So the dust is settling in the ROA (Rest Of America) regarding the budget "freeze" announced on Monday night, and hopefully settling here somewhat at Daily Kos.
In the vein of "being the change you want to see", I have taken my own advice from my diary yesterday and have decided to pull together some of the information that is now available on the proposed freeze as more details are coming out. (Note: I know up-front that I can't reach the level of research and commentary as some of the diarists I highlighted yesterday - but would like to approach this in that vein.) I don't believe I'm going to take a pro or con stance in the diary itself - mainly because I don't feel like I know enough just yet to argue for or against. So consider this an effort to do some legwork and compile some information as it stands today in advance of tonight's SOTU.
More over the fold.
First stop: The Washington Post. From an article posted yesterday, 1/26/2010:
The spending freeze would affect only about one-eighth of the nation's $3.5 trillion budget, the bulk of which is devoted to entitlement programs such as Social Security, Medicare and Medicaid, which are responsible for much of the future increase in spending. It would not restrain funding for the $787 billion economic stimulus package Obama pushed through Congress early last year, nor would it apply to a new bill aimed at creating jobs, which Democrats have identified as their top priority in the run-up to November's congressional elections.
My emphasis added. I read in this confirmation that Social Security and Medicare are NOT included in the budget freeze blast-zone. I also am glad for the additional detail that the $787B stimulus and the upcoming jobs bill are not included. My impression is that the upcoming jobs bill will really be a second stimulus but not titled as such to address the general anxiety the ROA has with the idea of increased spending's contribution to a larger defecit - but those are just my impressions. I am also curious for feedback from the great economic minds on Daily Kos as to whether or not this is an indication of an approach that will allay the concerns of noted economists such as Paul Krugman as to the overall soundness of cutting spending in any way during a recession. My general impression is that - with a glaring lack of details (and the devil truly IS always in the details), the term "freeze" is being amplified to its worse possible connotation. I am NOT under the impression that this freeze is absolute (see my comments below about how a freeze can be accomplished with a great deal of up and down movement on specific budget items). Further, I'm interested in exploring the idea that because this will be put in place beginning October 1 2010, the start of the Federal FY, there's a lot of room to set the level of that baseline through appropriations - specifically via the jobs bill - in the meantime. That's something I'll be watching. I don't know that it will occur, but if it has occurred to me, chances are someone else in a position to do something is considering it as well.
Also from the article:
"You can't afford to do everything that you might have always wanted to do. That's the decision-making process that the president and the economic team went through," said a senior administration official, speaking on the condition of anonymity to describe the speech the president will deliver on Wednesday night. "We're not here to tell you that we've solved the deficit. But you have to take steps to control spending."
I do hate reporting via "senior" officials who refuse to be named, for the record. But I also agree with the overall statement. I've always believed that, even as complicated as it is, the Federal budget should be run the way we run our household budgets (in theory, though not in practice lately in the aggregate). We are willing, as individuals and/or families (when financially possible) to assume debt to acquire necessities (i.e., a car) and to add to our overall assets (i.e., buying a house or investing in an education). Those of us who have, in the past, gotten a mortgage or have taken out a loan for car or for college and post-secondary education typically consider the cost of that loan (interest) over time and weigh that against the benefits of receiving that loan. I don't see where the Federal government should behave any differently. Debt is a hand-in-glove partner to growth, but should be considered carefully as to its cost and benefits. It's a fundamental truth in each of our lives that we try to refrain from buying things that we can't afford - generally speaking, I believe the government should operate under the same general idea. The trick around this freeze, as I see it, is where investments are prioritized and what winds up getting cuts.
I had an interesting exchange with jbou on Monday night. Sidebar: I owe jbou an apology as I was being an asshole. So, I'm very sorry I lost my cool. The idea of a "budget freeze" is a good talking point - but how that "freeze" is accomplished is another matter entirely. I don't think anyone believes that discretionary items that ARE included in the target for a freeze will simply remain at a particular level. Rather, you'll see some areas experience a reduction in funding where others will still experience an increase in funding. The trick will be to all make that level out to a zero-level increase in overall discretionary budget approval. Jbou and I disagreed as to whether or not this means that there is flexibility in the budgeting process. I believe there is and some further details coming out of the White House and other areas are backing up my impression. Via today's Washington Post:
Obama to promote more education spending in State of the Union speech
The proposal to raise federal education spending by as much as $4 billion in the next fiscal year was described by administration officials Tuesday night as the start of an effort to revamp the No Child Left Behind law enacted under President George W. Bush. Obama will highlight his school reform agenda Wednesday in the address.
The funding would include a $1.35 billion increase in Obama's "Race to the Top" competitive grants for school reform. It would also set aside $1 billion to finance an overhaul of No Child Left Behind, according to aides who spoke on the condition of anonymity to describe the budget proposal before its release next week.
Administration officials said they could not provide a direct comparison to current elementary and secondary education spending levels for No Child Left Behind, but they said federal education spending would rise overall by 6.2 percent.
I know that education funding was a primary issue for those concerned on first news of the budget freeze. I am not an education industry expert by any means, so I'll rely on those with experience in the field to analyze if this is a good start, if it goes far enough, or if it falls short. But I was happy to see this article today to allay some of the concern around the lack of detail as to what will be affected in the process of freezing the budget.
Another nugget about the increase in education funding:
In higher education, Obama will urge the passage of legislation that would change student lending, eliminating a program that relies on private banks to make federally guaranteed loans. Instead, the government would become the direct lender for all federal student loans. That shift, according to congressional budget analysts, would net the government close to $80 billion over 10 years -- a conclusion sharply disputed by the lending industry. The House passed such legislation in September, but it has been delayed in the Senate.
