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  • Obama’s Deficient Budget Pledge

    President Obama’s address to a Joint Session of Congress on health care reform included a range of urgings, pleadings, and partisan jabs, and a single bright line in the sand dealing not with health care per se but with the deficit. The President said, “I will not sign a plan that adds one dime to our deficits – either now or in the future. Period.”

    Before we get too carried away cheering the President’s sudden fealty to fiscal sanity we need to remember he did say the bill should come in at around $900 billion over 10 years. According to the various drafts and legislation circulating on Capital Hill, some of this would be offset with spending cuts but much of this amount represents a net expansion of government. Health care reform should not be used as an excuse to grow government. Health care reform should be spending neutral, not just budget neutral.

    President Obama and the health care reformers need also to take a step back and look at the even bigger picture including Medicare’s long-run unsustainability. Obama has correctly identified the imperative of bending the curve on soaring health care costs downward to make Medicare and other federal programs less unsustainable. This should be another line in the sand for the President and health care reform.

    That said, the President’s deficit neutrality pledge is encouraging. But to be taken seriously the pledge must be operational. Two issues needing answers then are – deficit neutral according to whom? and deficit neutral over what future?

    To be credible, deficit neutrality must be measured by the Congressional Budget Office (CBO), not the President’s Office of Management and Budget (OMB). Not that CBO’s estimates are inherently superior to OMB’s, but OMB does work for the President and there’s an appearance of the fox guarding the henhouse if the President declares the bill meets his deficit neutrality test according to his own numbers. This, after all, is why we have a CBO.

    Then there’s the question of “the future”. CBO and OMB make 10 year projections. Ten years may seem like a long time, but it’s not a long time for permanent programs. In such cases, the 10-year timeframe has more to do with the number of fingers and toes than it does anything relevant to the budget. A recent study by the Lewin Group for the Peterson Foundation demonstrates that Obama’s approach as captured in the House bill 3200 would increase the budget deficit by $1 trillion in the second 10 years after enactment. Surely the second ten years is part of Obama’s “future”, and so just as surely this bill would violate the President’s pledge.

    CBO should do its usual year-by-year score and then it should also do a long-run score in present value terms, much as the Medicare and Social Security Trustees calculate for those programs. Such an estimate is fraught with uncertainties and so should be presented with a range. But even an uncertain estimate guarded by an army of qualifiers beats no estimate at all. With this additional information policy makers and the public will at least have some idea of whether the legislation makes the long-run budget picture better as the President originally promised, or worse as the Lewin estimate suggests.

    Posted in Obamacare [slideshow_deploy]

    13 Responses to Obama’s Deficient Budget Pledge

    1. Vladimir MD says:

      Obama + "health care" reforms = CCCP

    2. hoser, wilton, ct. says:

      All of the neighbors on my street, all 2.63 million of them, have lost their insurance. What are they to do? Can you help?

    3. M.Decker Schaumburg says:

      OBAMA HAS DEMONIZED THE INSURANCE COMPANIES FOR OUR HEALTH CARE COSTS. HOW ABSURD!

      HEALTH CARE COSTS AREN'T DRIVEN BY INSURANCE PREMIUMS, INSURANCE PREMIUMS ARE DRIVEN BY HEALTH CARE COSTS! HE HAS GOTTEN THE ARGUMENT ON HIS TERMS. IT'S MORE SLIGHT OF HAND. IF HE CAN GET THE PUBLIC THINKING AND HATING THE BIG BAD INSURANCE COMPANIES, THEN WE WON'T THINK RATIONALLY. THIS IS ABOUT CONTROL!

      No Government, not even ours, should have the ability, the power to determine who lives and who dies, who receives medical treatment and who does not. This fundamentally wrong. How is it that Congress year after year can find money for their pork projects but can find money to help the poor get good health care and insurance? I don't believe that the poor should be consigned to a public option. We need to get on our leaders about this. I suggest booting them out in the primaries. If your a dem, go dem but a candidate that isn't the incumbent, same for the republicans or even independents.

    4. Daniel, Jersey City, says:

      Well written and thought provoking article. The author brings up excellent points and several serious considerations. I agree that more needs to be known about the exact details of this expansion of the federal government before it inevitably happens.

    5. Pingback: Obama’s Deficient Budget Pledge (And we know how good a politici ans promise is!) « Prayer, News & Action

    6. Pingback: » Financial News Update – 09/10/09 NoisyRoom.net: Where liberty dwells, there is my country…

    7. David Kahl says:

      IM APPALED THOURGHLY THAT NONE OF OUR APPOINTED REPRESENTATIVES ON EITHER SIDE OF THE ISLE DID NOT WALK OUT WHILE HE SPOKE ALL THOSE UN-TRUTHS DAVID A. KAHL

    8. Jmac, Sr. Maple Shad says:

      SOS, different day. If he would only be honest with us. He is a wolf in sheeps clothing. I'm sorry to say this about my president, but he has lied, yes lied, and I now cannot believe or trust a word he says.

    9. Voice of Reason says:

      Why does the far right continue to use this Lewin Group as a valid source of data? As they say, the cat is out of the bag because Lewin is a subsidiary of the insurance giant United Health Care. One has to wonder if Lewin Group’s data might be skewed?

    10. Bill San Antonio TX says:

      I would bet my house that Lewin's data is not as skewed as the information we are fed by present government. How do you measure 1,000,000 "saved" jobs?

      However, main point is CBO estimates.

      Great article.

    11. Jackie, Willis, TX says:

      I'm on Medicare and a supplemental insurance and my health care providers now get a very small percentage of what they actually charge for my care. It's embarassing – I don't enjoy being the barely-break-even customer. After Obama cuts that (and that's what he's going to do to come up with $500B in savings) then how am I and other Seniors going to find a doctor or lab who wants my business? The answer is the answer in Norway: our names will be in a lottery and might be drawn this month and might not. I'm scared, real scared.

    12. Bobbie Jay says:

      Obama's words and actions insinuates his avoidance to observe equality of mankind (major violation of the Constitution.)

      The bills written have and will always have cover-up until it's stopped! He wants many to pay for all those he sees as inferior, only to break the rest down to the same, while those he gives our money to can live without the burden of work, taxes or accountability.

    13. pat says:

      If you want to put an end to this ludicrous health scare scheme demand that your senators, representatives and the president drop their current plan and accept that which they hope to force on the rest of us commomers. Yes, I said commoners. When you get the Obama version of english health insurane you will also get the english word for its citizens, commoner. Of coarse not all citizens will be commoners. There will be the elites. You know those that you voted into office and now control your life and the lives of your family and friends. They now have the power to do as they please and what pleases them is to: exclude themslves from the obligations, regulations and laws that govern the commoners, vote themseles pay raises ans benefits as they deem necessary, commandeer government aircraft to fly them from hither to yon and back, accept millions of dollars from those seeking their favor, doing favors for those that pay for those favors, etc etc etc. And, they then have the nerve to tell you that they are working for you. We have something called the freedom of information act. Only problem is that "to protect you" congress has exempted themselves from compliance. America was a great experiment while it lasted but let us face America does not exist any longer.

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