Wednesday, July 08, 2009

Stimulus v. Health Care Reform

President Barack Obama wants Congress to pass a health care bill by the end of August but the latest job reports and Vice President Joe Biden's admission that the administration "misread the economy" may slow his momentum. The economic stimulus package which Obama pushed through Congress on an partisan vote (only two Republican senators voted for it) isn't working as of yet.

On ABC's "This Week," Vice President Biden said this can be attributed to, at least in part, to the fact that the bulk of the funds have yet to be spent. We won't know if the stimulus package is working until that money is spent on projects that create jobs. And Biden is right - up to a point. It might save many Americans their jobs but we don't know whether it will save enough to offset the loss in jobs that will occur when states either (a) close government programs or (b) raise taxes in order to balance their budgets.

Paul Krugman, a distinguished economist who writes a biweekly column for The New York Times, wasn't impressed with the President's economic stimulus package when it was unveiled.

The administration probably opted against a larger economic stimulus package for two reasons. First, members within the administration were looking for some Republican votes and they did not believe they could get a larger spending bill to the president's desk with bipartisan support. Second, and this was probably as important to the White House, they did not want to provide the Republicans with an argument against health care reform by suggesting that we are spending too much.

Though administration officials believe (correctly in my view) that both, a larger economic stimulus package and health care reform are needed, neither were politically feasible. The president probably thought he needed to choose whether he would push for a large economic stimulus package in the first year while putting health care reform on the back burner or push for a smaller economic stimulus package and health care reform in his first year.

How he may get neither when both were needed. The economic stimulus package that was passed earlier this year may not create enough jobs to offset the continued loss in jobs and that continual loss in jobs leads to the rising number of people in need of health care.

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