Obama Targets Social Security, Medicare

In his first foray into the hazardous terrain of entitlement programs, Barack Obama said yesterday that his administration would overhaul Social Security and Medicare to clamp down on government spending. At a news conference and in a subsequent interview with the New York Times, the president-elect said, "If we do nothing, then we will continue to see red ink as far as the eye can see."

This week the Congressional Budget Office projected an unprecedented $1.2 trillion budget deficit for 2009—even before Obama introduces his stimulus package, estimated at around $800 billion. For lawmakers and investors, promises of entitlement reform are critical reassurances that Obama will not allow public finances to spiral out of control. But the president-elect may face an uphill battle to transform the two mega-programs: President Bush failed in his campaign promise to overhaul Social Security, and Medicare has only grown.