Paul Ryan’s Medicare claims vs. his auto bailout claims

September 4, 2012

On Sunday, I mentioned that I found Paul Ryan's claims about Medicare far more defensible than his claims about the Janesville auto plant. Over e-mail, Kevin Drum asked why. So here's my thinking.

Take the Medicare claim first. Here's what Ryan said:

You see, even with all the hidden taxes to pay for the health care takeover, even with new taxes on nearly a million small businesses, the planners in Washington still didn’t have enough money.  They needed more.  They needed hundreds of billions more.  So, they just took it all away from Medicare.  Seven hundred and sixteen billion dollars, funneled out of Medicare by President Obama.

So what does Ryan want you to think here? As i read the passage, it's something like, "Obama is using Medicare cuts to pay for Obamacare, and we are not." Which is true.

I don't know which tax increase Ryan is referring to, but it is in fact the case that the Democrats cut hundreds of billions from Medicare in order to offset the cost of the Affordable Care Act.

The difficulty for Ryan is that he retained those cuts in his budgets. But Ryan's defense on this score is reasonable: He says his budget puts that money toward closing Medicare's long-term deficits, which means those cuts are shoring up the Medicare program directly, rather than being used to fund another program.

At this point, things can get a little bit hairy. It doesn't make sense to look at Medicare's budget in isolation. If you're concerned about the government not paying its bills, then the question you need to ask is how much money does the federal government have coming in and going out, not just how much money does Medicare have. Ryan refuses to raise taxes, and his plan includes massive tax cuts that he hasn't said how he'll pay for. So you could argue that Ryan's Medicare cuts are going to offset the cost of either refusing to raise taxes or cutting them further.

But I'm not going to make that argument. I'm on-record saying that trust-fund accounting is by and large a ridiculous way to look at the federal government's finances, but both parties do it, and so Ryan isn't committing any foul here. And within the trust-fund accounting rules, Obama is using his Medicare cuts to pay for the Affordable Care Act and Ryan is using his Medicare cuts to finance the Medicare program in the future.

All that said, Mitt Romney does not share his running mate's position on the Medicare cuts. He simply wants to repeal them. That means that money that could be going to close the deficit (Ryan) or fund a near-universal health care program (Obama) will instead be given to private insurers and hospitals. That creates a clearer contrast between the Republican ticket and the Obama administration, but not one, I think, that makes the Republican ticket look particularly good.

Still, I think Ryan's basic point on this -- "Obama is using Medicare cuts to pay for Obamacare, and we are not" -- is sound.

That brings us to Janesville. Here's Ryan again:

My home state voted for President Obama. When he talked about change, many people liked the sound of it, especially in Janesville, where we were about to lose a major factory. A lot of guys I went to high school with worked at that GM plant. Right there at that plant, candidate Obama said: “I believe that if our government is there to support you … this plant will be here for another hundred years.”  That’s what he said in 2008. Well, as it turned out, that plant didn’t last another year. It is locked up and empty to this day.  And that’s how it is in so many towns today, where the recovery that was promised is nowhere in sight.

So, same question: What does Ryan want you to think there? As I read that paragraph -- and I admit it's a bit unclear -- I take him as saying that Obama promised to keep a GM plant in Janesville open, and then, once in office, he broke that promise.

Wonkblog has looked into the case of the Janesville plant extensively at this point, and I think it's fair to say that nothing in Ryan's claim really holds up to scrutiny.

Let's start with the basic premise: Did Obama promise to keep the Janesville plant open?

In February 2008, at a campaign stop in Janesville, Obama said, ”I believe that if our government is there to support you and give you the assistance you need to re-tool and make this transition, that this plant will be here for another hundred years.”

First, I don't see a promise to save the Janesville plant. I see a fairly common point about retraining American workers and retooling American plants to better compete in the modern, global economy. Obama didn't go to Janesville and say he'd save their plant. he went to Janesville and said that, with the right policies, plants like the one in Janesville would be around well into the future.

Second, note the date. February 2008 was before the recession started. It was before Lehman fell. It was even before Bear Stearns fell. It was, in short, before the financial crisis that led to the wholesale bailout of the American auto sector. This was simply a whole different conversation in February 2008 than it was in February 2009, much less than it sounds like in September 2012. It moved from a generic discussion of keeping our manufacturing sector competitive to a specific discussion of who got bailed out during the worst economic crisis in almost a century.

Third, note the timeline. GM decided to begin shuttering the Janesville plant in June 2008. The factory was officially idled in December 2008 -- you can see this picture from the "final goodbye ceremony":


Workers at the Janesville GM plant on the last day of production, Dec. 23, 2008. (The Janesville Gazette.)

Now, it's true that it takes a long time to finally shut the doors on a factory, so the very last truck rolled off the lines in April 2009. But the factory was long past saving at that point. Most of the workers were gone, most of the lines were shut down and the factory was officially deemed done well before Obama entered office.

I can think of three ways to understand Ryan's comment. One is that he promised to bail out the plant and didn't. That's false. Another is that he could have kept the plant from closing and didn't. That's false. A third is that he should have worked some magic on the economy such that a roaring recovery led the Janesville plant to be reopened.  That seems ridiculous, and in any case, was certainly not something Obama or anyone else was promising in February 2008, as the recession necessitating that recovery wouldn't happen for many months yet.

A final point here is the implicit comparison. Obama failed the Janesville plant. Romney wouldn't have.

It can be a bit hard to parse Romney's position on the auto bailout. At times, Romney has claimed that he opposed Obama's bailout, saying,  “The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better." But then there have been times when his campaign has taken credit for the bailout, as when his adviser Eric Fehrnstrom said, Romney's "position on the bailout was exactly what President Obama followed. I know it infuriates them to hear that. The only economic success that President Obama has had is because he followed Mitt Romney's advice."

Jon Cohn has done some of the best work tracking Romney's shifting positions on the topic and the basic point is that Romney opposed putting taxpayer money at risk. But that taxpayer money provided financing that the frozen credit markets couldn't have provided and that was needed to get the automakers through the managed bankruptcy process that the administration ultimately pursued. Whether Romney would have taken a different line if he'd been president is anybody's guess, but just going by his public position, there's just no doubt that the Obama administration did far more to save the auto industry than Romney would have.

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