Obama’s Freeze on Discretionary Spending is Just a Drop in the Bucket!

By Richard H. Frank

According to the latest CBO projections, the Federal Budget for FY2010 will reach record spending of $3.5 trillion.  The deficit for the budget year will be $1.35 trillion and require Congress to increase the national debt ceiling once again from 12.3 trillion to 14.2 trillion.

Tomorrow evening President Obama is expected to announce a freeze on discretionary spending on approximately 17% of the national budget, that portion of the budget being equal to approximately $595 billion.  His proposed spending freeze is forecast to result in reductions of between $10 to $15 billion per year for the next three years.

According to the “Debt Clock” we are currently paying about $140 billion in interest annually on the $12.3 trillion debt, meaning the proposed spending cuts will fund about 10.7% of the interest bill on the national debt.

Congress and the the President just don’t seem to get the message.  Each and every bill they pass is loaded with earmarks and pork akin to fleas on a dog, sucking the life blood from us.  The 2009 Omnibus Spending Bill, signed by President Obama, contained 9,287 pork projects, costing the American taxpayer $13 billion, and when combined with 2,617 previous budget earmarks, cost us $28.9 billion.  When President Obama, Nancy Pelosi and Harry Reid were asked what happened to their campaign  pledges to go over the budget “line by line” and cut out the pork, they responded that these programs were left over from the Bush Administration and therefore could not be cut.  If my memory serves me correctly, the Democrats controlled Congress and therefor spending beginning in 2006 not 2009.

Nancy Pelosi has stated the policy of “Pay Go” is in effect in the 111th Congress.  I guess that this statement says “We pay as they Go and Spend.”  Obama’s pledge not to raise taxes on anyone earning less than $200,000 is also a ruse.  In 2011, if the Bush tax cuts are allowed to expire the marginal tax rates will rise across the board for all Americans and not just the “rich.”

So please, don’t be fooled by Obama’s political rhetoric that his proposed spending freeze will “bend the curve” and reduce the national debt.  He could show real leadership by insisting on an across the board Government spending cut of 5% that would generate $175 billion per year and stop the increased interest on our debt while reducing the principal at the same time.  This is what businesses and individuals must do and do implement during economic downturns.  Why is our Government any different?

If the President and Congress are serious about stimulating our economy and growing the nation’s GDP, there are proven steps they can take now to fix the economy:

  • Extend the Bush Administration tax cuts to provide more disposable income to families and small businesses and increase consumer confidence.
  • Establish  a National Energy Policy that encourages domestic exploration, offshore drilling, expansion of distribution for natural gas, shale oil extraction, geothermal and nuclear power generation, all activities aimed at energy independence and ultimately infusing up to $10 trillion annually into our economy.
  • Provide tax incentives for small businesses.
  • Incentives for research in cost effective solar and wind generated power systems.

These are the initiatives our Government should and must sponsor if we are to quickly return to economic growth, increased tax revenues, provide for our national security and long-term prosperity.

Fuel the free enterprise engine, as opposed to stifling ingenuity and imagination with onerous regulation and and taxation.  This is the real path to prosperity and a lasting legacy for those responsible for leading the way.