Spending Freeze Could 'Hit the Congress Where It Lives'

WASHINGTON (Jan. 26) – President Obama's proposal to freeze certain federal spending will have a tiny impact on the nation's deficit but a big one on some citizens who could see cuts to programs they rely on, according to budget experts.

Obama wants to hold spending on $447 billion worth of domestic programs level for three years. That means no adjustment for inflation, population growth or demand for the particular service that's being cut.

But Obama isn't including entitlement programs such as Social Security, Medicare and Medicaid, which take up a big chunk of the budget. And he's not including programs for defense, homeland security and veterans. And some domestic programs will be protected, meaning others will have to be cut to make up the difference. His annual budget detailing those trade-offs will be released Monday.

"When you start with all these items left unconstrained, a so-called freeze is not a very powerful weapon," said Bill Frenzel, a former Republican congressman from Minnesota and now a scholar at the Brookings Institution. "But it does hit the Congress where it lives: discretionary spending with all its little games – museums, highway ramps, all the earmarks they have such fun with."

Although blocking increases on $447 billion may sound like serious money, it's a small percentage of the $3.5 trillion federal budget. And budget expert Stan Collender of Qorvis Communications said the approximately $9 billion or so yearly that the federal budget will save from the freeze is a drop in the bucket for a $1.4 trillion federal deficit. Even doing away with all those $447 billion worth of programs would eliminate only about a third of the deficit, he pointed out. And no one has suggested that – it would mean firing the nation's federal judges, closing jails and other drastic actions.

But even the small amount of money saved from the freeze will matter somewhat in the long run, Collender said. If the freeze holds for all three years, when increases begin again they will start from a lower base, saving the government a total of $250 billion over 10 years.

"In the long run, it's the entitlements that matter," said Alan Viard, resident scholar at the think tank American Enterprise Institute. Cutting the $2 trillion in annual entitlements like Social Security has never been easy. But Viard said the spending freeze needs to be just a first step to getting the country's fiscal house in order.

The impact of the freeze will depend a bit on both ends of Pennsylvania Avenue. Will Congress bust the freeze? Will Obama back up his plan with vetoes of bills that are too expensive?

"Congress tends to be very resistant to any kind of restriction on what it considers its constitutional power of the purse," Frenzel said.

In the past Congress has sometimes ignored presidential calls for freezes. But President Clinton got help from legislation that forced all new bills to include a way to pay for them, Frenzel said. Those rules have since expired.

Collender said we're going to find out who's a real budget "hawk" and who's a budget "peacock" – preening in favor of cuts but unwilling to actually make them. "This is a great opportunity to call everyone's bluff," he said.

Without the freeze, spending would rise for most programs by about 3 percent to keep up with inflation for the budget year that begins next Oct. 1.

But even that's not enough for many programs, said Wilhelmina Leigh of the Joint Center for Political and Economic Studies. A housing voucher program that helps poor families pay rent, for example, has so many people on the waiting list already that some have waited for years. Freezing the program will mean even longer waits for needy people. "It can just make a bad situation worse," she said.

Agencies that come under the freeze will still have increases in rent, utilities and travel costs. They will have to cut back somewhere else to cover costs they can't control. And some programs will face bigger cuts if others are protected.

"The cost of doing business goes up every year. Ultimately, you have to pay those costs," said Scott Lilly of the Center for American Progress and a 31-year-veteran House aide who directed the Appropriations Committee.

Lilly said the freeze will hurt some people. One of the biggest departments subject to the cuts is the Department of Education. If it must cut aid to school districts with lots of poor children, for instance, those schools will need to lay off teachers, he said. A freeze at the Food and Drug Administration and the Department of Agriculture could mean there won't be enough money for inspectors to travel to check on food safety.

If the IRS must make cuts, that could mean fewer auditors – which could cost the government money from tax cheats who aren't caught. The Head Start program already is short of spaces for needy children, especially in Hispanic communities, Lilly said. Even without salary increases, the Head Start preschool program might need to make cuts to pay for higher energy bills and rent each year, he said. And the Park Service may not have the funds to repair sewage problems, leading to spills into pristine lakes and rivers.

"The trees have been there for 50,000 years," Collender added. "It's likely they'll still be there." But welcome centers may go without repairs and parks could end up with fewer rangers, meaning some sections of national parks are closed.

While conservatives believe the spending freeze doesn't go far enough, Lilly said it may go too far.

"You put at risk a lot of services that are important to people," Lilly said.