Over the last few weeks, the White House and its supporters have been pushing hard on the idea that health care reform really is fiscally responsible, mostly in hopes of winning over wavering moderate Democrats in the House. I think their budgeting claims are somewhat suspect, but, using an illustration about a debt-ridden, Starbucks-addicted vacationer (just read it), Harvard econ professor Greg Mankiw makes a really good point about how even if one accepts that they'll successfully follow through on all the cuts they propose, the bill would still make the long-term fiscal situation worse:
Even if you believe that the spending cuts and tax increases in the bill make it deficit-neutral, the legislation will still make solving the problem of the fiscal imbalance harder, because it will use up some of the easier ways to close the shortfall. The remaining options will be less attractive, making the eventual fiscal adjustment more painful. [emphasis added]
The program cuts and taxes revenue-raising mechanisms being proposed aren't being used to right the existing fiscal situation; they're being used to pay for an additional entitlement (primarily insurance subsidies and a Medicaid expansion). If you really can squeeze all that money out of the system, why not put it toward meaningful deficit reduction?