Tuesday, May 12, 2009
Learning from history? Nope.
Yesterday, in what President Barack Obama described as a “watershed event”, the health care industry promised to cut $2 trillion in costs over 10 years by implementing such measures as the use of health information technology, care coordination, disease management, and “evidence based” medicine. If you feel as though you’ve seen this movie before, that is because you have: these are the exact same cost-cutting proposals that were in the Obama administration budget released earlier this year. So much for a watershed.
But Obama’s big announcement yesterday is actually a remake of an even older idea. Reacting to the Obama administration’s health care event, former-President Jimmy Carter aide and Brookings Institution health economist Henry Aaron told the New York Times: “I had a Rip van Winkle moment, as if I had fallen asleep in 1977 and woke up again this morning.” And just as with the Carter administration, don’t expect these health care savings to ever actually materialize. Former director of the Congressional Budget Office Robert Reischauer told the Washington Post: “It would be difficult to wring 1.5 percentage points out of this list of proposals.” Boston University health policy professor Alan Sager was even less kind, calling the Obama event, “An unrivaled set of abstractions and posturing.”
So why is an extremely popular new president barely 100 days into his administration recycling failed policy ideas from the ’70s? Math. Yesterday the White House released numbers showing the federal deficit will reach $1.84 trillion this year; $89 billion more than they forecast just this February. The day President Obama was inaugurated the deficit stood at $1.2 trillion; meaning $600 billion has already been added during his four-month presidency.
An AP poll last month shows that while Obama’s overall approval rating was 64 percent, just 49 percent approve of his handling of the deficit. And voters are not the only ones losing patience with Obama’s deficit spending. Last week investors around the world signaled Obama’s easy money days were soon coming to an end when they demanded significantly higher interest rates for 30-year Treasury bonds.
The Obama administration has emphasized repeatedly that health-care reform is the key to their deficit reductions goals. But as the Washington Post points out the White House “is backing a plan to expand coverage that would cost taxpayers between $1 trillion and $1.5 trillion over 10 years, while it has proposed health-care savings of only $309 billion.” And no one even believes those $309 billion in savings will ever materialize. So where will Obama find the money to pay for his lavish health care dreams? He doesn’t know either.
First he proposed cutting tax benefits for charities, but that suggestion has been soundly rejected on Capitol Hill. Next Obama’s budget proposed raising energy taxes on the American people by almost $80 billion a year, but the necessary Waxman-Markey legislation can’t even get out of an energy subcommittee. Obama then proposed raising taxes on U.S. corporations that compete overseas, but even his Silicon Valley business allies are calling that plan a jobs killer.
And the Obama administration’s desperate search for more money will only get worse. Nobody believes the rosy economic assumptions that are keeping the deficit projections at their current level. IHS Global Insight chief U.S. financial economist Brian Bethune told McClatchy: “If they keep playing this game, they’re going to have real credibility problems.” At least they haven’t proposed that time-traveling Romulans can rescue our financial situation. At least not yet.