Obama's grand economic ambitions

Tackling the economic crisis has been the centrepiece of President Obama's first 100 days in office.
It is not yet clear whether the $787bn (£502bn) stimulus package or the $1 trillion bank bailout plan will succeed in stemming the sharp fall in the US economy.
But it is already clear that President Obama has even bigger economic ambitions.
Unlike the Bush administration, he sees a central role for the government in transforming the US economy and ultimately rebuilding US power and prestige in the world.
He has already signalled that despite the current economic problems, he wants to reform the US healthcare system, improve access and standards in education, and introduce green technology.
'Unsustainable'
But all these measures could be expensive, and his biggest challenge is reconciling his bold ambitions with reducing the huge budget deficit, projected to reach $1.7tn this year, 12% of GDP.

US fiscal policy is on an unsustainable course
Douglas Elmendorf
Congressional Budget Office director

The yawning deficit (graphic)
The president has recognised the need to bring the budget back into balance in the long term, after the economy begins to revive, but he has been vague about the details of how to do so.
The federal budget will face additional pressures in the next decade as the baby boomer generation begins to retire, adding to social security and Medicare costs.
The Congressional Budget Office estimates that by the end of the president's first term in office, the deficit will still be over $500bn.
"US fiscal policy is on an unsustainable course," says CBO director Douglas Elmendorf.
Already some fiscally conservative congressional Democrats, known as blue dogs, are expressing doubts that all of his spending plans are affordable. Together with the Republicans, they could have the power to block his plans.
The key battle is likely to be over healthcare reform, the most difficult economic and political challenge President Obama faces.
The rising cost of healthcare, which could reach $4tn within the next five years, or 20% of GDP, is threatening the government's budget balance and the competitiveness of US companies alike.
Half of total healthcare spending is by the federal government and the other half by companies who provide health insurance for their workers.
Health costs
Health costs are increasing at 5% a year above the rate of growth of the economy, a pace which is clearly unsustainable.

Nurses call for universal healthcare at a rally in Los Angeles
At the same time, President Obama is committed to bringing the 15% of the population which lacks any health insurance - around 45 million people - back into the system.
Earlier estimates suggested that his plan could cost up to $200bn per year, and the president has allocated a healthcare reserve fund in his budget proposals that will grow to $646bn.
Some of this is to be paid by eliminating tax breaks for higher-income earners that were introduced by the Bush administration.
But it is very likely that Americans will have to get used to a less generous healthcare system, with more controls over what doctors and hospitals can spend.
During the election, President Obama signalled that he would retain the basic structure of the US healthcare system, with employer-based insurance for those in work, but extend coverage by offering uninsured workers a version of the federal health plans offered to government employees.
However, the healthcare industry, a big and powerful lobby in Washington, is now organising against this part of the proposal, with the support of the Republicans.link...