White House to Agencies: Prepare for Broad Spending Freeze or 5% Cut

Congressional deficit anxiety, always running high amid conservative Democrats, is reaching something of a fever pitch this week — while the White House prepares to ask most federal agencies for two alternative budgets for the fiscal year that begins next fall: one that freezes spending and one with a 5 percent cut.

dot14_point.jpgU.S. DOT headquarters (Photo: Capitol Riverfront)

The Wall Street Journal has the details, as part of a larger report on the Obama administration’s internal debate over whether to set aside unspent financial bailout money for deficit reduction:

The White House is in the early stages of considering what bigger
moves it might make for next year’s budget. The Office of Management
and Budget has asked all cabinet agencies, except defense and veterans
affairs, to prepare two budget proposals for fiscal 2011, which begins
Oct 1, 2010. One would freeze spending at current levels. The other
would cut spending by 5%.

OMB is also reviewing a host of tax changes. The President’s
Economic Recovery Advisory Board will submit tax-policy options by Dec.
5, including simplifying the tax code and revamping the corporate tax
code.

Matt Yglesias tackles the political motivations behind the administration’s efforts to project fiscal hawkishness while weighing new initiatives to combat rising joblessness ("without increasing the deficit"). But the signals of coming budget austerity at non-military federal agencies is another huge story in itself, and one that’s bound to have significant implications for transportation policy.

The U.S. DOT made a budget request of $73.2 billion for fiscal year (FY) 2010, which began in October, compared with $68.2 billion during the final year of the Bush administration (FY 2009) and $70.3 billion in FY 2008. According to that data, a 5 percent cut would leave the agency’s request above its FY 2009 level.

Once budget requests are forwarded to Capitol Hill, lawmakers get the final word on setting agency spending levels. But the administration’s move — which comes as more states face budget crises and find themselves at risk of losing federal matching funds for transportation — suggests that a spending freeze may indeed be the best case scenario.

  • Nathanael

    Asinine.

    Deficit reduction == anti-stimulus, almost by definition.

    If we were pulling the money out of money going abroad — like some of the military funding — it might work out OK. Instead, this is a recipe for a double-dip recession.

ALSO ON STREETSBLOG

Debt Deal Could Mean More Painful Cuts for Transportation

|
The House and Senate are getting close to voting on a deal, reached over the weekend, to raise the debt ceiling and cut spending. There’s nothing in the legislative text that says anything specifically about transportation or the Highway Trust Fund, but it’s clear that the cuts mandated in the agreement will affect all sectors. […]

GOP Targets Transportation, Housing For the Deepest Cuts

|
The House Appropriations Committee yesterday gave a glimpse into their plans to cut spending as promised. Chair Hal Rogers (R-KY) set spending ceilings each of the 12 Appropriations subcommittees, cutting the budget for the Transportation and HUD Subcommittee by 17 percent, or $11.6 billion. It is, by far, the most dramatic of all the cuts. […]

President Obama to Embrace Deficit Commission Plan Tomorrow

|
Four months ago – just days after the Democrats’ “shellacking” at the polls – a bipartisan commission offered President Obama the chance to retake the budgetary high ground from Republicans, who had positioned themselves as the party of fiscal sanity. The blue-ribbon deficit commission – led by Erskine Bowles, President Bill Clinton’s budget negotiator, and former […]

GOP Budget Would Slash Transpo Spending, Entrench Oil Dependence

|
With the release of House Budget Committee Chairman Paul Ryan’s budget proposal yesterday, right wing calls for massive cuts to transportation spending are now enshrined in the GOP leadership’s fiscal plan. Ryan singled out transportation as an area particularly ripe for cuts, criticized the use of gas tax revenues for projects that aren’t highways, and […]

Democrats Learning to Love the I-Word — But Will Words Bring Action?

|
The White House is re-centering its message around economic and fiscal concerns ahead of tomorrow’s State of the Union address, with a new package of job-creation measures expected to vault to the top of the agenda and a three-year "spending freeze" pitched to deficit-wary conservative Democrats. Infrastructure: Democrats love it. But how will they fund […]