The Ryan Plan

My friend and esteemed blogosphere neighbor, Cory Heidelberger, has a note on the ten year budget plan produced by Rep. Paul Ryan (R-WI). Cory's heading informs us that Ryan's plan would "End Medicare and Medicaid". He later amends the indictment to read "eliminating Medicare and Medicaid as we know them."

This is of course how the argument will play out. Democrats will do what they have done for decades: accuse anyone who proposes any real fiscal reforms of wanting to destroy Medicare, Medicaid, and throw Grandma off the ship. It always worked in the past and I have no reason to think it won't work this time, politically speaking.

Fiscally speaking, Medicare and Medicaid "as we know them" are going to end, one way or another. They are simply unsustainable. Here is a clue:

And here is Erskine Bowles, former Clinton Chief of Staff and Co-Chair of the President's National Commission on Fiscal Responsibility.

"I'm really concerned. I think we face the most predictable economic crisis in history. A lot of us sitting in this room didn't see this last crisis as it came upon us. But this one is really easy to see. The fiscal path we are on today is simply not sustainable."

Unfortunately, the President ignored his commission's findings and produced a budget that shows, well, here is a chart from Keith Hennessy:

Bear in mind: that's not what happens if the President's plans fail, that's the plan.

So I ask two questions. First: do you believe that the budgetary trends in the chart above can actually happen? I don't. You may believe that we can raise the revenue lines substantially by raising taxes and if you do you might be right. But can we possibly raise them to catch up with the spending line? I don't believe that we can even if we wanted to. Unless you can somehow disagree with Erskine Bowles, and that seems ridiculous to me, you will have to concede that federal spending has to be substantially reduced.

Second: if you agree that federal spending has to be reduced dramatically, but you object to the Ryan plan because of what it does to Medicare or something else, then what is the alternative? The President hasn't offered one. The Democrats in Congress couldn't even produce a budget for this year. The Hill reported that House Democrats were "likely" to offer a 2012 budget bill to counter Ryan's plan, but they can't quite make up their minds. I am waiting to hear from my friend Cory.

We can assume that the President will not provide any leadership. Two prominent Senate Democrats, Kerry and Baucus, recently published an essay in the Wall Street Journal urging the President to act on a treaty with Columbia. The President is a lead weight. We can assume the Democrats in Congress will bend all their will toward demonizing the Ryan plan. Let's be clear about what this demonic plan looks like.

Ryan's plan, like Obama's, shows steady growth in federal spending over the next decade. It just shows less growth. That is what the Left has already begun to excoriate.

Just right now, the only leadership on the fiscal crisis at the federal or state level has come from Republicans. Paul Ryan has taken a big risk, which is to say that he has acted responsibly. I am not optimistic about the chances for this plan or for any fiscally responsible policy.

But if Ryan falls, who shall stand? I will leave you with a final bit of reality. There is only one part of the federal budget that cannot be cut by simple legislation. That's the interest on the debt. Just right now that's the third largest item, after Social Security and Defense. If that continues to grow at present rates, it will eventually crowd out all public and private spending, one way or another. Our descendants will labor, but not to provide for themselves or their families. They will pay taxes, but not to provide for the poor, the sick, or the elderly. They will support a federal government that has little money for defense or for entitlements, and people will wonder what the phrase "discretionary spending" could possibly mean. They will labor to pay off the debt that these generations have left them.

Comments

[DDC]

Ah yes, the "extreme" "budget slashing" plan that increases spending by 2.8% per year (with projected 2.1% inflation) over the next 10 years. Ryan's newest plan doesn't even balance the budget for more than 20 years, after we've built up an additional $8+ trillion in debt.

They think we're stupid.

[KB]

Bill: If so, then let's drop the extension of the Bush tax cuts and keep the rest of Ryan's plan. You in?

[Jon S.]

Bill,

I have read the CBO report. I will post the link below. I can find no evidence for the claim that the Ryan plan will increase the deficit. Granted, I did not read word-for-word. Perhaps I missed something. Would you follow the link and show me where it says the plan will increase the deficit? The report analyzes what it calls the extended base-line scenario (current law extended into the future), the alternative fiscal scenario (the scenario in which likely policy choices such as extending the Bush tax cuts and the "doc fix" occur) and the "proposal" (Ryan's plan). They mark the deficit at five dates: 2010 actual, and estimates in 2022, 2030, 2040 and 2050. I can find no evidence that shows the Ryan deficits higher than either of the two other scenarios. In fact, the report says: "Those differences in specified growth rates [in entitlements] are the fundamental reason why CBO projects that deficits and debt will be much smaller." This is on page 14 of the document (or page 16 as the pdf counts).
under the proposal than under either of CBO’s long-term budget scenarios. What is true, I suppose, is that if Ryan did not extend the tax cuts AND engaged in spending controls, the deficits would be even less, but nowhere does it say that the deficit will be higher under Ryan's plan than under either of the other two scenario's analyzed. Again, I am prepared to believe I have missed something. Please show me what and where.

