Director Orszag is correct that neither the Medicare drug benefit nor the tax cuts were offset with other spending cuts or tax increases. He fails to tell you that in 2003 Congressional Democrats wanted to spend more on Medicare drugs than the bill President Bush signed into law. (President Obama was a State Senator at the time.) He fails to tell you that President Obama did not propose means-testing the drug benefit to save money, as President Bush tried to do. He also fails to tell you that President Obama’s budget proposes to continue $3.2 trillion of the 2001 and 2003 tax cuts and the AMT patches that followed them. (See the first few lines of Table S-5.) He also fails to tell you that his $9 T figure includes $835 B for the stimulus and associated interest costs that President Obama clearly did not inherit.
While he wants to argue that these “$5 trillion” are “not his fault,” the same could be said about all federal spending and taxes in place when President Obama took office. Had Medicare not been enacted in 1965 or had Social Security benefits not been indexed to wages rather than inflation in the 70’s, our budget would be in surplus today (if nothing else had changed). It is misleading to attribute future deficits to any particular past policy change, as future deficits are the result of a calculation assuming unchanged extensions of all past policy changes into a path for total future spending and total future tax receipts. Director Orszag is picking and choosing particular policies to try to assign blame. How much of future deficits are because future Medicare spending was not offset when Medicare was enacted in 1965?
