Obama: Watch the Spending Except for Health Care

These two stories indicate that Obama just isn’t serious about limiting spending and deficits. The first is about how President is trying to earn some credibility for fiscal responsibility.

President Barack Obama sought on Tuesday to show he was serious about improving the U.S. budget picture as he called on Congress to pass new limits on tax cuts and spending programs to avoid adding to deficits.

Obama urged passage of “pay-as-you-go” legislation that would require any new tax cut or automatic spending program to be paid for within the budget.

“The ‘pay as you go’ principle is very simple. Congress can only spend a dollar if it saves a dollar elsewhere,” Obama said in a speech at the White House attended by several Democratic members of Congress.

“Entitlement increases and tax cuts need to be paid for. They are not free,” said Obama, who has been criticized by Republicans for proposing a hefty domestic agenda that includes overhauling the health care system, bolstering education and tackling global climate change.

Now that isn’t too bad, although taking it too far could be bad if it leads to a situation like in California where the state is having to cut spending at precisely the wrong time.

This next bit is rather amusing,

“The reckless fiscal policies of the past have left us in a very deep hole,” Obama said. “Digging our way out will take time and patience and tough choices.”

Indeed and considering President Obama’s own role in creating these reckless fiscal policies I guess he knows what he is talking about. And yes, to be sure it isn’t all Obama’s fault, but his budget this year does rack up a rather impressive deficit by just about any measure.

Then we get the second article that has President Obama saying that don’t worry that “pay-as-you-go” thing, well not for health care. For health care, borrow as much as you want.

President Barack Obama on Tuesday proposed budget rules that would allow Congress to borrow tens of billions of dollars and put the nation deeper in debt to jump-start the administration’s emerging health care overhaul.

The “pay-as-you-go” budget formula plan is significantly weaker than a proposal Obama issued with little fanfare last month.

It would carve out about $2.5 trillion worth of exemptions for Obama’s priorities over the next decade. His health care reform plan also would get a green light to run big deficits in its early years. But over a decade, Congress would have to come up with money to cover those early year deficits.

Guess he didn’t want that fiscal responsibility credibility anyways.

The federal deficit is on pace to explode past $1.8 trillion this year, more than four times last year’s all-time high. The record borrowing is credited with pushing up interest rates, which could imperil chances for a recovery later in the year.

FILED UNDER: Economics and Business, Government, Health, US Politics, , , , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Our Paul says:

    He is back, in his primary role as critic of Health Care Reform at OTB. As usual, brother Steve presents no solutions to the fact that our health care costs have placed American companies at a competitive disadvantage, that our Health Care costs are rising at a more rapid rate than comparable industrialized countries, that we pay up to two times more for care that clearly produces worse outcomes than are found in other countries.

    My solutions: If you have a big med bill, buy your drugs in Canada. If you cannot afford reasonable Health Insurance, pray. If you get cancer or some other unfortunate disease and the Insurance companies start to string you out, hold up a bank with a toy gun. In jail, you will get adequate medical treatment. But, check out the accommodations first. Alabama or Mississippi should be way down on your list…

  2. just me says:

    So Our Paul what is your solution since you are demanding them from Steve?

    I don’t have too many problems with a pay-go system, but the problem is that he is conveniently trotting it out after he has pushed through over a trillion dollars in spending and wants to spend even more.

  3. DavidL says:

    Yes the freaping geniuses at the Obama Administration can do the same thing for healthcare that they did to the economy. The American healthcare system works. There is little chance that it well after the Obamatards fix it.

  4. odograph says:

    I got a kick out of this one, for reasons which should be obvious to OTB denizens:

    Poll: 45 Percent Say Cancel Stimulus Spending

  5. odograph says:

    Another good link, Alex Tabarrok, not a liberal source, at Marginal Revolution:

    Now Obama deserves kudos for a more honest budget process. Indeed, if the only choices are the tax and spend party and the no-tax and spend party then I prefer the former for both economic and political reasons. Thus as political accounting Leonhardt’s conclusion is reasonable.

  6. steve says:

    Did you read Leonhardt’s article? I suggested you look at those numbers a couple of weeks ago as we did on my little blog. Most of this big deficit is not being generated by actions initiated by Obama. Most of it comes from the recession and commitments from the Bush administration. Please read Cowen’s comments also.Then comment on Obama’s role in CREATING the deficit.

    As we go through 2012, Obama’s share increases. We will see where Obama stands as time goes on. I am puzzled by the initial reaction on the right to pay as you go. Why has cutting taxes totally replaced fiscal responsibility?

    Steve

  7. MstrB says:

    Isn’t California also a case of spending every cent when the times are good and then borrowing more?

  8. An Interested Party says:

    Yes the freaping geniuses at the Obama Administration can do the same thing for healthcare that they did to the economy.