The article which you link to says "Ryan has claimed that his budget would save $6.2 trillion from the federal deficit over the first 10 years." My guess is the authors don't know the difference between deficit and debt. Deficits, as you probably know, occur on an annual basis while debt is the total amount owed. What Ryan projects is a cut in the total DEBT compared to some other projection (I don't know if it is current law, Obama's budget, or what). Meanwhile the article states that, a-ha!, the deficit will rise slightly in 2012 under Ryan's plan (I can find no evidence, btw, that the CBO report says this. A search for "2012" finds three results, none of them relevant. Perhaps it says "next year" somewhere and I missed it, but I think it says nothing about the 2012 deficit). These are not contradictory. His plan may provide for a slight deficit next year with nine years of declining deficits totaling $6.2 trillion less than some other baseline (again, I don't know that baseline and am not taking the time to look it up).

But this is all academic, in a way. Bill, if you don't like Ryan's plan, you must HATE Obama's budget because it adds far more to the debt than does Ryan's. Perhaps you love the congressional Democrat's budget because, after all, they don't have one and haven't had one for over a year. We have three choices: significant reductions in projected entitlement spending, significant increases in taxation on everyone, or some combination. Ryan has chosen #1. What does Mr. Flemming propose?

Here is the CBO report: http://www.cbo.gov/ftpdocs/121xx/doc12128/04-05-Ryan_Letter.pdf

[Jon S.]

Typepad ate one sentence of my post. It said: CBO shows deficits lower at every turn under the proposal than under either of CBO’s long-term budget scenarios.

[larry kurtz]

The Ryan budget is a distraction from Koch Earth rape: http://www.opensecrets.org/politicians/contrib.php?cycle=2010&cid=N00004357&type=C

[larry kurtz]

Stop the GOP Earth-haters: http://motherjones.com/blue-marble/2011/04/epas-moment-truth

[Jimi]

Larry,

I love it how you guys on the left believe you're pure like the wind driven snow, and everybody else is evil.....Get A Clue or some Medication!

[larry kurtz]

Darth jimi: i love it when you on The Right soil yerselves.

[William]

Another defect in the CBO modeling is simply that it doesn't (can't) account for human behavior. IF, one believes that a less onerous tax policy increases entrepreneurship and, thus jobs, then a reduction in tax rates does not INCREASE debt, but will ultimately REDUCE IT by increasing tax revenue, if there's no corresponding increase in spending. The "Reagan tax cuts" DID increase revenue, but Federal spending increased at a greater rate.

Ongoing government deficits and debt are NOT the result of too little TAXING, it's a result of too much SPENDING!

Obviously, some people believe we're not "taxed enough", the "rich" don't pay enough, that corporations "pay" taxes, etc. I've just never seen anything in history to support that viewpoint. "Eventually, you run out of other people's money to spend..." (Margaret Thatcher)

Ryan's plan, at worst, reduces the level of government spending far below the trajectory it's currently on. Whatever flaws it may have, that IS the direction we have to take to avoid the far harsher consequences reality will force on us if we choose to continue down the path we're on.

As far as I'm concerned, we pay for far more government than we need and the government we have is not worth a fraction of what we're paying for it.

[DDC]

Jon S.

It does seem as if the author of the article that Bill linked to was confused between deficits & debt. It also appears as though they don't know the difference between 70% and 100% is. We just hit the point where our national debt equals our GDP. That means 100%, not 70%.

Oh well, we're only adding another $1.3 trillion additional in debt this year. Nothing could possibly go wrong, could it?

[Jose]

- OH EMILY!!!!!!!!!!!!!!! I love, love, love them! I am teary-eyed and smiling at the same time. You careputd us perfectly! And these made the entire day (even the window smashing of my car :)) TOTALLY worth it! And I know Brian will agree. Thank you from the bottom of our hearts for capturing yet another awesome time in our lives for us! You are the best and such a dear friend all 4 of us love you!October 19, 2010 4:34 pm

[Alhely]

Celeste - they are just amazing.i ecisepally like the family one where all three are laughing.and the book one is clever, cute, and i totally think you need to do a digi kit with vintage book paper in it so that you can scrap it properly. :)October 15, 2010 5:18 pm