Obama To Freeze Or Cut Agency Spending?
Barack Obama can talk the talk, that’s for sure. But can he walk the walk? From the Associated Press’ Andrew Taylor today:
On Thursday, the government reported that the federal deficit hit a record for October as the new budget year began. The Treasury Department said the deficit for October totaled $176.4 billion, even higher than the $150 billion imbalance that economists expected. The deficit for the 2009 budget year, which ended on Sept. 30, set an all-time record in dollar terms of $1.42 trillion. That was $958 billion above the 2008 deficit, the previous record holder…
The Obama administration has alerted domestic agencies to plan for a freeze or even a 5 percent cut in their budgets, part of an election-year push to rein in record deficits that threaten the economy and Democrats’ political prospects next fall…
White House budget director Peter Orszag said Friday that it is imperative to start curbing the flow of red ink in coming years so as not to erode the fledgling economic recovery and raise interest rates. But he called it a balancing act and said acting too fast could undercut the recovery.
Orszag wouldn’t comment on the specifics of the upcoming budget, which will be unveiled in February, right after Obama’s State on the Union address in which the initiative is sure to be a major focus…
“As part of that fiscal 2011 budget, we will be putting forward proposals that will put us back on a fiscally sustainable path and that have lower deficits,” Orszag said in a recent Associated Press interview. “I’m not going to get into the mix between spending and revenues. Obviously deficit reduction requires some combination of those two.”
Should this come to fruition, I wonder if the Obama administration will concentrate more on cutting back spending before raising revenues due to political self-interest. After all, as Taylor noted:
Tax-raising deficit deals in 1990 and 1993 had big political consequences for President George H.W. Bush, who lost his re-election bid, and for President Bill Clinton, whose party lost control of Congress the following year.
I’ll be keeping a close eye on this story.
Source:
“Obama eyes domestic spending freeze”
Andrew Taylor
Associated Press, November 13, 2009
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