Obama to Call for Spending Freeze for Most Domestic Programs

President Obama reportedly will freeze spending for most domestic discretionary programs in his FY2011 budget request according to the New York Times. Domestic discretionary programs encompass all the government agencies that receive annual budgets, though some apparently will be exempted from the freeze. The budget is due to be released next Monday and the President is expected to talk about it during his State of the Union address this Wednesday evening.

The federal budget is broken into three major categories: entitlement spending for programs such as Medicare, Medicaid and Social Security; interest on the national debt; and everything else, or “discretionary” spending. The President will propose a three-year freeze on most discretionary spending with increases for inflation thereafter according to the newspaper, which adds that the Department of Defense, the Veterans Administration, homeland security, and foreign aid are exempted. A freeze is a cut in real terms since the agency has to absorb cost increases due to inflation.

The implications for NASA could be serious. Only a few weeks ago, rumors were that NASA would get a $1 billion increase for FY2011, which, according to an estimate in the Augustine committee report, would have been just about enough to pay for an extra six months of space shuttle operations if NASA is not able to complete the remaining five launches by the end of the current fiscal year (September 30, 2010). Those rumors have faded, but hope remained that a smaller increase might be forthcoming. A glimmer of hope still shines since the freeze would be on the total funding for all the affected agencies. Individual agencies or programs could receive more or less, but the excitement spurred by the Augustine Committee report’s call for a $3 billion increase for NASA seems to have dimmed.

The loss by Democrats of the Senate seat formerly held by Senator Edward Kennedy was cited by the newspaper as a key factor in the President’s renewed focus on deficit control. Political analysts cite voter dissatisfaction with how the Democrats are handling the economy as a factor in their election of a Republican. The Democratically-controlled Congress also is likely to be sensitive to those concerns, but the extent to which it agrees with the President’s budget request will be determined over the course of the next many months.