Economy Alarm: White House Announces Plans for Fiscal Discipline After Massive Spending Binge

White House Announces Plans for Fiscal Discipline After Massive Spending Binge
Administration’s Mixed-Messaging Machine Strikes AGain

President Obama Promised Fiscal Discipline from the Get-Go

“The time has come to usher in a new era – a new era of responsibility in which we act not only to save and create new jobs, but also to lay a new foundation of growth upon which we can renew the promise of America.” (Notes from the President’s Budget, 2/26/09)

Credibility Crash: After Flushing Away Taxpayer Money for Job-Killing Spending Sprees and Driving Deficit to $1.4 Trillion, White House Suddenly Shifts Gears

President Barack Obama plans to announce in next year’s State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning.

The president’s plan, which the officials said was under discussion before this month’s Democratic election setbacks, represents both a practical and a political calculation by this White House.

On the practical side, Obama has spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion. This leaves little room for big spending initiatives.

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The big question for Obama – and the country – is whether the sudden concern about deficits will be more rhetoric than reality once his first State of the Union address concludes.

All presidents promise deficit reduction – and almost always fall short. There is good reason to be skeptical of this White House, too, on its commitment.

For starters, the White House has not dropped plans for an aggressive global warming bill early next year that will be loaded with new spending on green technology and jobs – that would be paid for with tax increases. Democratic lobbyist Steve Elmendorf says the White House focus on deficit reduction could easily kill the cap-and-trade effort. “I think this means cap-and-trade has to go to the backburner,” he said.

Additionally, there is no evidence Democrats are willing to aggressively cut the biggest parts of the budget, such as entitlement programs and defense. Former President Bill Clinton told Senate Democrats at their policy lunch this week that one of the biggest reasons to finish health care is to allow Obama to focus on economic concerns next year – in part with more spending. Sen. Ron Wyden (D-Ore.) said afterward that Clinton had advised getting health care out of the way to “clear the tables and allow the focus to be on jobs and education and infrastructure.” None of that is free.

The Wall Street Journal reported Thursday the White House is considering applying some money from the $700 billion financial bailout bill to deficit reduction, and that Cabinet agencies have been asked to submit two budget plans for next year, one that freezes spending at existing levels and one that trims spending by 5 percent. Congress has long history of taking those requests and piling on money for programs it favors. The only way Obama can prevent Congress from imposing its will – a tactic he has been reluctant to do during his presidency – would be to threaten vetoes. And if Obama’s political goal is to minimize tough votes, gutting domestic spending bills could mean fewer projects lawmakers can brag about back home. History shows that that’s often an impossible sale on the Hill. (Mike Allen and Jim VandeHei, “After Big Spending Binge, WH Says It Will Focus on Deficits,” Politico, 11/12/09)

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