Monday, July 20, 2009

Health care reform: Why the rush?

President Barack Obama says Congress needs to tackle health care reform before the August recess, but many members of his own party are asking: “Why the rush?”

The answer is twofold: Most presidents enjoy the typical “honeymoon” with voters during the first six months after their elections and the former Illinois Senator is no exception. His popularity ratings, while slumping in the last couple of months, are still fairly high,
According to an ABC News/Washington Post poll released July 20, 59% of Americans still think Obama is doing a good job, but that’s down from a peak of 72% when he took office.

Moving quickly, therefore, means he can leverage his personal popularity and push otherwise fence-sitting lawmakers into helping him achieve his top priorities. Thus, the need for speed.

But I hope the president also understands another underlying component of this debate. The rest of his term will be the equivalent of a living, governing hell without fixing the rising costs of government-provided health care, primarily Medicare and Medicaid.

The new Congressional Budget Office Director, Doug Elmondorf, explained why health care reform is so important to all of us when he testified before the Senate Budget Committee last week. It read like a version of “Scary Movie,” without the laughs. Here are a couple of excerpts:

“Under current law, the federal budget is on an unsustainable path---meaning that federal debt will continue to grow must faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging population will cause federal spending to increase rapidly under any plausible scenario for current law.”

“For decades, spending on the federal government’s major health care programs, Medicare and Medicaid, has been growing faster than the economy. CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined, will grow from roughly 5% of Gross Domestic Product (GDP) today to almost 10% by 2035 and more than 17% by 2080.”

“Federal spending on Medicare, Medicaid and Social Security will grow relative to the economy both because health care spending per beneficiary is projected to increase and because the population is aging.”

“CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41% of GDP at the end of fiscal year 2008 to 60% at the end of fiscal year 2010.

Had enough? Let’s hope the Chinese and others who hold the majority of our debt, have not.
But here are two more “nuggets” from his testimony that drive home the threats to every farmer, rancher and business owner in the U.S.

"CBO’s long-term budget projections raise fundamental questions about economic sustainability. If outlays grew as projected and revenues did not rise at a corresponding rate, annual deficits would climb and federal debt would grow significantly. Large budget deficits would reduce national savings, leading to more borrowing from abroad and less domestic investment, which in turn, would depress income growth in the U.S. Over time, the accumulation of debt would seriously harm the economy. Alternatively, if spending grew as projected and taxes were raised in tandem, tax rates would have to reach levels never seen in the U.S.”

“Policymakers could mitigate the economic damage from rapidly rising debt by putting the nation on a sustainable fiscal course, which would require some combination of lower spending and higher revenues than the amounts now projected. Making such changes sooner rather than later would lessen the risks that current fiscal policy poses to the economy.”

President Obama has said that this expansion of health care coverage to millions of Americans must not drive up the deficit over the next 10 years. That's a worthy goal, but the health care reform packages emerging from House Committees don’t appear to meet that test. Something this big and this important is going to take more time to get it right.

Agriculture News, Farm Policy, and Rural Policy

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