Obama Faces Hurdles on Health Care, Stimulus

July 13, 2009— -- Back from his overseas trip, President Barack Obama returns his focus to health care and the stimulus package, as the two issues face mounting criticism.

The president faces a number of hurdles in his push for health care changes, as the effort has gone from platitudes and rhetoric to cold, hard legislation, with tough choices on how the program will be paid for, or whether it will include a public, government-run health insurance plan.

Obama wants to see health care legislation pass through both the House and Senate before the August recess, but Republicans, and even some Democrats, say that is unlikely.

The president today had stern words for those critics.

"It's the same Washington thinking that has ignored big challenges and put off tough decisions for decades. And it is precisely that kind of small thinking that has led us into the current predicament," Obama said while announcing Dr. Regina Benjamin as his pick for U.S. Surgeon General. "So make no mistake. The status quo on health care is no longer an option for the United States of America."

"We are going to get this done. Inaction is not an option. And for those naysayers and cynics who think that this is not going to happen, don't bet against us," he said. "I understand people are a little nervous and a little scared about making change. ... The muscles in this town to bring about big changes are a little atrophied, but we're whipping folks back into shape."

Critics of the president's plan take issue with costs and the idea of a government-run health insurance plan.

"Republicans very much want reform but not on the backs of the American people with the kind of taxes and potential rationing of care that would result," said Sen. Jon Kyl, R-Ariz, on "This Week With George Stephanopoulos." "There is no chance that it's going to be done by August. President Obama was right about one thing. He said if it's not done quickly, it won't be done at all. Why did he say that? Because the longer it hangs out there, the more the American people are skeptical, anxious, and even in opposition to it."

But administration officials say the president is hopeful and sees the finish line in a chance to revamp health care for the first time in modern history. At a news conference marking the end of the G-8 Summit in Italy, the president resonated that optimism.

"We're closer to that significant reform than at any time in recent history," he said when asked to refocus on his domestic agenda at the speech in L'Aquila, Italy. "That doesn't make it easy. It's hard. But I'm confident that we're going to get it done."

When questioned whether it is a do-or-die before Congress breaks in August, Obama said, "I never believe anything is do-or-die. But I really want to get it done by the August recess."

The bill faces resistance even from some conservative Democrats in Congress on who would pay for it.

Today, the president argued that his plan would not add to the deficit over the next decade, though Congressional Budget Office estimates of different congressional proposals have put the various price tags at close to a trillion dollars or more. Obama also repeated the promise that those making $250,000 a year or less would not pay more in taxes.

There is also heated debate about whether there should be a public-option plan, which would entail a government-run insurance program to compete with the private industry. Democrats like House Speaker Nancy Pelosi, D-Calif., have said that any plan going through Congress will have some form of public option, but Republicans argue that it will stifle the private market and dent competition.

As he takes his stimulus and health care push to Warren, Mich., Tuesday, the president is likely to push lawmakers to come together around a set of common principles and press them to find ways to compromise on key issues and put a system in place that would strip inefficiencies and help small businesses and families.

Heated Battle on the Stimulus

The president's stimulus plan is also drawing the ire of some Republicans.

In an op-ed in the Washington Post Sunday, the president defended his $787 billion stimulus plan from concerns and criticism that it has been ineffective, asking Americans to be patient.

"The American Recovery and Reinvestment Act was not expected to restore the economy to full health on its own but to provide the boost necessary to stop the free fall," Obama wrote. "So far, it has done that. It was, from the start, a two-year program, and it will steadily save and create jobs as it ramps up over this summer and fall."

Administration officials point to the roughly $100 billion that has been invested in infrastructure projects and tax cuts, and say that the bulk of the stimulus spending will occur in the next 12 months.

But some Republicans say the stimulus plan has failed to work the way it was intended.

There is also the issue of expectations. Asked by ABC News how Americans should measure whether his economic plans are correct, the president said, "My initial measure of success is creating or saving 4 million jobs."

But unemployment is a lagging economic indicator, meaning job growth will likely be one of the last parts of the recovery to start working. With unemployment rising to nearly 10 percent, critics say the stimulus hasn't begun to save or create 4 million jobs.

"I think it's now acknowledged, it hasn't done what it set out to do," Kyl said.

"All governors like 'free money' coming to the state. My governor is no different. But the reality is that it has added to our deficit. ... It promised to ... save 4 million jobs. We've now lost another 2 million jobs. The reality is it hasn't helped yet."

Critics are not buying the president's argument that the economic situation could be worse without the recovery package.

"We're finding out only 10 percent of the money has been spent, a lot of it has been on ridiculous projects," Sen. John McCain, R-Ariz., said on NBC's "Meet The Press" Sunday. "It included tax cuts, but a lot of them were in the wrong direction. ... So what they promised us would be the result of this stimulus in a short-term has turned out not to be true."

Talk of a second stimulus -- which some Democratic lawmakers support -- has elicited an even harsher response from the GOP.

"I think it's a dumb idea, I think it will not work," the ranking Republican on the Senate Banking Committee, Sen. Richard Shelby, R-Ala, told Fox News. "I know a second stimulus would be a mistake because we're going to borrow that money. And it won't turn the economy around. A lot of things will turn the economy around, but I don't believe the stimulus will."

But, despite the criticism, the president and his team argue that jobs are the last thing that will improve in this economy and cite improvements in the housing and credit markets as signs of progress.

"We must let it work the way it's supposed to, with the understanding that, in any recession, unemployment tends to recover more slowly than other measures of economic activity," Obama wrote in the Washington Post op-ed.

His supporters echo that optimism, saying that job creation is likely to accelerate as more stimulus money is spent.

"This is not a four-month plan, this is a two-year plan," Sen. Charles Schumer, D-N.Y, said on "Meet The Press" Sunday. When you have such an awful situation, the worst economy that we've had in December, the president hamstrung because the usual tools of getting us out of a recession were lowering interest rates but interest rates were already at 1 percent, you need a strong, long-term plan that has a number of phases.

"Now you're going to see the second part of the stimulus, which is the job creation part, really kick in."

The president's Council of Economic Advisers released a report today detailing how the U.S. labor market is expected to grow and develop in the next few years. Per the report, the expansion in the health care and environment-related sectors will likely create more employment opportunities. It also notes the impact the stimulus has had on construction and manufacturing markets, with a rebound expected as money from the stimulus is distributed.