On Tuesday, President-elect Obama sought to reassure those understandably uneasy about the prospect of a ballooning federal budget deficit. He must tread a narrow line. The weakened economy makes necessary the planned $775 billion economic stimulus package. At the same time, Obama has the task of signaling that eventually a sufficient measure of fiscal discipline will be applied.
Thus, the president-elect highlighted his willingness ”to make some very difficult choices in how we get a handle” on the deficit. …
The timing couldn’t be worse, the country facing a string of deficits after the Bush White House presided over a doubling of the national debt and with retiring baby boomers now beginning to draw on programs such as Social Security, Medicare and Medicaid … The analysts at the Center for Budget and Policy Priorities note that rising health-care costs will be the ”single largest cause” of increased federal spending.
Thus, the ”very difficult” course for the new president: He rightly wants to achieve universal coverage. He also must find ways to restrain health-care spending …
Yes, pump ample and immediate money into the economy. In doing so, don’t lose sight of the need for an exit strategy from the torrent of red ink.