Bush Administration Predicts Record $482B Deficit in FY 2009; Projection Could Affect Next President’s Spending Plan, Including on Health Care

The "bleak outlook for the budget will crimp the ability of the next president to carry out ambitious" proposals for health care and other issues and will add to the "fiscal pressures that were already building because of the growth of Medicare and Social Security," the New York Times reports (Pear/Herszenhorn, New York Times, 7/29). The White House Office of Management and Budget on Monday released a midsession review that included an estimated federal budget deficit of $482 billion in fiscal year 2009, driven in large part because of a $150 billion economic stimulus package enacted earlier this year and slower economic growth (Sanchez, CongressDaily, 7/29). The deficit amounts for 2008 and 2009 represents approximately 3% of the overall economy, which is smaller than the deficits of the 1980s and early 1990s, according to the AP/St. Louis Post-Dispatch.

However, neither Democratic presumptive presidential nominee Sen. Barack Obama (Ill.) nor Republican presumptive presidential nominee John McCain (R-Ariz.) "is backing off on campaign promises" on health care and other issues "in light of the bleaker new figures," the AP/Post-Dispatch reports (Taylor, AP/St. Louis Post-Dispatch, 7/29). According to McClatchy/Miami Herald, Obama and McCain both "pledge to keep most taxes low while revamping the nation's health care system and strengthening its military," and, although both candidates have offered a number of proposals to reduce spending and increase revenue, neither candidate "specifically addresses how much saving his ideas could generate, particularly if the economy remains sluggish, which holds down federal revenues" (Lightman/Douglas, McClatchy/Miami Herald, 7/29).

In addition, the Wall Street Journal reports that neither Obama nor McCain have offered specific proposals to reduce the federal budget deficit (McKinnon/Chozick, Wall Street Journal, 7/29). In an effort to reduce spending for entitlement programs, Obama has promised to decrease waste in Medicare and implement reforms to make the health care system more efficient, and McCain is "similarly vague, saying he wants to 'modernize'" the programs "but offering no details," according to McClatchy/Miami Herald (McClatchy/Miami Herald, 7/29).

Health Care Reform Effort
A bipartisan group of 16 senators on Monday in a letter asked Obama and McCain to assign their top advisers to work with lawmakers on a proposal to reform the health care system and make health insurance coverage more affordable, CongressDaily reports. The 16 senators -- eight Democrats and eight Republicans -- have co-sponsored a bill (S 334) introduced by Sen. Ron Wyden (D-Ore.) that would establish a universal health insurance system in the U.S. (CongressDaily, 7/29).

The legislation would effectively replace the employer-sponsored health care system with a system in which individuals would purchase private health insurance through state-administered purchasing pools. The legislation would require all residents to obtain health insurance. The bill would allow employers to continue to provide health insurance (Kaiser Daily Health Policy Report, 7/10).

In the letter, the senators wrote, "Like you both, we are deeply committed to avoiding a replay of the bitter, highly polarized health reform effort during the 1990s" (CongressDaily, 7/29).

Opinion Piece
Obama and other Democrats continue to advocate for a "government takeover of health care," as they have since the early 1990s, House Ways and Means Health Subcommittee ranking member Dave Camp (R-Mich.) writes in a Washington Times opinion piece. According to Camp, the "rhetoric has improved," but the "policy has not," as the proposal "still requires a massive increase in taxes that we cannot afford, ... rations care, limits choices and limits procedures just as it has in Western Europe and in Canada."

He writes, "Republicans are offering a better alternative" that includes a proposal to "drive down costs and give everyone access to quality, affordable health care." The proposal would provide all U.S. residents with tax credits to purchase private health insurance, eliminate legal and regulatory barriers that increase costs, implement health care information technology and focus on prevention and wellness, Camp writes. He concludes, "There is an alternative to government owned and operated health care, and Republicans are providing it" (Camp, Washington Times, 7/29).