    Oh? So the economy was a glorious powerful engine, just chugging along beautifully before January 20, 2009? Who knew…

  9. Bill H says:

    Most of it comes from the recession and commitments from the Bush administration.

    Yes, but Obama is reversing none of those actions, cutting even more taxes, raising no taxes (albeit talking about maybe doing so in very small measure), and adding even more spending programs.

    So he is critizing Bush, but instead of trying to make things better, he is making them worse.

  10. DavidL says:

    Oh? So the economy was a glorious powerful engine, just chugging along beautifully before January 20, 2009? Who knew…

    Obama inherited a recission. He said that Porkulus was urgenlty needed to fix the economy So Congress passed Porkulus, without bothering to read it.

    But instead of reversing the economic decline, the Obama economy has gotten worse. Obama’s proposed fix certainly did not work and may have made the problem worse.

    Now having claimed to have a competent understanding of economics, but having shown none, Obama wants to fix a healhcare system that works. It would like having the mechanic who just botched your tune-up on your engine, now perform open heart surgery.

    Are you willing to bet your life on Obama Care?

  11. odograph says:

    But instead of reversing the economic decline, the Obama economy has gotten worse. Obama’s proposed fix certainly did not work and may have made the problem worse.

    That is tortured logic.

    Much easier to say that things have gotten worse than many expected, because the probelms were as severe as a few pessmists did predict.

    You got the Roubini future, and no, the stimulus wasn’t big enough to “reverse” it. For that, as the joke goes, you’d need a BIGGER stimulus.

  12. Steve Verdon says:

    He is back, in his primary role as critic of Health Care Reform at OTB. As usual, brother Steve presents no solutions to the fact that our health care costs have placed American companies at a competitive disadvantage,

    That is a load of nonsense. Christine Romer doesn’t support it, Doug Elmendorf doesn’t support it, and neither do I. It is a false argument since firms look at total compensation not just health care benefits or salary individually.

    And I’ve presented solutions before on this site. It isn’t my fault you’re too lazy to use the search function.

    I see no reason to read the rest of your comment since you can’t even get the basic economics right, nor properly aquaint yourself with my views.

  13. Steve Verdon says:

    Steve,

    I think you meant Alex Tabarrok, not Cowen (I’ve made that mistake myself).

    Anyhow, I think it is overly simplistic, Leonhardt’s analysis. After all, Obama was in the Senate, he did have some say in the matter. Unless he voted no for TARP, and other programs he should get tagged, at least partially, for them as he was an enabler.

    I agree with Alex’s conclusion,

    Washington is all about political accounting but we should not be misled into thinking that because Obama’s agenda accounts for only a “sliver” of the deficit that this makes it a modest or cheap agenda. The agenda is big and expensive and every dollar of spending is a dollar that adds to the deficit.

    As for this,

    As we go through 2012, Obama’s share increases. We will see where Obama stands as time goes on. I am puzzled by the initial reaction on the right to pay as you go. Why has cutting taxes totally replaced fiscal responsibility?

    I think you need to re-read what I wrote on this. I’m not necessarily opposed to it, I’m just worried that we could be heading down the road California is on, that is all. Call it cautious optimism.

  14. Dave Schuler says:

    As I pointed out in my post on the Leonhardt article yesterday, it has methodological problems. To his credit, Leonhardt himself concedes that in his blog post on the article.

  15. anjin-san says:

    But instead of reversing the economic decline, the Obama economy has gotten worse.

    That would certainly explain the soaring stock market…

  16. An Interested Party says:

    Are you willing to bet your life on Obama Care?

    As opposed to someone who has no health insurance and has the ER as his “doctor” and then can get his finances wiped out or others who are at the mercy of some HMO bureaucrat who may hold their insured lives in his grubby, greedy hands? Oh look, hyperbole works both ways…

  17. Steve Verdon says:

    That would certainly explain the soaring stock market…

    1. The stock market is not the economy.
    2. Beware sucker’s rallies during a recession.

  18. another matt says:

    Now having claimed to have a competent understanding of economics, but having shown none, Obama wants to fix a healhcare system that works.

    When economists themselves cannot come to an agreement about the best way to fix the economy, I don’t fault Obama so much for taking the course he has taken. The healthcare system works for some, but not for many.

  19. Dave Schuler says:

    Mind the overestimation of the problem and fallacies of composition. About 15% of the population is uninsured. Those 15% are disproportionately in just six states.

    I think some parsimony should be shown and that’s the value of a federal system. Solve the problem in the states with the largest problem first as a pilot program before launching into an inevitably half-baked national plan.

  20. Steve Verdon says:

    But instead of reversing the economic decline, the Obama economy has gotten worse. Obama’s proposed fix certainly did not work and may have made the problem worse.

