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Budget Bust: Record Spending Could Threaten Health-Care Reform
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| President Barack Obama, flanked by Kaiser Permanente CEO George Halverson, left, and American Medical Association President J. James Rohack, speaks about health-care reform yesterday in the State Dining Room of the White House. (Charles Dharapak/AP) |
By JOE MURRAY, The Bulletin
With the economy unable to turn the corner and the recession lingering, the White House announced yesterday the anticipated federal budget deficit for 2009 would top $1.84 trillion — $89 billion more than originally predicted.
The new budget prediction served as a wake-up call for the new administration. If the number holds, the 2009 budget deficit will be four times larger than the deficit the country ran in 2008 by the time the fiscal year ends in September.
The deficit for 2009 will represent 12.9 percent of the nation’s gross domestic product and reflects the aggressive spending policy adopted by President Barack Obama.
The White House released a forecast in February, during the heat of the stimulus battle, which showed the 2009 budget topping out $1.75 trillion. Anticipating criticism from the Republican Party, Office of Management and Budget Director Peter R. Orszag attempted to lay the blame on the sluggish economy and former President George W. Bush.
“The deficits in these years (2009 and 2010), now projected to be 12.9 percent and 8.5 percent of GDP, respectively, are driven in large part by the economic crisis inherited by this Administration,” Mr. Orszag wrote in a blog posting on the White House’s Web site.
“The change in the deficit estimates reflects upward technical revisions in light of new information regarding the collection of receipts, financial stabilization efforts, and other federal programs.”
The White House also blamed higher costs related to unemployment insurance and the ailing automobile industry as some of the reasons its budget predictions were not accurate.
The news for 2010, however, looks equally bleak. White House economists predict the 2010 budget deficit will stand at $1.25 trillion, which will be $83 billion higher than earlier projections for the next fiscal year.
House Republicans have been the most vocal critics of Mr. Obama’s policy of spending the nation out of the recession, and one Texas Republican said yesterday’s grim numbers will not be the end of the economic saga.
“The government has less money to spend this year, and so it spends more — $1.5 trillion more — than it has. When the economy expands, the government expands. Worse, when the economy contracts, the government expands more,” said U.S. Rep. Ron Paul, R-Texas.
Dr. Paul, in criticizing the passage of Mr. Obama’s $3.5 trillion budget, predicted last month deficit projections would not be accurate and said: “I predict spending will top $4 trillion this year, raising the national debt by over $2 trillion when all is said and done.”
Concerns over spending deficits and rising unemployment could undermine Mr. Obama’s ambitious proposal for universal health care. But the president remained undeterred by the budgetary setback.
“We cannot continue down the same dangerous road we’ve been traveling for so many years, with costs that are out of control, because reform is not a luxury that can be postponed, it is a necessity that cannot wait,” Mr. Obama said in unveiling a health care plan he said would save families of four $2,500 in five years.
Mr. Obama predicted his health care plan would reduce national health care spending by 1.5 percent each year over the next decade. He said the savings would be $2 trillion and health care would represent a smaller portion of the nation’s gross domestic product.
Republicans, especially in light of the 2009 budget predictions, were skeptical of Mr. Obama’s health care estimates.
“The administration has yet to answer the fundamental question of how to pay for its massive multi-trillion health care plan,” said House Minority Leader John Boehner, R-Ohio.
“Will the administration raise taxes on families and small businesses? Will it ration care so that families and seniors face long waits for medical treatment? Will it borrow even more money and pass the debt on to our kids and grandkids?”
Joe Murray can be reached at jmurray@thebulletin.us
The new budget prediction served as a wake-up call for the new administration. If the number holds, the 2009 budget deficit will be four times larger than the deficit the country ran in 2008 by the time the fiscal year ends in September.
The deficit for 2009 will represent 12.9 percent of the nation’s gross domestic product and reflects the aggressive spending policy adopted by President Barack Obama.
The White House released a forecast in February, during the heat of the stimulus battle, which showed the 2009 budget topping out $1.75 trillion. Anticipating criticism from the Republican Party, Office of Management and Budget Director Peter R. Orszag attempted to lay the blame on the sluggish economy and former President George W. Bush.
“The deficits in these years (2009 and 2010), now projected to be 12.9 percent and 8.5 percent of GDP, respectively, are driven in large part by the economic crisis inherited by this Administration,” Mr. Orszag wrote in a blog posting on the White House’s Web site.
“The change in the deficit estimates reflects upward technical revisions in light of new information regarding the collection of receipts, financial stabilization efforts, and other federal programs.”
The White House also blamed higher costs related to unemployment insurance and the ailing automobile industry as some of the reasons its budget predictions were not accurate.
The news for 2010, however, looks equally bleak. White House economists predict the 2010 budget deficit will stand at $1.25 trillion, which will be $83 billion higher than earlier projections for the next fiscal year.
House Republicans have been the most vocal critics of Mr. Obama’s policy of spending the nation out of the recession, and one Texas Republican said yesterday’s grim numbers will not be the end of the economic saga.
“The government has less money to spend this year, and so it spends more — $1.5 trillion more — than it has. When the economy expands, the government expands. Worse, when the economy contracts, the government expands more,” said U.S. Rep. Ron Paul, R-Texas.
Dr. Paul, in criticizing the passage of Mr. Obama’s $3.5 trillion budget, predicted last month deficit projections would not be accurate and said: “I predict spending will top $4 trillion this year, raising the national debt by over $2 trillion when all is said and done.”
Concerns over spending deficits and rising unemployment could undermine Mr. Obama’s ambitious proposal for universal health care. But the president remained undeterred by the budgetary setback.
“We cannot continue down the same dangerous road we’ve been traveling for so many years, with costs that are out of control, because reform is not a luxury that can be postponed, it is a necessity that cannot wait,” Mr. Obama said in unveiling a health care plan he said would save families of four $2,500 in five years.
Mr. Obama predicted his health care plan would reduce national health care spending by 1.5 percent each year over the next decade. He said the savings would be $2 trillion and health care would represent a smaller portion of the nation’s gross domestic product.
Republicans, especially in light of the 2009 budget predictions, were skeptical of Mr. Obama’s health care estimates.
“The administration has yet to answer the fundamental question of how to pay for its massive multi-trillion health care plan,” said House Minority Leader John Boehner, R-Ohio.
“Will the administration raise taxes on families and small businesses? Will it ration care so that families and seniors face long waits for medical treatment? Will it borrow even more money and pass the debt on to our kids and grandkids?”
Joe Murray can be reached at jmurray@thebulletin.us
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