Today at Northwestern University, the President revisited the foundation for growth and prosperity that he unveiled more than five years ago, in April 2009, at Georgetown University. In that speech, he called for investing in new energy and technologies, expanding access to education for the country’s workers and children, launching health care reform, managing our nation’s finances, and putting in place financial reform and a stronger system of consumer protections.
It’s worth taking this moment to look back at the distance the economy has come since 2009, and the work left to do to build a more durable economy for the future. When it comes to managing our nation’s finances, we face a very different picture than we did five years ago. As the chart below shows, under the President’s leadership, the deficit has been cut by more than half as a share of the economy, representing the most rapid sustained deficit reduction since World War II.
The rapid reduction in annual deficits has been driven in part by a historic slowdown in health care cost growth, with health care prices rising at the slowest rate in 50 years. These recent trends and passage of the Affordable Care Act (ACA) have improved our long-term fiscal outlook, reflected in the extended solvency of the Medicare Hospital Insurance Trust Fund and the reduction in projected Medicare and Medicaid spending. As the chart above shows, projected baseline Medicare and Medicaid spending in 2019 – just one year alone – has fallen by $261 billion, and over a decade (from 2011-2020) it has fallen by more than $1 trillion. The ACA is contributing to this slowdown by reducing Medicare overpayments to private insurers and medical providers and implementing reforms that improve quality of care and reduce hospital readmission rates. And these budgetary savings are being achieved while the ACA is expanding access to quality health care to more than 10 million Americans.
But as the President made clear today, we have more work to do. We have an opportunity now to build on the progress we’ve made in putting our fiscal house in order and recovering from the worst economic downturn since the Great Depression, by putting an end to mindless austerity and manufactured fiscal crises. Instead, we can work together to make the investments we need to grow our economy, increase opportunity, and enhance our national security, while continuing to put in place reforms that will improve our long-term fiscal position.
Brian Deese is the Deputy Director at the Office of Management and Budget.