    That is tortured logic.

    No it is counter-intuitive. Like when, during a boom, that the stock market goes up when the unemployment rate comes in a bit higher than expected. The Fed can hold off on a rate increase in such a case, since such a report would provide weak evidence that the economy is not growing too fast to raise the possibility of higher inflation.

    In the case we are in now, if the quantitative easing and the increased spending have the effect of increasing the interest rate, then it could put off the recovery and/or make the recession worse. I’m not saying this is the case, but that would be one way the story could work.

    You got the Roubini future, and no, the stimulus wasn’t big enough to “reverse” it. For that, as the joke goes, you’d need a BIGGER stimulus.

    You are ignoring the fact that so little of the stimulus has been spent. To claim that BIGGER stimulus is necessary given this fact is indeed tortured logic…or the logic of one who ignores reality.

  21. odograph says:

    You got the Roubini future, and no, the stimulus wasn’t big enough to “reverse” it. For that, as the joke goes, you’d need a BIGGER stimulus.

    You are ignoring the fact that so little of the stimulus has been spent. To claim that BIGGER stimulus is necessary given this fact is indeed tortured logic…or the logic of one who ignores reality.

    I think you just reinforced my comment. Yes, bigger and faster.

  22. Steve Verdon says:

    I think you just reinforced my comment. Yes, bigger and faster.

    Let me see, so far we have virtually nothing spent…and the economy is still in the tank…so bigger? Bond markets, interest rates and inflation fears be damned.

    Faster, maybe, bigger? No. Why not have the Administration get the current slated spending spent then see if we need more.

  23. Our Paul says:

    And thus, having once graced some of Steve Verdon’s blog posts in the past and having received a F for my efforts in one of them, I am not surprised to be relegated to the dust bin of his memory. To wit:

    And I’ve presented solutions before on this site. It isn’t my fault you’re too lazy to use the search function. Steve Verdon (June 11, 2009 | 12:27 pm)

    It was when you blessed me with the F crown, that you had this to say:

    First off precluding people prior conditions also lowers premiums. Including them would drive up premiums. That is precisely the point of how administrative costs, even higher ones, can keep premiums lower and thus create value for customers of a private insurance company.

    Which I thought was an elegant solution to the rising cost of Health Care, especially if we coupled it with one of your previous suggestions to lower the cost of health care by excluding pregnancy and obstetrical benefits from insurance coverage. Yes, a brilliant formulation: exclude those that may be “high” costs individuals, and medical insurance rates will go down.

    It strikes me that you have an inability to grasp health care data. When presented with comparative data, such as the OECD studies, you fail to examine or comment on the data, and instead come back with a post implying that the OECD countries are going broke. When comparing Canadian and U.S. Health Care you selectively quote a study by June E. O’Neill and Dave M. O’Neill which as referenced is not available on line or through library services to your readership. As strange as it may be, the O’Neill paper, as quoted by yourself , is part of a large survey paper on Health Care; the paper presents other studies which clearly point to the benefit of government sponsored by health care.

    Turns out I read OTB for its unique conservative/libertarian perspective, and the fact that the comments by the readership often contain thoughtful links to information that are challenging. In turn I try to broaden the conversation either through criticism, questions, or pertinent links. One of the questions I posed in the past was this:

    Do you believe that Insurance Companies can deliver a better “product” than a government single payer system? If yes, explain in terms of Quality Assurance and Evidence Based Medicine.

    Steve’s answer was

    This is a very large question that would require a very lengthy reply, so not going to answer it here. My general position though, is that I’d prefer a market based mechanism so that we can get whatever cost minimization mechanisms come with the market vs. government where such mechanisms are dubious at best. That doesn’t mean there is no role for government, I just don’t see any government run program that does it right.
    Posted by Steve Verdon | May 13, 2009 | 03:41 pm |

    As a physician I favor the quality of medical care, and its equal and equitable distribution to all Americans; that surely is not happening today. Steve shows no interest in the quality of health care, and views the distribution of medical care through plutocratic economic models. That we would disagree is predictable.

    Psssst… For those who were frustrated by the inability to access the study by June E. O’Neill and Dave M. O’Neill it can be found here. I do look forward in discussing this paper with Steve in the future.

  24. odograph says:

    My comment is very simple:

    We got a bigger recession than you expected.

    Your argument twists a lot of ways, but you seem to be trying for this one:

    No get got the recession we predicted, only the lack of the stimulus we didn’t want, made it worse.

    May I LOL? Tell me again how “worst since the Great Depression” was overblown, and we should only expect a “typical” recession.

  25. Steve Verdon says:

    Which I thought was an elegant solution to the rising cost of Health Care…

    Paul, you only confirm my opinion that you are mendacious with claiming that was “my solution” or suggested solution to the problem.

