We can still make investments in education, so we’ve already expanded the Pell Grant program so that more young people can go to college. We’re investing more in STEM education — math and science and technology education. We can still make those investments. We can still rebuild our roads and our bridges, and invest in high-speed rail, and invest in the next generation of broadband and wireless, and make sure everybody has access to the Internet. We can do all those things while still bringing down the deficit medium term.
Now, there’s one last component of this — and I know this is a long answer but I wanted to make sure everybody had the basic foundations for it. Even if we get this $4 trillion, we do still have a long-term problem with Medicare and Medicaid, because health care costs, the inflation goes up so much faster than wages and salaries. And this is where there’s another big philosophical debate with the Republicans, because what I’ve said is the best way for us to change it is to build on the health reform we had last year and start getting a better bang for our health care dollar. We waste so much on health care. We spend about 20% more than any other country on Earth, and we have worse outcomes because we end up having multiple tests when we could just do one test and have it shared among physicians on Facebook, for example.
We could focus on the chronically ill; 20% of the patients account for 80% of the costs. So doing something simple like reimbursing hospitals and doctors for reducing their readmissions rate, and managing somebody with a chronic illness like diabetes so that they’re taking their meds on a regular basis so that they don’t come to the emergency room, that saves huge amounts of money. So that’s what health care reform was about last year or a year and a half ago, and what we want to do is build on that and continue to improve the system.
What the Republicans right now are saying is, number one, they can’t agree to any increases in taxes, which means we’d have to cut out — of that $4 trillion, all of it would come from education, transportation — areas that I think are critical for our long-term future. So, for example, they proposed 70% cuts in clean energy. Well, I don’t know how we free ourselves from dependence on foreign oil — and anybody who is paying gas prices knows that there’s an economic component to this as well as an environmental component to it — if we’re not investing in the basic research and technology that allows solar, wind and others to thrive and develop.
At the same time, what they’ve said is let’s make Medicare into a voucher program, so that retirees, instead of knowing that they’re always going to have health care, they’re going to get a voucher that covers part of the cost, and whatever health care inflation comes up is all going to be on them. And if the health insurance companies don’t sell you a policy that covers your illnesses, you’re out of luck. I think it is very important for us to have a basic social safety net for families with kids with disabilities, for seniors, for folks who are in nursing homes, and I think it’s important for us to invest in our basic research. We can do all those things, but we’re only going to be able to do it by taking a balanced approach. And that’s what this big debate is about — all about right now. All right?
Mark Zuckerberg: All right, so — sorry, don’t mean to cut off the applause.
Barack Obama:No, no, no, no, no.
Mark Zuckerberg: That was a very thorough answer.
Barack Obama:No, they were — they were stunned by the length of that answer. But it’s complicated stuff.
Mark Zuckerberg: So the next question is from someone watching Facebook live. [Jay Aptine] from Williamsburg, Virginia writes in and asks: “The housing crisis will not go away. The mortgage financing for new homebuyers with low to moderate income is becoming very difficult. As President, what can you do to relax the policies that are disqualifying qualified homebuyers from owning their first home? How can you assure the low to moderate homebuyers that they will have the opportunity to own their first home?”
Barack Obama: Well, it’s a good question. And I’ll be honest with you, this is probably the biggest drag on the economy right now that we have — along with I know the frustrations people have about gas prices. What we’ve really seen is the housing market, which was a bubble, had greatly over-inflated in all regions of the country. And I know I probably don’t get a lot of sympathy about that here because I can only imagine what rents and mortgages you guys are paying. It is a real drag in all sorts of ways. People, first of all, they feel poorer even if they still have a home or they’ve already purchased a home, because for a lot of folks their mortgage is now what’s called underwater. The mortgage is more than the home is worth. And so if you feel like your most important asset is now worth less than your debt, that’s going to constrain how you spend.
People who want to move have a great deal of trouble selling, and people who want to buy, as you pointed out, are seeing terms a lot more restrictive. So we’ve put in place a bunch of programs to try to see if we can speed along the process of reaching a new equilibrium. For example, what we did was we went to the mortgage lender and said, why don’t you renegotiate with your mortgage — with the person with the mortgage, renegotiate the terms of their mortgage so that their principal is a little bit lower, they can afford the payments, and that way homes don’t get foreclosed on, there are fewer homes on the market, and that will raise prices and that will be good for everybody. And we’ve seen some significant progress on that front.