During an extensive interview on a host of subjects with President Obama, Steve Scully Political Editor of C-Span served up the following question after asking the President about health care reform: “Yet , it all takes money.  You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion.  At what point do we run out of money?”  Here was President Obama’s response: “Well, we are out of money now.”

Obama went on to say: ” We are operating to deep deficits, not caused by any decisions we’ve made on health care so far.  This is a consquence of the crisis that we’ve seen and in fact our failure.

“So we’ve got a short-term problem, which is we had to spend a  lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it’s putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people and who have been laid off.

“So we have a short-term problem and we also have a long-term problem.  The short-term problems dwarfed by the long-term problem.  And the long-term problem is Medicaid and Medicare.  If we don’t reduce long-term health care inflation substantially, we can’t get control of the deficit.

“So, one option is just to do nothing.  We say, well it’s too expensive for us to make some short-term investments in health care.  We can’t afford it.  We’ve got this big deficit.  Let’s just keep the health care system that we’ve got now.

“Along that trajectory, we will see health care cost as an overall share of our federal spending grown and grow and grow until essentially it consumes everything.  That’s the wrong option.

“I think the right option is to say, where are the game changers, the investments that we can make now that are going to reduce costs, even if thy don’t reduce them this year or next year, but 10 years from now or 20 years from now we are going to see substantially lower costs.

“And if – one of the very promising areas that we saw was these insurance companies, drug companies, hospitals, all these stakeholders coming together, committing to me that they would reduce costs by 1.5 percent per year.

“If we do that, it seems like a small number, we end up saving $2 trillion,$2 trillion, which not only can help deal with our deficit and our long-term debt, but a lot of those savings can go back into the pockets of American consumers in the form of lower premiums.

“That’s what we are driving for, to make some good decisions on health care over the next several decades.”