budget next week, the discretionary spending for government agencies from Health and Human Services to the Department of Treasury will be frozen at its 2010 level in fiscal years 2011, 2012 and 2013.

If you’re going to do deficit reduction, do it for real: the long-term deficit problem is, as Pete Orszag notes, $9 trillion. The debt level is projected to rise to 300% of GDP by 2050. These are serious numbers. $250 over 10 years is nothing. Worse, it fails to address any of the drivers of the deficits: the drivers of the deficits are the aging of America, economic stagnation, and most importantly, health care.

Nor will this cut have anything to do with helping the economy. That $250 billion—in 2011, 2012, 2013—will suck money out of people’s pockets at a time that the economy should be ramping up. It’s the exact opposite of what we should be doing.

But the sums are so small that the economic impact may be less than the negative political impact. It’s in that that the most pernicious effects will be shown: in a stroke, Obama has successfully confirmed every negative stereotype about Democrats and confirmed every Republican storyline. That the funding of Health and Human Services—which, you know, only helps people’s health and funds life-saving research—is somehow less important than defense funding (only the most bloated part of government). That deficit-cutting is of the highest importance. That Keynesianism is not a valid economic system. And because the cutting is so nonserious, you know what Republicans will do: demand more cuts. And by the professed logic of the Obama administration, this will be hard to deny.

Since the policy is so nonserious and exactly the opposite of what is needed right now—I can’t even imagine Summers and Geithner stumping right now—it is most likely pandering. And what awful pandering it is. It’s pandering that feeds people’s worst instincts. Deficits weren’t a political problem during most of the Aughts. Why? People felt they were dong OK. People only fixate on deficits when they think they’re not doing well. Naturally, your conclusion should be to help people do well economically; it shouldn’t be to indulge them. Yet the administration has decided to indulge them.

I voted for Obama and contributed money to get health care; not to have it stalled. I voted for a sensible economic policy; not a dumb one. I voted for an administration that would remain steady and even-keeled in a crisis; not one that overreact to the slightest difficulty. Sadly it appears I didn’t get what I voted for.

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