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WASHINGTON—President Barack Obama intends to propose a three-year freeze in spending that accounts for one-sixth of the federal budget—a move meant to quell rising concern over the deficit but whose practical impact will be muted.  Getty Images
President Barack Obama and Vice President Joe Biden at a meeting of the Middle Class Task Force on Monday. 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. Among the areas that may be potentially subject to cuts: The departments of Housing and Urban Development, Justice, Energy, Transportation, Agriculture, and Health and Human Services. "We're not here to tell you we've solved the deficit, but you have to take steps to put spending under control," a senior administration official said. The spending freeze, which is expected to be included in Wednesday's State of the Union address and the president's Feb. 1 budget proposal, is one of a series of small-scale initiatives the White House is unrolling as the president adjusts to a more hostile political terrain in his second year. On Monday, the president unveiled a set of proposals aimed at making child care, college and elder care more affordable. "Given Washington Democrats' unprecedented spending binge, this is like announcing you're going on a diet after winning a pie-eating contest," said Michael Steel, spokesman for House Minority Leader John A. Boehner (R., Ohio). "Will the budget still double the debt over five years and triple it over 10? That's the bottom line." Responding to criticism, administration officials acknowledged the freeze is directed at only a small part of overall spending, but that fiscal discipline has to start somewhere. President Obama had requested a 7.3% increase last year in the areas he now seeks to freeze. White House officials said they had achieved 60% of the $11.5 billion in cuts outlined in the budget for the current fiscal year. Mr. Obama will also propose the creation of a deficit commission to look for potential solutions for the medium- and long-term deficit—a move to garner bipartisan support for what may be unpopular tax increases and spending cuts. A bipartisan group of senators has been trying to get such a commission passed into law in a way that would give teeth to its recommendations. The recommendations of any presidential panel would require congressional approval. The budget proposal will be welcomed in some quarters. On Monday, four members of the Democratic Party's Blue Dog caucus, which favors fiscal discipline, wrote to Mr. Obama suggesting he implement a freeze much like the one he plans. "More will need to be done to get our fiscal house in order, but we believe this freeze in non-defense related discretionary spending is a good place to begin," they wrote. John Makin, an economist at the conservative American Enterprise Institute, called the effort "certainly a step in the right direction." He said the amount saved isn't large, but noted that he preferred this approach over raising taxes. "I'm not going to belittle it because it's not a big cut in spending." A year after the White House rolled out ambitious initiatives on health care and energy, in addition to a giant economic stimulus plan, the president is in some respects taking smaller steps. That's partly because much of the 2009 agenda remains undone. Also, in an election year, members of Congress are typically reluctant to take on controversial proposals. But the president said Monday that he remains committed to tackling health care and other big problems. "I'd rather be a really good one-term president than a mediocre two-term president," he told ABC News. He faces tough dynamics. Mr. Obama and his party are bracing for losses in this fall's election amid fallen approval ratings and after a damaging loss in a Massachusetts special Senate election. The president has already shifted to a more populist tone aimed at convincing independent voters in particular that he is on their side. "We're going to keep fighting to rebuild our economy so that hard work is once again rewarded, wages and incomes are once again rising, and the middle class is once again growing," Mr. Obama said in unveiling his new proposals Monday. That message will likely be broadcast on Wednesday, when Mr. Obama delivers his State of the Union address to Congress. Aides say he'll use the domestic-policy section to focus on jobs, the budget deficit and ways to reform the way Washington works. The big-ticket legislative items from last year may wind up on the back burner. The president has suggested Congress might significantly scale back its health-care legislation after the party lost its 60-vote Senate super-majority. And on energy, following last year's proposal to fight global warming by requiring companies pay for the right to emit greenhouse gases, Democrats concede it is more likely that Congress will approve a scaled-back bill with subsidies and more modest rules. White House officials say they will continue to push their 2009 goals. "We are not trimming the sails on the major policy initiatives, but we are at a different stage where the focus is on moving forward [on existing initiatives] not announcing a new policy," said one White House adviser. Many Republicans argue Mr. Obama tried to do too much. "In my view, the president struggled in his first year not only because his agenda veered too far left, but because he took too many big bites out of too many apples and tried to swallow them all at once," Sen. Lamar Alexander (R., Tenn.) said on the Senate floor Monday. On Monday, the president and Vice President Joe Biden announced a handful of modest proposals aimed at supporting middle-class families, the result, they said, of a task force led by Mr. Biden. They said the budget will include an additional $1.6 billion for low-income child-care subsidies, and that they would ask Congress to sweeten a child-care tax credit with more generous help for families earning up to $115,000. Administration officials wouldn't say how much the extra tax breaks would cost, or how they would pay for them. The plan also includes new limits for people repaying student loans, capping repayments at 10% of discretionary income, at a cost of $7.5 billion over 10 years, and $102.5 million for help with elder care.
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