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Right Turn
Posted at 09:45 AM ET, 04/06/2011

Paul Ryan favors substance over gimmicks

Rep. Paul Ryan (R- Wis.) resisted the urge to budget by headline or to resort to gimmicky process. In putting together a very serious budget document, one so serious that liberal critics could only mischaracterize the bill or shriek. We heard plenty of “Repeal the 20th century!” “Destroy government!” “Starve six million old people !”

There were exceptions to the hysteria. The Post editorial board raised legitimate questions about the details of the Medicare reform proposal. Meanwhile over at Slate, Jacob Weisberg wrote:

And before they reject everything in Ryan’s plan, liberals might want to consider whether some of what he proposes doesn’t in fact serve their own ultimate goals. . . . [I]t’s hard to make a principled liberal case for the program in its current form. To do so, you have to argue that government-paid health care should be a right only for people over the age of 65, and for no one else. Medicare covers doctor and hospital bills at 100 percent, regardless of income. This gives doctors and patients an incentive to maximize their use of the system and waste public resources. Choosing to pay 100 percent of Warren Buffett’s medical bills while cutting Head Start reflects a strange set of social priorities, to say the least.

Ryan’s alternative to Medicare hardly seems as terrible as Paul Krugman makes out. Seniors would enter the health care world the rest of us live in, with co-payments, deductibles and managed care. Eventually, cost control would require some tough decisions about end-of-life care and the rationing of high-tech treatments that have limited efficacy. But starting with a value of $15,000 per year, per senior—the amount government now spends on Medicare—Ryan’s vouchers should provide excellent coverage. His change would amount to a minor amendment to the social contract, not a fundamental revision of it.

Effectively constraining the growth of Medicare could make it possible for Democrats to do a lot else that’s important to them in the future. In 2010, Medicare spending was $519 billion, as compared with $666 billion for all nondefense domestic discretionary spending. . . . Ryan’s goal isn’t to empower the federal government. But if your goal is a more interventionist public sector, you might find yourself on Ryan’s side of the Medicare debate.

Of the alternatives we face in controlling long-term spending growth, moving Medicare to a voucher system seems only mildly unfortunate—and nothing as compared with a debt-driven economic crisis that could stem from inaction. As Ryan rightly points out, this kind of crisis could come at any time and could cast a pall over the country’s entire future. Keeping Medicare as a fee-for-service program simply isn’t worth that risk. If anything, liberals should go further than Ryan did in this plan, adding a means-test that would diminish Medicare subsidies for upper-income beneficiaries.

One note: It’s not a voucher program; all the money goes to the selected health care plan. That is why it is deemed a “premium support plan.”Ryan did propose a voucher in the Roadmap for America ; this plan, however, doesn’t use that concept.

But returning to the main point,I hate to minimize the innovative nature of the budget Ryan put forth, but Ryan’s plan is remarkably nonradical. It does signify Republicans’ determination to preserve entitlement programs (rather than let them go bankrupt), doesn’t really address Social Security and still will have the government spending more than $3.5 trillion next year. Ryan doesn’t touch current Medicare retirees and has in general put forth a plan that is more gradual and livable than the forced austerity that a debt crisis would bring on. Considering the depth of the hole we are in, Ryan deploys a very gradual exit slope. It’s hardly going to take us back to the 1960s, let alone the Stone Age, as the left asserts.

I am especially pleased he didn’t do two things that have become meaningless and unhelpful features of previous budget plans. First, he isn’t demanding a balanced budget in a decade. What counts is the trajectory and the path to fiscal sobriety. The Wall Street Journal editorial board explains:

Some House conservatives are grousing that Mr. Ryan’s proposal doesn’t cut spending enough to balance the budget in 10 years. This is a foolish complaint. Mr. Obama will be happy to balance the budget too—at 24% of GDP, which means far higher taxes. Republicans should keep their eye on what Milton Friedman understood was the real burden of government, which is spending.

The Ryan plan would chop $179 billion from the 2012 White House budget and another $241 billion in 2013. This would be the largest two-year savings since the demobilization of the military after World War II. Mr. Ryan would cut funding for corporate welfare and hundreds of ineffective programs, reform agriculture subsidies, reduce the federal work force by 10% and repeal ObamaCare, among other good ideas.

Mr. Ryan’s budget would reduce federal borrowing to 2% of GDP by 2017, which is a manageable level of new debt and a huge improvement from the roughly 10% of GDP the Treasury is borrowing now. Given the epic hole we are in, this would be a historic achievement.

Ryan also dispenses with a shopworn gimmick — the balanced budget amendment. This is a device that elevates process over substance and gives the impression that if we say it, it will be! The Senate budget balanced amendment currently circulating is a bumper sticker without a car. Ryan isn’t talking about balancing the budget; he put forth a plan that will do it.

It is only fair for critics of the plan, including the White House, to acknowledge two things. Ryan’s plan is serious as is the crisis we face. His plan would over time eliminate the debt. And if they have objections to parts of it, where’s the alternative? We sure haven’t seen one yet.

By  |  09:45 AM ET, 04/06/2011

Categories:  Budget

 
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