    And the O’Neil & O’Neil paper can be had by spending $5 here.

    Once again, I’m not going to read the rest of your post since you once again failed to use the site’s search function, nor engage the actual positions I’ve laid out.

  26. Steve Verdon says:

    Odograph,

    Who are you quoting there, because it sure is not me. But feel free to laugh all you want, but pardon me for finding your last comment incoherent nonsense.

  27. Our Paul says:

    Sorry to take so long to get back to you just me (June 11, 2009 | 06:12 am) but it has been a long day, and I am a slow thinker, and a slow writer. You are correct when you state: So Our Paul what is your solution since you are demanding them from Steve? At the risk of being repetitious, there are three distinct but interlocking problems: Our Health Care costs are increasing at faster rate, our costs are greater, and our health care outcomes are worse than every other industrialized western nation. There is no argument against this triad, it accepted among most health care planners.

    The problem immediately jumps out at you: attempts at cost containment should not lead to a decrease in quality of health care. And thus my question to Steve Verdon (above) revolved around the issue of Quality Assurance (is the ”widget” you are delivering of the highest quality), and Evidence Based Medicine (prove to me that the “widget” is of high quality, and indeed not defective).

    In the U.S. health care is financed by the Government (Medicaid, S-CHIP), Medicare, Veteran Administration etc), Private Health Insurance (employer provided with employee self pay contributions, or total self pay contributions), and out of pocket on a need basis. The latter group is the uninsured (estimated at 16% of the population), and if you wish, the underinsured (estimated at 35% of the population).

    A bit sparse, but the above sets the table. To ensure Quality Assurance, you need an extensive data base, preferable as all encompassing as possible, and somebody to maintain it. You need an entity to investigate malfeasance, you need an entity to define why health care is more expensive in region A than in region B, and why 4 times more back surgeries are done in city X than in city Y. That can only be done by the Federal Government, and those that argue the market place is self correcting, are opening the door to the chicken coop to the foxes, and inviting the vulture capitalist to the feast…

    Evidence Based Medicine is just simply defining what works best, and excluding what is ineffective, or may actually be harmful. This has to be done by a totally independent body, financial players (Insurance Companies, for profit and non profit hospitals etc) have to be excluded. They have to be able to say this back operation cannot be entertained unless these conditions are meet, and they have to be the intellectual policemen.

    Within the above frame work I favor single pay, government sponsored, Health Insurance. Everybody, young and old pays in, everybody, rich or poor gets the same treatment. Do not cry socialism, you are still able to chose your own physician, he or she is able to recommend a specialist, and you may wish to chose your own specialist. That my friend, is impossible in many of today’s “free market” insurance plans. It does not preclude that an individual can purchase selected insurance, as is available I many EU countries.

    Is my choice going to happen, of course not. The French on finding a dead body, are fond of saying “find the women”. In the U.S., the hard boiled cop will say “follow the money trail”. There is just too much money to be made in American Health Care to seek a reduction in the escalating cost; that the increase is greater than any other industrialized nation assuredly is of no concern to those who profit. In the U.S. there is just too much money floating around to worry about health care outcomes (Quality Assurance), and whether our system damages our and future generations (Evidence Based Medicine).

    Gasp, a comment by R. Paul Miller, MD whose children affectionately roll the ‘R’ as the say Our Paul, posted without any links. They will provided on request, or if challenged.

  28. Our Paul says:

    Steve, I know you have classified me as a Goof Ball, and have decided that what I write is trash, you may be interested in the information presented in this comment.

    Many moons ago, when I was knee high to a grasshopper, I used to sit on the front porch with my pappy, Rufus head resting on pappy’s outstretched legs while his tail in a slow metronome wagged back and forth, Goof Ball, our cat purring on my lap, Benny Goodman in the background magically coming from the radio, and I would question and listen to what the old man said.

    One night, as the thunder heads rolled closer obliterating the stars, and the lightning flashes competed with the lightning bugs, pappy got a bit sick and tired of the stand I was taking. In his knuckle rapping voice he said this:

    “You know R. Paul, if somebody disagrees with you, you really ought to listen to what he has to say, you may learn something.”

    I only bring this up to point out that in my comment you refused to read, I gave an Internet link to the O’Neil & O’Neil paper that does not require the magic 5 dollar fee you feel we all should pay. It required an academic affiliation, and the usual full name and E-Mail address. I did not have to fudge the information, after all I did teach at the University of Rochester School of Medicine. I am sure that others with real or imagined academic credentials will be able to access this paper. As I do not wish to subject you or others to my verbiage, the link can be found here.

    I really do looks forward discussing this paper with you, at 43 pages, and 4 pages of references, it ought to be a fun bone experience…

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