Now THAT I like. Because anything that is sharply objected to by the lending industry sounds like a good plan for the recipient of funds to me. I would like to point out also that - based on my assertion that there is discretionary budget flexibility through a series of increases and reductions - this $80B potentially plays into the overall freeze scenario by creating a reduction that allows for an increase elsewhere.
And now, over to The New York Times - from today's paper:
Climate, Energy Programs Could See Boosts Despite Budget Freeze
The proposal is not an across-the-board freeze. The bottom line would stay flat, but the White House intends to increase some programs and decrease others, according to Rob Nabors, deputy director of the Office of Management and Budget.
Aha! I hadn't seen this when I started writing the diary. I am pleased to see that the "freeze" does NOT indicate budgetary inflexibility.
Back to the linked article:
Because tackling climate change is touted as one of the Obama administration's top priorities, observers say a budget freeze is unlikely to starve programs aimed at curbing greenhouse gas emissions, even if it means squeezing cash out of other areas.
Hm. Ok. Not meaty enough for me - who are these "observers"? This sounds like something I'll want to keep my eye on.
Further:
Climate change programs at EPA, the Interior Department and the Forest Service received $385 million under the fiscal 2010 appropriations bill, a $155 million increase over 2009 levels. Overall, EPA received $10.3 billion for fiscal 2010, a 36 percent boost over 2009 levels.
This was particularly interesting to me because the 2009 to 2010 increase is the level set for the freeze in 2011. The key question I have is whether or not the 2009 to 2010 budget increase for EPA ONLY accommodates the money needed to enforce tougher greenhouse gas emission standards (which is a good thing) and whether or not there's room to increase moving forward for additional environmental issues that still need to be addressed.
On Energy:
Rob Nabors, deputy director of the Office of Management and Budget, said the Obama administration has pored over previous budgets, and spending proposals for some programs will decrease while others will increase. "Clean energy" is one area where the administration will continue to make investments, he said (Greenwire, Jan. 26).
Programs within the Energy Department's Office of Science, like the Advanced Research Projects Agency-Energy, or ARPA-E, are likely to remain administration priorities.
I like the sound of this, but "continue to make investments" is vague. It's another item where the devil is in the details and the details are, as yet, unknown.
The whole article from which I have excerpted is worth reading.
And finally, via yesterday's Wall Street Journal (yes, yes - I know):
Among the areas that may be potentially subject to cuts: the departments of Housing and Urban Development, Justice, Energy, Transportation, Agriculture, and Health and Human Services.
This blurb - repeated in other media outlets - has been a focus here at Daily Kos. I understand that. Chances are, frankly, that every department will see some measure of monkeying with the 17% of the US Federal budget that is discretionary and potentially subject to this increase/cut methodology.
Just for some context, let me just provide a small example of some places where there can be "cuts" that don't affect an actual program where the reduction is experienced. One of the biggest issues for some Federal agencies is the retirement of the experienced workforce. This has been - at the GS (non-political) levels of the government - an issue that has been being discussed and planned for for over a decade. It's often referred to as "the brain drain". Some of these areas, obviously, will have to be backfilled. But some of them (and there are a lot of them) can be offset by implementing technologies that are long overdue with the Agency in question. As experience personnel leave the organization and are not backfilled, the workload spreads out across the remaining personnel and systems. Sometimes this creates a circumstance where you actual workers wind up with a lot more than they should reasonably be expected to do - but that is surprisingly rare. More typically - in my direct experience - Agencies are modernizing the systems that support mission and program priorities. I can't speak too specifically here for a host of reasons, but suffice it to say that a) I've seena substantial increase in investments and activities to modernize systems to accommodate the retiring workforce drain since Obama took office. It's a stark difference from the Bush administration and a change I noticed nearly immediately. Where it is possible to modernize technology through IT infrastructure investment, the experienced personnel who retire are NOT being backfilled - AND the workload strain is not substantially increasing on those who remain. So while the investment in modernization represents an increase in cost, the savings outpace it over time.
In conclusion...
I am not prone to think of the "freeze" as a bad thing - nor am I prone to think of it as a good thing. I am not automatically predisposed to Krugman's thinking mainly because I think that there is potential for great wiggle room with the current stimulus (it's exempt) and the jobs bill(exempt also) to continue to keep the government spending at a level that benefits overall employment, especially for the middle class. I also believe that what I've seen so far on the Clean Energy initiatives presents a further stimulative opportunity.
BUT.
There's a lot of "potentially" and "under the impression" and "observers" and "senior officials" in both my commentary and the articles I've chosen to excerpt. Vague, vague vague. So my list of questions so far are as follows:
- Are the proposed increases in education sufficient? Are the initiatives targeted the right ones to help improve our educational system?
- What will the new jobs bill look like? Is there going to be enough in there to assist the middle class with good jobs and lower unemployment? [Obviously, this is a BIG one]
- What will happen to funding for vital programs that benefit lower income Americans?
- How does the "freeze" relate to HCR as it stands today, as well as how it will change into the future?
- Will a detailed list of programs affected - with both increases and decreases quantified - be provided as this process rolls out?
I know I'll have more questions than that moving forward. But I want to use my own personal question list as a means to keep track of what is and is not occurring consistent with my values and priorities.
So the net result is what I said in the intro - I don't think I'm taking a pro or con position - I'm waiting until I have more information and making note of which information I find most critical.
I welcome additional comments and any additions to my list of questions to keep track of this moving forward.