Obama To Propose Spending Freeze on Many Domestic Programs

January 26, 2010 — President Obama during his State of the Union speech on Wednesday is expected to propose a three-year freeze on federal funding for a range of domestic programs, administration officials announced on Monday, the New York Times reports. The spending freeze would not apply to entitlement programs in the federal budget -- such as Medicare, Medicaid and Social Security -- or any Veterans Affairs or national security-related initiatives under the Pentagon, the officials said. Administration officials added that in addition to the freeze, some programs will be cut (Calmes, New York Times, 1/26).

The proposal would take effect Oct. 1 under the fiscal year 2011 federal budget -- which Obama is expected to unveil next week -- and apply only to specific domestic agencies whose budgets are approved by Congress annually (Feller/Taylor, AP/San Francisco Chronicle, 1/25). The officials noted that the portion of the budget that would be targeted for the spending freeze amounts to about one-eighth of the budget (New York Times, 1/26). The plan would require approval from Congress before it can be implemented, the AP/Chronicle reports (AP/San Francisco Chronicle, 1/25).

Although entitlement programs are the major driver of increased spending and potentially unsustainable future budget deficits, Obama's proposal to freeze smaller discretionary spending budgets would have "symbolic value," according to an anonymous administration official, the Times reports. According to the official, the public is unlikely to support larger cuts to popular entitlement programs until spending on lawmakers' pet projects is controlled. The official added, "By helping to create a new atmosphere of fiscal discipline, it can actually also feed into debates over other components of the budget" (New York Times, 1/26).

According to the Washington Post, the freeze would affect about $447 billion annually in spending allocations for the targeted programs and would eliminate no more than $15 billion from the FY 2011 budget (Montgomery, Washington Post, 1/26). However, one official estimated that it initially would save $10 billion to $15 billion and generate as much as $250 billion in savings over the next decade (AP/San Francisco Chronicle, 1/25).

The Post also reports that the proposal -- which will remain in place through the remainder of Obama's first term -- is unlikely to affect health reform legislation that currently is being considered in Congress. During an interview with ABC's "World News" on Monday, Obama reiterated his commitment to moving forward with health reform despite the recent spate of Democratic setbacks (Washington Post, 1/26).