The President’s Long View

The Lehmann Letter ®

In this evening’s press conference President Obama gave his long view of the federal deficit.

1. The current recession will be responsible for a substantial portion of the projected deficit over the coming decade because a depressed economy reduces federal tax revenues and requires additional expenditures.

2. One way to reduce the long-run deficit is to reduce federal expenditures by reforming health care, Medicare and Medicaid and other programs that swell federal outlays.

3. Another way to reduce the long-run deficit is to boost revenues by enhancing economic growth through education reform and energy-conservation programs. Faster economic growth generates additional federal tax revenues.

In sum, the President told the nation, “If you want long-run deficit reduction, help me deal with today’s recession and tomorrow’s structural reforms.”

© 2009 Michael B. Lehmann