Vol. 73/No. 3      January 26, 2009

Obama announced the creation of a White House position to “scour this budget, line by line, eliminating what we don’t need, or what doesn’t work.” He appointed Nancy Killefer as “chief performance officer” to oversee this.

In an interview January 11 on ABC’s “This Week,” Obama singled out the program Medicare Advantage as one he would eliminate. Medicare Advantage is an alternative Medicare plan in which the government subsidizes private insurers. Copayments tend to be lower and patients can get more benefits than under the regular Medicare plan.

Obama argued that Medicare Advantage costs the government more than regular Medicare and “doesn’t necessarily make people on Medicare healthier.” He claimed that the savings from cutting Medicare Advantage could be used to provide more funding for health care.

“We are going to have to make some tough choices under my watch,” the president-elect said.

Interviewer George Stephanopoulos asked him, “[A]re you really talking about over the course of your presidency some kind of a grand bargain? That you have tax reform, health care reform, entitlement reform, including Social Security and Medicare where everybody in the country is going to have to sacrifice something, accept change for the greater good?”

“”Yes,” Obama replied. “Everybody is going to have to give. Everybody is going to have to have some skin in the game.” Obama’s nominee for Council of Economic Advisers, Christina Romer, released a report January 9 on the economic stimulus plan the new administration is proposing.

The report projects giving “business investment incentives” to increase production and thus encourage employers to hire more workers. Some 90 percent of the estimated 3.7 million jobs created will be in private business. Thirty percent of these will be in construction and manufacturing and a sizable proportion in retail trade and leisure and hospitality, two other sectors where unemployment has soared.

“Not all of the increased output reflects increased employment,” the report says. “[S]ome comes from increases in hours of work among employed workers and some comes from higher productivity.” Millions will be left jobless by the program, which envisions reducing unemployment by a mere 1.8 percent by the end of 2010, when the unemployment rate is projected to be 5 percent.

The report says, “The recovery plan is likely to create jobs paying a range of wages.” There is no proposal to enforce union-scale wages.

The package includes a temporary increase in food stamps and a temporary expansion of unemployment insurance, funds for state governments to prevent certain health and education cuts, and a one-time tax cut of $500 for individuals and $1,000 for couples.  
 
 
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