Princeton economist Paul Krugman and Robert Reich, former labor secretary in the Clinton administration, ripped Obama’s plans for limiting government spending amid high unemployment and not doing enough for middle class America.
WSJ says Obama’s proposal is “a move meant to quell rising concern over the deficit but whose practical impact will be muted.” From the Journal:
To attack the $1.4 trillion deficit, the White House will propose limits on discretionary spending unrelated to the military, veterans, homeland security and international affairs, according to senior administration officials. Also untouched are big entitlement programs such as Social Security and Medicare.
The freeze would affect $447 billion in spending, or 17% of the total federal budget, and would likely be overtaken by growth in the untouched areas of discretionary spending. It’s designed to save $250 billion over the coming decade, compared with what would have been spent had this area been allowed to rise along with inflation.
The administration officials said the cap won’t be imposed across the board. Some areas would see cuts while others, including education and investments related to job creation, would realize increases.
Obama proposing a three-year spending freeze is “appalling on every level,” Krugman writes at Conscience of a Liberal. “It’s bad economics, depressing demand when the economy is still suffering from mass unemployment,” he says.