TOO FEW LEADERS:

Fiscal frustrations: George Bush's budget has scant chance of becoming law. Too bad, for it contains some good ideas. (The Economist, 2/08/07)

Where Mr Bush and Congress will differ most is in their appetite for attacking big entitlement schemes, particularly Medicare. The government health plan for the old and disabled is widely known to be the source of America's biggest long-term fiscal problem, thanks to an ageing population and rapidly rising medical costs.

Mr Bush's budget takes some useful snips at the behemoth. For instance, he wants to introduce some means-testing to the recent prescription-drug benefit and broaden the means-testing that already exists in the rest of Medicare. More affluent old people would pay higher premiums for their health-insurance coverage. Mr Bush also intends to trim payments to many medical providers by reducing the automatic inflation adjustment they get every year.

The immediate impact will not be huge. Overall, the Bush budget aims to slow entitlement spending by almost $100 billion over the next five years, with around half the savings coming from Medicare. But over the longer term the reforms would yield significant savings. The present value of Medicare's financial hole over the next 75 years is the astonishing sum of $32 trillion. The White House estimates that its plans would reduce that gap by some $8 trillion.

Since every politician in Washington knows that Medicare reform is essential, these proposals ought to be taken seriously. Yet they have been assailed from all sides.

It's really conspicuous the degree to which America has only one leader these days on the major issues. Contrast that to the last cycle when George W. Bush, Newt Gingrich, and Bill Clinton were all on the same page. It'll be interesting to see who moves first to stake out that Third Way ground.

Posted by Orrin Judd at February 8, 2007 7:56 PM