How does Medicare and War influence deficit?

As I mentioned in former post, the two candidates are deliberately trying to avoid the huge problem we are facing in deficit. It is understandable that they don’t want to threat their voters and there are indeed not much they can promise. Maybe some of you still remember what Bush promised during the 2004 presidential campaign. Bush promised to cut the deficit by half and consequently we can conclude that a promise on deficit is not that convincing. In fact, according to Congressional Budget Office, the federal government is going to run a deficit for the next ten years. They are expecting the deficit to become smaller in 2010 just because Bush’s tax cuts will expire on schedule. However, McCain wants to make the tax cuts permanent , while Obama says he’ll at least extend the cuts for middle-class taxpayers. Thus, we shouldn't put too much hope in increasing revenue to relieve the situation. With the passed bailout, no matter who win the election, the next president doesn’t have much money to spend in 2009 fiscal year.


Personally, I’m not too worry about the economy which influences the cyclical component of deficit since economy is always in cycle. As some Intellectuals point out, the biggest threat comes from expenditures on health care. Hence, I want to focus on the roles of health care and war play in future deficit. The large population of Baby Boomer born in 1946-1964, which used to bring market increased consumptions and work force, now brings a bomb of health care entitlements. Government has to spends large sum of money on social secure programs and Medicare. This piece of structural deficit will inevitably increase in the following fiscal year. As far as I’m concerned, maybe the government should seek expense cuts on the war which is estimated costing $11 billion per month.

By comparison between health care expense during Clinton administration and Bush administration, I want to explore how greatly did health care influenced government spends. What did we do financially to prepare for the bomb (which is quite predicable) and how can it relieve pressure on budget deficit. How much money can Obama/McCain’s plan on war can save that make the budget deficit available to deal the bomb.

References:
http://www.brookings.edu/opinions/2008/0525_deficit_rivlin.aspx
http://www.facingup.org/blog/scottbittle/2008/09/deficit-train-picks-steam
http://www.facingup.org/tags/federal-deficit
http://www.cbsnews.com/stories/2008/02/12/national/main3822385.shtml
http://www.foxnews.com/story/0,2933,392043,00.html
http://news.bbc.co.uk/2/hi/business/7529372.stm
http://www.pbs.org/newshour/bb/social_security/july-dec04/deficit_10-12.html#
Useful links:
http://www.economagic.com/em-cgi/data.exe/fedstl/fgdef
http://www.treasurydirect.gov/govt/govt.htm
http://www.oecdobserver.org/news/fullstory.php/aid/1896/US_current_account:_Dealing_with_the_deficit.html
http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html
http://www.oecdobserver.org/