For months, Obama and OMB head Peter Orszag told us healthcare reform would reduce government spending. A hodgepodge of cost savings measures would pay for all the new coverage and reduce the total amount spent on healthcare. Sounds impossible? It is. And now, having frittered away months avoiding the obvious, the Democrats are at odds over the most basic of issues: how are we going to pay for it?

The New York Times reports:

It has become the trillion-dollar question: can President Obama find that much in spending cuts and tax increases to keep his campaign promise to overhaul the health care system, without adding to already huge deficits? Mr. Obama and the Democrats running Congress are deeply split over the possibilities.

The president is unwilling to add to the deficit to finance his plan for a greater government role in health care, being debated in a Senate committee.
House and Senate leaders do not like his ideas but cannot agree on alternatives. Other proposals that could reduce health care spending would take too long to show savings for purposes of Congress’s budget scorekeeping, and many would require big investments initially, such as for research into cost-effective treatments.

What are they going to do? Limit deductions for upper earners or tax employer-provided benefits? Maybe raise “sin taxes” which hit the poor most heavily. But wait. How does this mesh with the promise to provide tax relief to 95% of all Americans? Well it doesn’t. Not at all.

One wonders why they didn’t address this issue up front and why they wasted time pretending it was all going to be free. But as reality settles in, we will find out just what tax scheme they can settle on (if they can agree on one) and how they will explain to the American people in the middle of a recession why their taxes are going up.

This is all quite disorganized. No funding mechanism and no agreement on exactly what they are going to be funding. Other than that, they have it all worked out.