Breaking tonight, the President will propose a discretionary, non-security spending freeze for three years starting in FY 2011 as part of his State of the Union address.

The move, intended to blunt the populist backlash against Obama’s $787 billion stimulus and an era of trillion-dollar deficits — and to quell Democratic anxiety over last Tuesday’s Massachusetts Senate election — is projected to save $250 billion, the Democrats said.

The freeze would not apply to defense spending or spending on intelligence, homeland security or veterans.

The proposal is in line with a plan floated by Sen. Evan Bayh (D-Ind.), a fiscal hawk, who told Bloomberg’s Al Hunt last week that there was a “fighting chance” Obama would propose a freeze in most discretionary spending by the federal government as part of his address.

I have to head out the door here in a moment, so more on this tomorrow. But 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.

And of course, the truly unbelievable thing about this is how it’s framed as non-security discretionary spending, as if spending on the military is magic and somehow doesn’t affect budgets. If anything is bankrupting the country, it’s the bloated military budget, which is currently at a higher level than during the Cold War buildup of the Reagan Administration. So this freeze will do exceedingly little for the budget deficit, but is sure to hurt a lot of poor and middle-class people.

Matt Yglesias was on a conference call about this, where the line was that some programs would go up while others would go down, baselining the final number. Theoretically, this could mean a slash of farm subsidies by half while increasing community health centers or TANF payments. You can read him for additional context. I like this line:

I’m attempting not to freak out because (a) I don’t have details and (b) I suspect this initiative was deliberately leaked to progressive bloggers in an effort to get denounced by the left and I don’t want to give them the satisfaction.