EDITORIAL: Obama’s freeze

OPINION:

President Obama’s pledge to freeze domestic discretionary spending for five years was a diversionary tactic. A look at the numbers shows how ineffectual his supposed fiscal discipline would be.

One honest way to measure discretionary spending is to take inflation into account by using a constant-dollar benchmark. When calculated this way, America’s longest-running economic boom - slowed down by one brief and shallow recession - coincided with an 18-year period of fiscal responsibility. Profligacy, on the other hand, begat the current harsh recession.

In fiscal 1980, the year before President Reagan took office, federal domestic discretionary outlays totaled $355 billion as measured by the 2005-dollar standard used in the latest official government records. By 1989, the last fiscal year for which Mr. Reagan signed a budget, that same measure of spending had dropped to $305 billion. After a few subsequent years of spending growth, the 1995-98 Newt Gingrich-led Congress again put on the brakes.

In fiscal 1998, the last year before the Monica Lewinsky scandal took Republican eyes off the ball, the same category of outlays stood at $348 billion. In other words, 18 years later, taking inflation into account, the government was still doling out $7 billion less than it had under President Carter.

During those 18 years, inflation dropped from 12.8 percent to 1.5 percent, and unemployment dropped from 7.2 percent to 4.5 percent. The poverty rate was low. Prosperity reigned in large part because government got out of the way.

Now consider what has happened since 1998. Even before Mr. Obama took office, domestic discretionary outlays rose steadily, in real 2005 dollars, from $348 billion to $469 billion in 2008. By 2010, the figure exploded to $610 billion - a 30 percent increase in just two years. The economy not only has failed to improve, it has gotten worse. In 2010, unemployment stood at 9.4 percent - more than double what it was in 1998 - while inflation crept up to 2.1 percent, which is 40 percent worse than it was in 1998.

In the face of such gluttonous government, a spending freeze means very little. Mr. Obama says his freeze will save $400 billion in “projected” spending during a 10-year period. The House Republican Study Committee would save six times as much projected money just by cutting government back to its bloated 2008 level.

Cutting government excess gives the economy room to grow and create jobs. Unfortunately, making government smaller is not Mr. Obama’s thing.