President Obama is holding a town hall right now in Nashua, New Hampshire that was both a teachable moment and also incredibly revealing about the bankruptcy of the President’s spending freeze.

The President, responding to a question about Judd Gregg’s fiscal commission, said that people have misconceptions about the budget. He said that, if you talk to people, they’d say that the waste in the budget comes entirely from foreign aid and pork. He calmly laid out that foreign aid represents 1% of the overall budget, and “pork” represents 1% as well. “What really accounts for our federal budget is Medicare, Medicaid, Social Security, defense, interest on the national debt,” Obama said. He said that if you wanted to cut the deficit using solely discretionary non-defense spending, exempting entitlements and defense, you would have to cut everything else by over 60% (I think his math is off; you’d probably have to eliminate them completely). “Can you imagine? So we’ve got to have an honest conversation about all aspects of the budget,” he closed.

We sure do. That’s why focusing on a spending freeze on those same discretionary non-defense parts of the budget as the centerpiece of fiscal responsibility is so unserious. Obama essentially delivered the argument against the freeze.

What Obama failed to say is that the cause of the deficit is extremely simple – the Great Recession. We both lose tax revenue when millions of Americans are out of work, and we have to spend on unemployment and public health and welfare programs at the same time (known as automatic stabilizers). And yet, despite this known reality, it’s the deficit that’s seen as a prelude to American decline and not the the unemployment crisis, that “human recession” which the Obama Administration sees as perfectly reasonable to exist for close to another decade. Christina Romer just rolled this out the other day, a benchmark of 8% unemployment at the end of 2012, without a hint of a problem at that. This is indeed a depressing reality, that concerns about the deficit have trumped this human crisis.

As many have pointed out, the administration projects high unemployment for years to come.

So what’s the response to this dismal, family-destroying prospect? A brief, small additional stimulus, followed by a spending freeze. In essence, the administration is accepting mass unemployment as just one of those things we have to live with [...]

While the freeze won’t be a big deal, it will depress demand during a period in which, according to the administration’s own projections, unemployment will stay very high.

What we’re witnessing is an awesome national failure.

We don’t know if the President’s budget projections will turn out; these things are unpredictable. What we do know is that we’re in the midst of mass unemployment and the Administration is playing small-ball on spending freezes that they admit won’t do a thing on the deficit side, without coming up with anything to deal with the jobs crisis.

Brendan Nyhan and Matt Yglesias have more.

UPDATE: Rich Trumka, President of the AFL-CIO, says this pretty plainly in a statement. I’ve bolded the key point:

In Washington, too much attention is being paid to the budget deficit—most of which President Obama inherited from his predecessor. Not enough attention is being paid to our massive “jobs deficit.” We need to create over 10 million new jobs just to get back to where we were when the recession began. This massive jobs deficit demands bold, urgent action to create new jobs and grow the middle class. In any case, the most effective way to reduce the budget deficit is to eliminate the jobs deficit.

UPDATE II: Ugly.