Ignoring Congressional Budget Office (CBO) estimates showing health care reform will reduce deficits, a Wall Street Journal editorial asserted that President Obama should "[d]rop the health-care bill" if Democrats "really are serious" about fiscal responsibility. The editorial further attributed all of the fiscal year 2009 spending to Obama, but the increases in spending and the deficit also reflect the impact of policies enacted under former President Bush.
WSJ: Dems should "[d]rop the health-care bill" if they are "serious" about fiscal discipline
From the January 27 Wall Street Journal editorial:
If the middle-class tax cuts remain, the AMT doesn't soak the middle class and spending grows at its historic norm, then CBO concedes "the deficit in 2020 would be nearly the same, historically large, share of GDP that it is today and the debt held by the public would equal nearly 100% of GDP." Buongiorno, Italia.
Oh, and none of this includes a penny for ObamaCare.
The tragedy is that Mr. Obama's fiscal conversion is coming a year too late, assuming it is now real. If the President and his party really are serious, they can do more than promise a spending freeze after 2012. They can stop spending more now: Drop the health-care bill, cancel the unspent stimulus spending from last year, kill the $150 billion new stimulus that has already passed the House, and bar all repaid bailout cash from being re-spent. Everything else is marketing.
CBO: Health care reform bills reduce deficits over next 10 years and beyond
CBO: Senate bill yields "a net reduction in federal deficits of $132 billion" over 10 years. On December 19, 2009, CBO reported of the Senate bill incorporating the manager's amendment:
CBO and JCT estimate that the direct spending and revenue effects of enacting the Patient Protection and Affordable Care Act incorporating the manager's amendment would yield a net reduction in federal deficits of $132 billion over the 2010-2019 period.
CBO also estimated on December 20, 2009, that the bill will continue to reduce the deficit beyond the 10-year budget window that ends in 2019 "with a total effect during that decade that is in a broad range between one-quarter percent and one-half percent of GDP."
CBO estimated the House bill will result in $138 billion in deficit reduction through 2019. On November 20, 2009, CBO reported of the House health care reform legislation, "CBO and JCT now estimate that the legislation would yield a net reduction in deficits of $138 billion over the 10-year period." CBO also stated in its November 6 estimate that "[i]n the subsequent decade, the collective effect of its provisions would probably be slight reductions in federal budget deficits. Those estimates are all subject to substantial uncertainty."
Ignoring Bush-era spending, WSJ asserted Obama "created" the fiscal reality through "record spending spree"
WSJ attributed fiscal year 2009 spending to Obama. In the January 27 editorial, the Journal called Obama "the spender who has sent the federal deficit to levels unseen since World War II" and asserted that Obama "created" this "fiscal reality." Although the Journal acknowledged that "Mr. Obama did inherit a recession" which caused a "collapse in revenues," the editorial continued to attribute all fiscal year 2009 spending to Obama. The Journal stated: "Obama's major contribution to deficits has been a record spending spree. In 2007, before the recession, federal expenditures reached $2.73 trillion. By 2009 expenditures had climbed to $3.52 trillion. In 2009 alone, overall federal spending rose 18%, or $536 billion." The editorial further stated, "CBO shows that over the first three years of the Obama Presidency, 2009-2011, the federal government will borrow an estimated $3.7 trillion," despite the fact that this figure includes spending approved under Bush, who was in office during the first third of fiscal year 2009 and presided over major commitments of federal funds in response to the recession.
CBO: TARP, Fannie, Freddie commitments comprised much of spending increase in FY 2009. CBO stated in its January 2010 Budget and Economic Outlook that "[m]uch of the rise in outlays in 2009 came from mandatory programs." CBO added, "Three initiatives accounted for nearly two-thirds of that increase. Outlays recorded for the Troubled Asset Relief Program (TARP) totaled $152 billion in 2009; net payments to Fannie Mae and Freddie Mac accounted for another $91 billion; and fiscal stimulus legislation, the American Recovery and Reinvestment Act of 2009 (ARRA), increased mandatory outlays by $80 billion." The spending for TARP and the Fannie and Freddie conservatorship was approved before Obama was elected.
Spending for unemployment benefits, Medicaid increased as result of recession. CBO also stated of fiscal year 2009:
Outlays for Social Security, Medicaid, and Medicare grew at a combined rate of 13 percent (or by $154 billion) in 2009, with nearly one-third of the increase coming from ARRA funding. With that stimulus funding excluded, Social Security outlays rose by 9 percent ($53 billion) last year, primarily because the 5.8 percent cost-of-living adjustment that took effect in January 2009 was the largest annual adjustment since 1982. Medicaid spending (excluding stimulus funding) increased by 9 percent ($18 billion) in 2009--exceeding its 7 percent average annual growth rate of the previous 10 years--largely because higher unemployment boosted enrollment in the program. Medicare outlays (including an offset for premium payments) also rose at a faster rate than the average of the past decade, growing by 10 percent ($39 billion).
In addition, payments for unemployment benefits rose by $76 billion in 2009, pushing outlays for that program to more than double the level recorded in 2008. The jump was caused by substantially higher unemployment as well as increased and extended benefits to unemployed workers ($27 billion from ARRA and $17 billion from other legislation). As a whole, all other mandatory spending rose by 5 percent ($17 billion) in 2009.
New York Times: Obama policies are "responsible for only a sliver of the deficits." According to a budget analysis by The New York Times, "Mr. Obama's main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies -- together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama -- account for 20 percent" of the increase between the FY 2008 and FY 2009 budget deficit estimates. The New York Times wrote that 70 percent of the increase is attributed to a combination of economic hardships, including "the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists' assumptions about how much in taxes the government would collect in future years" and "new legislation signed by Mr. Bush ... like his tax cuts and the Medicare prescription drug benefit."
CBO projected outlays of $3.5 trillion and deficit of $1.2 trillion for FY 2009 before Obama took office. On January 7, 2009, CBO stated in its Budget and Economic Outlook that "[w]ithout changes in current laws and policies, CBO estimates, outlays will rise from $3.0 trillion in 2008 to $3.5 trillion in 2009." This estimate included $240 billion -- in contrast to the $91 billion recorded at the end of fiscal year 2009 -- for "incorporating the two housing GSEs into the federal budget." Before Obama took office or signed any legislation, CBO had estimated that the deficit would be $1.2 trillion for fiscal year 2009.