Tag: budget

A spending freeze? Is he kidding me?

Let’s just say that I wasn’t very happy when I heard yesterday that President Obama was caving into pressure from deficit hawks and planned to announce a federal spending freeze at a time when a more robust stimulus is needed to get Americans back to work.

According to news reports,

Administration officials announced on Monday that Mr. Obama, in his State of the Union speech, will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that. The initiative, meant to signal his seriousness about restraining the deficit, provoked outrage among liberals in the president’s party because defense spending was exempted, while Republicans have mocked the proposal as too little, too late.

The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.

Security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, would not be frozen; neither would the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.

The freeze, of course, exempts the very programs that are driving the deficit off a cliff — the kind of spending that has transformed our government from one that is nominally democratic to a militaristic empire.

Apparently, Sen. Sherrod Brown (D-Ohio) — one of the Senate’s leading progressive voices — isn’t very happy either. From Talking Points Memo:

Start with this: The people who have been most outspoken about debt are the people most responsible for it…. The people, as I said, who have been most outspoken against the budget deficit have been those that voted for the Iraq war, and charged it to our kid, those who voted for the giveaway to the drug and insurance industry in 2003 and charged it to our kids, and those who voted who tax cuts for the rich and charged it to our kids, and those who ignored infrastructure needs in this country for a decade and charged that to our kids. And they come and they’re screaming the loudest about the balanced budget. And that disturbs me.

Paul Krugman was even more blunt:

A spending freeze? That’s the brilliant response of the Obama team to their first serious political setback?

It’s appalling on every level.

It’s bad economics, depressing demand when the economy is still suffering from mass unemployment. Jonathan Zasloff writes that Obama seems to have decided to fire Tim Geithner and replace him with “the rotting corpse of Andrew Mellon” (Mellon was Herbert Hoover’s Treasury Secretary, who according to Hoover told him to “liquidate the workers, liquidate the farmers, purge the rottenness”.)

It’s bad long-run fiscal policy, shifting attention away from the essential need to reform health care and focusing on small change instead.

And it’s a betrayal of everything Obama’s supporters thought they were working for. Just like that, Obama has embraced and validated the Republican world-view — and more specifically, he has embraced the policy ideas of the man he defeated in 2008. A correspondent writes, “I feel like an idiot for supporting this guy.”

And that is what the president has wrought. It would be heartbreaking if it weren’t for the fact that Washington political culture is a cesspool of shifting justifications and calculations that too often have little to do with whether I can afford to put gas in my car or my students at the county college can afford even their meager tuition.

The problem is that just about everyone in Washington is myopic, unable to see beyond their narrow interest (i.e., re-election), and that includes the president. Politics no longer has anything to do with policy and we are all the poorer for it.

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Don’t buy war bonds

Sen. Ben Nelson, the conservative Democrat from Nebraska, is pushing the idea of funding the war in Afghanistan by selling government bonds — borrowing an idea that worked well during World War II.

But as this piece points out, the economy has changed, making the bond sale problematic.

More importantly, the Afghan and Iraq wars are not very popular; any funding mechanism based on a voluntary contribution is going to fail.

If we believe these wars are necessary — they aren’t, but if we want to fool ourselves into believing they are — we should be honest and pay for them out of our budget the way we pay for everything else.

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Money where your mouth is

I want to go back to something that former Gov. Christie Todd Whitman said early in her first term. Budgets, she said, are where politicians prove their priorities, where they back up their talk with cash.

The history of Trenton, of course, is that politics has been the priority, with legislators of both parties larding on the spending and using an array of gimmicks to both win votes and avoid angering the natives. Cut the income tax, as Whitman did, but pay for it with fancy accounting tricks. Sell state roads to the Turnpike, as Florio did. Borrow, borrow, borrow, as McGreevey did.

Chris Christie, who replaces Gov. Jon Corzine next month, is promising not to play these games. Like Corzine, he is promising to return the state’s finances to a level of sanity that no one can actually remember. Corzine — as I think history will show — did some good, even if his tenure in office ultimately has to be viewed as a failure.

Christie has laid the gauntlet down, ordering severe cuts in state spending targeted toward eliminating programs that do not meet the mission of individual departments and consolidating duplicated services. This comes from a memo obtained by The Star-Ledger and shows that, just maybe, the new governor plans to play hardball.

The question, of course, is what he views as necessary programs. When Whitman was governor, she slashed the budget of the Department of Environmental Protection and eliminated the public advocate — moves that saved some money but made it far too easy for the business community to escape scrutiny.

She balanced the budget and cut the state income tax rate, but left the state in a far worse position than when she took office as future governors were left to rebuild the regulatory apparatus and plug the massive hole she blew in the state’s pension accounts.

Christie may succeed in slashing state spending, but how and who will pay the price? Will it be towns or schools in the form of state aid? Or the state’s healthcare or prescription assistance programs? Or the DEP? Or the arts community? Some of these groups already are hurting, thanks to Corzine’s budget cutting, and can only be further damaged by additional cuts.

It is not just about cutting spending. It is about priorities. Christie didn’t outline those for us during his campaign — even as he sung the zero-based budgeting song. (What is the Ledger talking about, by the way, in this story? How does this memo tie back to the zero-based nonsense all politicians spout?) He has until his first budget address to do so. Let’s hope his priorities are the same as the bulk of the state’s residents.

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Waiting for Christie to be specific on his budget is like waiting for Godot

I have a question for Republican candidate Chris Christie: When do you plan to explain how you can cut taxes, increase property tax rebates and balance a budget that already is expected to be $8 billion in the red next year? Because his public comments — mostly criticism of his opponents tax policies — leave me wondering whether he understands how budgets work.

Consider: If you cut taxes, you’re cutting revenue. That means the state has less money coming in, unless you can find a new source of cash to replace it. If you can’t — or won’t — you will need to make budget cuts to offset the lost revenue.

That’s how a family budget works. Think about a two-income family. If one person is laid off or quits his or her job, then that family has to account for the lost money, either by bringing in new money or reducing the amount going out. That person can find a job or a couple of part-time jobs. The remaining breadwinner can get a second job or someone else in the family can go to work. The alternative is making cuts in what each member spends — driving less, going out to eat less frequently, stretching food or other supplies for longer periods and so on. But the family cannot continue to spend at the same level when less money is coming in.

It works the same way with a state budget.

Christie has been talking about his plan — a vague promise to cut waste and end corruption. OK. If he wins, I hope he’s successful at doing that. The reality is, however, that the waste and fraud he’s talking about will not result in enough savings to cover his own promises, let alone the anticipated deficit.

Unless, of course, he has a different definition of what wasteful spending might be (cutting programs with which he disagrees, for instance) or plans to borrow to plug the gap. If those are possibilities, he needs to say so. New Jersey voters need to know what programs might be on the chopping block under a Christie administration.

If he’s not thought that out, he needs to explain that, as well, so that voters know he is making bogus promises.

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