Opinion: Spot the Savings, If You Can, From Federal Spending Freeze

(Jan. 26) – If the old cliché about how "little things mean a lot" holds true in the world of Washington spending, then the Obama administration's plan to freeze some federal spending for three years is a big deal.

But that's about the only way this plan could be characterized as a big deal. By every other measure, it's microcosmic.

Here are some relevant numbers:

First, the share of the budget affected by the freeze is small – just 13 percent, based on Congressional Budget Office data for 2011 (the administration says 17 percent). That's because President Obama has taken most of the big spending areas off the table, including defense, Medicare and Social Security.

Source: White House and Congresional Budget Office data

Second, he only proposes freezing spending on these programs for three years, rather than let it climb automatically with inflation. That doesn't save much at all in the short term, since inflation is expected to be low. And while the White House says the savings add up to $250 billion over 10 years, that's still only about 4 percent of the total projected deficits of $6 trillion.

Indeed, as the charts below show, it's almost impossible to detect the change in spending or deficits over the next decade.

Source: Author's calculations based on White House and Congressional Budget Office data

Which is why the reaction to the plan – mainly among liberals predicting catastrophe – is so fascinating. If $6 billion – which is about what would be saved in the first year of the freeze – is all that stands between prosperity and doom, the United States has far more serious problems to deal with.

But to be fair, the fact is that Washington has to start closing the enormous gap between federal spending and tax revenues. And Obama's plan is a relatively painless way to get that effort started.

So, even if the freeze is just a teeny, tiny step, at least it's one in the direction of fiscal responsibility.