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Obama wants to freeze discretionary spending for 3 years

By Ed Henry, CNN
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3-year spending freeze
  • Discretionary spending is about one-sixth of the entire federal budget
  • Agencies would be able to give some programs increases, cut money elsewhere
  • Exempted under plan: budgets of Defense, Homeland Security departments
  • Some Democrats saying cuts would be tough to swallow

Washington (CNN) -- President Obama will announce in Wednesday's State of the Union address that he's proposing to save $250 billion by freezing all nonsecurity federal discretionary spending for three years, according to two senior administration officials.

The proposed freeze, which could help position Obama in the political center by sharpening his credentials on fiscal discipline, would exempt the budgets of the departments of Defense, Homeland Security, and Veterans Affairs, along with some international programs.

"We are at war, and we're going to make sure our troops are funded adequately," one of the senior officials said.

The officials would not reveal the details of which domestic programs would be cut, as they prepare to face major pushback from liberals in the president's own party because popular education and health spending could be on the chopping block. The details will be officially unveiled February 1, when the president publicly releases his next budget blueprint for fiscal year 2011 -- which starts October 1 -- and beyond.

"We've got to make some tough decisions," the second senior official said. "Everybody is not going to get what they want."

What do you want to hear in the speech?

Under the proposal, which would need to be approved by both houses of Congress, all federal discretionary spending would be frozen at its current level of $447 billion per year. Within that parameter, however, individual federal agencies would have the power to give some programs increases, while cutting money elsewhere.

Besides burnishing his fiscal discipline credentials, the move could also help the president force Republicans' hand on whether they're serious about meeting Obama halfway on some of his policy proposals.

Immediate Republican reaction was split, with some senior GOP aides saying the freeze is something they could support, while others said it did not go nearly far enough.

"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, a spokesman for House Minority Leader John Boehner, R-Ohio. "Will the budget still double the debt over five years and triple it over 10? That's the bottom line."

The senior administration officials acknowledged that discretionary spending is only about one-sixth of the entire federal budget, and that much larger savings would come from cutting entitlement programs like Medicare, but the White House believes that cuts need to start somewhere.

"We're not here to tell you we've solved the deficit," said one of the senior officials, adding that the federal government has to go through the "very same process that families" across America have had to go through in their personal budgets.

The move will also spark a major debate within the president's own party, with senior Democrats already saying the cuts would be tough to swallow. A senior Senate Democratic aide said it will prompt a major fight after the Bush administration "underfunded domestic programs for so long."

"Why would we want to play into the Republicans' hands like this?" the senior Senate Democratic aide asked.

But it could also help Obama break ranks with an unpopular Democratic Congress. "Do I expect this to win us a lot of kudos on Capitol Hill? No," one of the senior administration officials said.

CNN Senior Congressional Correspondent Dana Bash contributed to this report.

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