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A Laughable Plan
Obama's solution to overspending is more overspending.


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Rich Lowry

EDITOR’S NOTEThis column is available exclusively through King Features Syndicate.
For permission to reprint or excerpt this copyrighted material, please write to [email protected], or phone 800-708-7311, ext 246.


Treasury Secretary Timothy Geithner wasn’t playing for yucks when he visited China last week. But when he told students at a Chinese university that China’s assets in the U.S. are “very safe,” the audience burst out in laughter.

The Chinese own so much of our debt, they have a keen interest in U.S. fiscal probity, and apparently they take a dim view of our ability to achieve it. The mandarins of a notionally communist government are now forced to harangue the world’s emblematic capitalist country about its ever-spiraling public debt. Mao Zedong and John D. Rockefeller must be spinning in their graves, at an equal rate though in different directions.

The students didn’t even titter at Geithner’s most hilarious line of all: that America is going to control the cost of government by creating an expansive new government health-care program. Heretofore, a Ted Kennedy–supported health-care reform that will cost at least $1.5 trillion over ten years would have been considered new spending, plain and simple. That was before the advent of Barack Obama and of fiscally prudent overspending.

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The same way overzealous Republicans once argued that tax cuts paid for themselves, Obama Democrats argue that deficit spending pays for itself. The $700 billion stimulus bill will preserve so many jobs, it is cheaper than the alternative. The bailout of the auto companies will pay off by saving and modernizing an embattled industry. And creating a new Medicare-like health program and handing out massive health-care subsidies will end rampant health-care inflation.

Typically, the Obama administration can’t explain two things about its gloriously responsible new government program: how to pay for it and how it will achieve savings. Besides that, it’s an admirable exercise in fiscal restraint.

President Obama sent a letter to Congress last week broaching the idea of more cuts to Medicare and Medicaid than he’s already proposed, roughly doubling them from $300 billion to $600 billion over ten years. That’s still not enough. Democrats in Congress are considering getting revenue by ending the tax deduction for employer-provided health care. When John McCain endorsed this proposal last year, the Obama-Biden campaign savaged it as the largest tax increase ever proposed on the middle class.

The only way the Obama program will save money is through the sort of dislocating changes for people currently with coverage that Obama has promised he won’t impose. People would be herded into the new public plan Obama endorsed in his letter to Congress. Then, over time, costs could be squeezed through rationing or price controls imposed by an appropriately anodyne-sounding bureaucratic body. Something like the Medicare Payment Advisory Commission that Obama wants to empower to enforce savings unless contravened by a vote of Congress.

Libertarian blogger Virginia Postrel noted a report by the Council of Economic Advisers that plugged for the cost-savings potential of Obama’s reform by arguing that “nearly 30 percent of Medicare’s costs could be saved without adverse health consequences.” Just smoothing out state-by-state disparities in health-care spending would do the trick. If so, Postrel asked, why not begin health-care reform by cutting Medicare while maintaining its quality? Once the federal government has pulled off that nifty feat, it could apply its lessons to a broader reform.

This sensible minimalism is a non-starter, of course, because the true motive is further nationalizing health care, a decades-old liberal goal. The stimulus bill was an ungainly collection of old liberal priorities passed ostensibly to fight the recession. Health-care reform is an old liberal priority Obama hopes to pass under the pretense of saving the federal budget from the red ink flooding it thanks, in part, to the stimulus bill.

Whether Obama is spending or saving, creating red ink or fighting it, he’s growing government. This from the president who promised to scour the federal budget for savings, and to level with the American public about tough choices as he pursued nonideological and responsible government. The Chinese students had the right idea — cue the laughter.

Rich Lowry is the editor of National Review. © 2009 by King Features Syndicate



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