Michael Linden on the deficit and health care

Why is the United States running such high deficits?

This year's deficit is mainly the result of two factors. The first is that President Bush's eight years in office left President Obama with a pretty big budget deficit to begin with. Eight years of tax cuts, and more tax cuts, and fighting two wars, and instituting a new entitlement in Medicare program that was unpaid for, put the budget out of balance, even though President Bush inherited a surplus. The second big factor is the current economic downturn. During an economic downturn, tax revenues go down because people are making less, and spending on programs like unemployment insurance go up, which also puts the budget into deficit. Those two things combined create big deficits that we're seeing right now. The President's and Congress' efforts to save the economy, to turn things around, the American Recovery and Reinvestment Act, for example, only contribute about 10 or 15 percent to this year's deficit.

What will be the biggest driver of deficits in the next 10 years?

The biggest driver of deficits in the next 10 years is absolutely going to be health care spending. Health care costs have risen dramatically over the past several decades, and if they continue to do so, they're going to really bust the federal budget. In fact, the Congressional Budget Office estimates that by 2019, health care spending will be bigger than any other category of federal spending--bigger than all domestic discretionary programs together, bigger than social security, bigger than the defense budget.

How can we begin to get deficits under control?

Well, the first task is absolutely health care reform. We can't balance the budget unless we do something about rising health care costs. But that's not going to be enough. We're also going to have to have a national conversation about paying for the government services we want. Balancing the budget is going to take some combination of reduced spending and increased taxes and revenues. And nobody likes paying taxes, but balancing the budget just on spending cuts doesn't really make sense either. It would mean cuts to things like veterans benefits, and highway maintenance, and schools, and hospitals, and those are things that we all want. So we're going to have to figure out some combination of reduced spending and higher revenues that's going to get us closer to a sustained budget.