Caution: Exploding Heads Likely

 Wall Street Journal:

The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue. 

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter. It is also expected to lower the projected long-term cost of the program -- the amount it expects to lose -- to as little as $200 billion from $341 billion estimated in August.

The idea is still a matter of debate within the administration and it is unclear how much impact it would have on the nation's mounting deficit levels. Still, the potential move illustrates how the Obama administration is trying to find any way it can to bring down the deficit, which is turning into a political as well as an economic liability.

The White House is in the early stages of considering what bigger moves it might make for next year's budget. The Office of Management and Budget has asked all cabinet agencies, except defense and veterans affairs, to prepare two budget proposals for fiscal 2011, which begins Oct 1, 2010. One would freeze spending at current levels. The other would cut spending by 5%.

Politico:

President Barack Obama plans to announce in next year's State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning.

Andrew Sullivan (headline: Obama, Deficit Hawk):

To treat the stimulus package as if it were something he just felt like doing - because he's a big government maniac - is a lie, a piece of propaganda that has seeped into the lazy Beltway desire to describe everything - even now - into the big government/small government, red-blue paradigm.

Item two: The health insurance reform almost painfully tries to pay for itself - something that Bush's Medicare entitlement didn't even pretend to do. 

Item three: there's a big big difference between spending on green and infrastructure investment and slashing taxes or increasing Medicare entitlements.

The way in which cynical and amnesiac Republicans have tried to portray this as classic big government liberalism is a lie. You can debate the merits of each initiative, but this is obviously not an administration as fiscally reckless as the last one. Mercifully, they have a chance to show it in earnest next year. And to call the bluff of those Republicans yelling about spending while having absolutely no plans or ideas for cutting it.