Did I just see a trial balloon launched? Over at a Wall Street Journal conference, Christina Romer, chairman of President Obama’s Council of Economic Advisers had this to say about deficit reduction:
Guess what? It turns out the Chinese are kind of curious about how President Barack Obama’s healthcare reform plans would impact America’s huge fiscal deficit. Government officials are using his Asian trip as an opportunity to ask the White House questions. Detailed questions.
First, the nub of the WH idea:
The White House is looking to cut its budget deficit by using some unspent funds from the U.S. government’s Troubled Asset Relief Program (TARP), the Wall Street Journal said, citing people familiar with the matter.
I spent all morning at a Senate Budget Committee hearing looking at how to create a special commission that would devise a plan to fix America’s long-term budget shortfall. This would be like the base-closing commission where a panel — made up mostly of senators and congressman — would submit a plan to Congress that would have to be voted on — up or down, no amendments.
If you care about bending the curve of long-term healthcare costs – downward, I should emphasize – then it is tough not to conclude that Democratic efforts at healthcare reform are a failure. The essential money-sucking structure of US healthcare would remain intact. As the NYTimes finally figures out:
Here is OMB Director Peter Orszag at NYU yesterday:
Our fiscal future is so dominated by health care that if we can slow the rate of cost growth by just 15 basis points per year (that is, 0.15 percentage points per year), the savings on Medicare and Medicaid would equal the impact from eliminating Social Security’s entire 75-year shortfall.
The great Andy Busch of BMO Capital Markets sees some problems down the road:
It’s called carry, but not like currency carry. As most know, banks can fund themselves at 0.1%-0.25% as the Federal Reserve keeps Fed Funds at 0.0%-0.25%. Then banks are incentivized to find the safest, highest return they can with this cash.