By Suzanne Perry and Grant Williams

Washington

President Obama has proposed freezing some parts of the federal budget for three years starting in 2011 - a move that some charity leaders worry could affect spending in areas like social services and the arts.

In an effort to help rein in the federal budget deficit, the White House has proposed freezing "discretionary" spending - that is, money outside of areas like Medicare, Medicaid, and Social Security - in budget areas that are not related to defense or national security.

The reference to discretionary spending makes some nonprofit leaders nervous. "Typically those are the programs that serve the people that come to our doors," said Candy S. Hill, senior vice president for social policy and government affairs at Catholic Charities USA.

"My initial reaction was shock," said Tim Delaney, chief executive of the National Council of Nonprofits. "The notion of freezing domestic spending when our population is not frozen, our population still has great needs, how are we going to fashion that?"

‘Top-Line' Freeze

The White House calls the proposal a "top-line freeze" - one that would lock in current spending for the overall budget rather than every individual program - and the administration's comments Tuesday provided some reassurances to charity leaders.

Rob Nabors, deputy director of the Office of Management and Budget at the White House, told reporters in a telephone conference call that he could not be specific about which programs would be cut or enlarged but that liberal criticisms would be muted once the details are released next Monday.

"Right now people are all afraid that their favorite program has been gutted. But what we did, we went through line by line and looked at what wasn't working and looked at what was working."

"There will be increases for certain presidential priorities," he said. "There will be decreases for other priorities."

Impact on Charitable Deductions

James Horney, director of federal fiscal policy for the Center on Budget and Policy Priorities, said he does not expect the administration to "underfund" important social-services programs. "My assumption is these programs will get something more than a freeze."

He said the president's obvious interest in controlling the deficit, however, could affect the nonprofit world in another way. He said he would not be surprised if Mr. Obama revived his proposal in his 2011 budget to cap the value of itemized deductions - including those for charitable donations - for wealthy taxpayers.

That idea - which the president proposed last year as a way to pay for a health-care overhaul - got a frosty reception in Congress. But Mr. Horney said Mr. Obama could include it as part of an overall plan to show the administration "is proposing difficult steps, but steps that are necessary to get the deficit down."

Arts advocates, meanwhile, are hoping the freeze does not halt the upward trend in spending on the National Endowment for the Arts over the past few years. Americans for the Arts, an advocacy group, has been making the case to lawmakers that the arts help create badly needed jobs, said Nina Ozlu Tunceli, the group's chief counsel.

She noted that even if Mr. Obama proposes freezing arts spending, Congress may come to the rescue as it did last year, allocating more money to the NEA than the president's budget. "The story doesn't end just because the budget's released," she said.

Rising Service Demand

One other question mark is whether the budget freeze would affect plans to greatly expand AmeriCorps, the national-service program. A spokeswoman at the Corporation for National and Community Service, which manages the program, said she could not say yet how her agency would be affected.

Ms. Hill said the proposed budget freeze comes just as Catholic Charities is planning to issue its latest quarterly "snapshot" of the demands for emergency services like food and housing that its affiliates are facing across the country.

The report, which will be issued on Thursday, will paint a grim picture as the bad economy continues to take its toll, she said. "With each of these reports we continue to hear conditions on the ground are worsening."

Father Larry Snyder, president of Catholic Charities USA, sent a letter to the White House today - drafted before the president proposed the budget freeze - urging him to "give the highest priority to the needs of those living on the margins."

Mr. Nabors said the budget freeze would not affect White House and Congressional plans to craft a jobs bill, which would take effect in this fiscal year. Ms. Hill said the White House had consulted Father Snyder and other religious leaders about elements that could be included in that effort.