The Congressional Budget Office (CBO) says that the federal budget deficit in 2009 was going to be $1.2 trillion before passage of the “stimulus” bill. Now, it’s likely to be closer to $1.4 trillion. President Obama promised in his speech to cut it in half by the end of his term, which others have taken to mean fiscal year 2013 (which would start October 1, 2012). So he is promising a deficit of about $600 billion in 2013, it would seem.

Is this something to boast about? Many commentators have suggested that this will be an impossible goal. But the projections all assume restoration of economic growth and a fading of the financial crisis. If that indeed occurs, CBO sees the deficit falling all on its own to about $260 billion in 2013. (If the economy remains sour for that long, all bets are off, of course.)

In effect, the president is redefining what’s expected to happen in the public’s mind to make his task much easier. He is leaving more room than it appears to accommodate his spending plans.

On health care, there was much talk of eliminating inefficiency, rooting out waste in Medicare, and using “comprehensive reform” to cut costs in public programs. But how, exactly? No coherent vision was presented. The listener was left with the impression that the money is there for the taking if only the special interests can be conquered. What he really meant is that the government is going to develop new and clever ways to get at this kind of big savings. Implicit in everything he said is a tremendous faith in government to manage the entire health sector more competently than it has managed Medicare and Medicaid for four decades.

What the president clearly has no intention of doing this year is what’s actually needed: restructuring of health-care policy so that consumers and suppliers of services have strong financial incentives to drive out waste themselves.

[Cross-posted at the Corner]


February 25, 2009