Health care wasteful cost cutting part of health care reform
28 11 08 - 14:27
Obama vows to slash wasteful federal spending
By Richard Wolf and David Jackson, USA TODAY
CHICAGO — Faced with an unprecedented federal budget deficit of $1 trillion or more next year, President-elect Barack Obama vowed Tuesday to do what most presidents before him have tried: cut wasteful spending.
Like President Bush, Obama promised to target wealthy farmers who receive federal aid. Like Bill Clinton, he stressed the importance of reducing health care spending. Like Ronald Reagan, he pledged to go line by line through the federal budget in search of reductions. Like Jimmy Carter, he pledged to target programs that have outlived their usefulness.
What tied Obama's predecessors together was their desire to hold down federal spending — and, to varying degrees, their inability to do so. Even though Clinton finally produced budget surpluses in the late 1990s, health costs continued to soar.
"Every president-elect has promised spending cuts, but they rarely happen," said Brian Riedl, budget analyst at the conservative Heritage Foundation. "Every federal dollar spent, no matter how wasteful, will be defended by whoever receives it."
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Enter Obama, who named two young budget experts Tuesday to head up the White House Office of Management and Budget. He chose Peter Orszag, 39, the Congressional Budget Office director, as his budget director, subject to Senate confirmation. Orszag, an expert on health care and Social Security, served in Clinton's White House and later co-founded the Brookings Institution's Hamilton Project to focus on economic research and policy.
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Obama also selected Rob Nabors, 37, chief of staff at the House Appropriations Committee, to be deputy budget director.
The president-elect said he, like his predecessors, will go after sacred cows. "We can't sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of politicians, lobbyists or interest groups," Obama said.
In one line, Obama summed up the forces against him:
• Members of Congress who for decades have refused to give up "earmarks," or parochial programs and projects. In 2008, the government spent about $16.5 billion on earmarks. During four years in the Senate, Obama requested $860 million, according to Taxpayers for Common Sense — but none this year.
• Corporate lobbyists that persuade members to insert billions of dollars in tax breaks into the Internal Revenue Code.
• Special-interest groups that fight for spending increases during each year's congressional appropriations process.
Those forces have defeated many a president before. Even so, some fiscal conservatives believe Obama may have a better chance to make good on his vows because of the mandate for change he received from 53% of voters.
"This gives Barack amazing power to take on the special interests," said Rep. Jim Cooper, D-Tenn., a leader among fiscal conservatives in Congress. "Think of the farm lobby now."
Obama singled out farm subsidies Tuesday, citing a report from the Government Accountability Office that found more than 2,700 farmers who received federal payments from 2003 to 2006 each had income above $2.5 million.
Bush had proposed eliminating subsidies for farmers with adjusted gross incomes above $200,000. He vetoed the farm bill but was overridden by Congress, which set a $750,000 limit — $1.5 million for married couples.
Obama also pointed to electronic medical records as an area that could save money. That, too, has been a Bush priority. In 2004, Bush set a goal for most people to have electronic records by 2014.
And each year, Bush has proposed eliminating or making big reductions in hundreds of programs — only to be mostly rebuffed by Congress. This year, he targeted 151 programs worth $18 billion — less than 1% of the budget — but Congress ignored most of the proposals.
"So far, the constituencies that defend those dollars have won," said Sen. Judd Gregg, R-N.H., top Republican on the Senate Budget Committee. Still, with big Democratic majorities in Congress and Republicans inclined to support budget cuts, he said, "There are areas of opportunity here."
Perhaps the greatest opportunity is in an area that has been Orszag's specialty at the Congressional Budget Office: identifying potential cost savings in health care, which he has called "the nation's central fiscal challenge."
Orszag believes that more expensive care isn't always better care, and that costs can be cut without damaging outcomes. Maya MacGuineas of the bipartisan Committee for a Responsible Federal Budget called him "the leading advocate in the country for controlling health care costs."
"Health care reform will be an opportunity to show that you can marry a major expansion of coverage with taking a lot of inefficiencies and excessive cost growth Â… out of the economy," said Gene Sperling, a budget expert at the liberal Center for American Progress and former top adviser to Clinton.
Wolf reported from Washington