Responding to the loss of Ted Kennedy’s Massachussetts Senate seat to Republican Scott Brown, Barack Obama is set to announce a three year discretionary spending freeze. (Note that military spending is apparently compulsory not discretionary.)
Nate Silver at FiveThirtyEight.Com thinks that the move is, politically speaking, a “brain freeze”. He also queries “the wisdom of curtailing government spending in the middle of a massive consumption deficit”.
Obama’s move will placate ‘Blue Dog Democrats’, including champion deficit hawk Evan Bayh of Indiana, whose seat is looking shaky. In a broader sense, it’s further evidence of the triumph of politics over economics, albeit in a somewhat different register; a return to a sort of pre-Keynesian mindset, or Maggie Thatcher’s petit bourgeois rhetoric of ‘household budgets’ without the monetarism.
Obama is basically saying that the stimulus fixed the economy, that there will be no further government support measures and that he’ll govern like a hybrid of John McCain and Herbert Hoover for the rest of his term to curry favor with the deficit maniacs.
Andrew Leonard at How The World Works:
If ever there was a time to pull out the old Karl Marx chestnut, “History repeats itself, first as tragedy, second as farce,” that moment is now. Prominent members of Obama’s own administration have warned against repeating the errors of 1937, namely, Franklin Roosevelt’s decision to cut spending and balance the budget too quickly, thus strangling a nascent recovery from the Great Depression. But with the U.S. economy far from healthy, the president has decided, once again, to bow to the political winds and make the deficit priority number one.
It’s also the effective decoupling of the US from the G20 stimulus agenda, and further proof that America is mired in the politics of domestic decline. What happens to a globalised economy when the globalisers opt out?
Incidentally, this is additionally the sort of policy u-turn the Coalition in Australia have long been advocating. If further sclerotic growth, or even a double dip recession in America, is the result, it won’t be without its ramifications for the political debate here.
Update: Robert Reich on how Obama’s political panic could ruin the economy.
Update: Michael Lind.
Update: Brad DeLong: This is such a disaster in the making.
Update: Krugman: Obama Liquidates Himself.

Recent comments
Terry, tigtog, Sam, Eric Sykes, Zorronsky, BilB [...]
informally yours, Chris, informally yours, Saint Furious of Ikea, Chris, Paul Burns [...]
BilB, Peter, BilB, OldSkeptic, anthony nolan, mitchell porter [...]
Zorronsky, Razor, terangeree, Deborah, Saint Furious of Ikea, terangeree [...]
Lefty E, PinkyOz, Mercurius, Geoff Honnor, Lefty E, Lefty E [...]
jeff, Mercurius, silkworm, SJ, Razor, anthony nolan [...]
Mark, Paul Burns, Bert, Rx, Paul Burns, Andos
anthony nolan, Helen, Nickws, kph, Helen, Caroline Church [...]
Fran Barlow, Robert Merkel, Kiashu, Mervyn Langford, OldSkeptic, Frankie V. [...]
anthony, Ginja, Anthony, Terry, Alison, anthony nolan [...]
Chris, Ken Lovell, Gummo Trotsky, desipis, Pavlov's Cat, Pavlov's Cat [...]
RightHandThread, Nabakov, rumrebellious, Nabakov, RightHandThread, RightHandThread [...]