Will Ryan’s budget revive Simpson-Bowles?
I wouldn’t be surprised if, a year from now, it’s broadly agreed that the main thing Paul Ryan’s budget did was persuade Democrats — and perhaps some Republicans — to adopt something pretty close to the Fiscal Commission’s recommendations (which are currently being turned into legislation by a bipartisan group of senators).
There are real similarities between the two plans. Perhaps most importantly, the Ryan budget and the Fiscal Commission rely on similar mechanisms to reduce the deficit: They both cap stuff. But the Fiscal Commission’s caps are more flexible and fair than those in the Ryan budget; the Fiscal Commission makes revenues part of the solution, where the Ryan budget includes a deficit-busting tax cut; and the Fiscal Commission doesn’t try to sneak an ideological wish list into law under the cover of deficit reduction.
That Ryan’s shown political courage by proposing difficult and even dangerous policy ideas can’t be denied. But political courage in service of bad ideas is no virtue. His budget concentrates its sacrifices among the poor and vulnerable and largely exempts defense spending and high-income taxpayers. It tries to lock in a number of conservative policy ideas that increase the deficit, including the permanent extension of the Bush tax cuts, the privatization of Medicare and the repeal of health-care reform. It then uses caps on Medicare and Medicaid, as well as a freeze on domestic discretionary spending, to cut costs going forward.
The Fiscal Commission’s approach is less objectionable. Ryan caps his Medicare vouchers at GDP+1%. The Fiscal Commission directs Congress to “contain growth in total federal health spending to GDP+1% after 2020 by establishing a process to regularly evaluate cost growth, and take additional steps as needed if projected savings do not materialize.” The savings are similar to Ryan’s budget, but the proposal offers more flexibility in how they should be achieved, and it doesn’t insist on privatization — which would raise costs — as a precondition to cost control.
Ryan freezes non-defense discretionary spending at 2008 levels, but he largely leaves defense alone. The Fiscal Commission’s plan “rolls discretionary spending back to FY2010 levels for FY2012, requires [a] 1% cut in discretionary budget authority every year from FY2013 though 2015” — but, notably, that includes both defense and non-defense discretionary spending and requires equal cuts from both, meaning it saves a lot more money.
One of the better parts of Ryan’s plan is his proposal to clean out and simplify the tax code. The Fiscal Commission does much the same thing, but it assumes the expiration of the Bush tax cuts for income over $250,000 and it increases revenue a bit beyond that, too, so where Ryan’s plan sneaks a big tax cut into his deficit-reduction proposal, the Fiscal Commission makes revenue a larger part of the solution.
Is the Fiscal Commission’s plan perfect? Not even close. But it’s a lot more reasonable, and a lot less ideological, than Ryan’s budget. And I think Ryan’s budget is going to persuade a lot of Democrats to give it a second look.