Wonkbook: Everything you need to know before the Ryan budget lands

March 12, 2013

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Wonkbook's Number of the Day: 3.4 percent per year. That's the average amount by which spending increases per year under Rep. Paul Ryan's budget proposal. Ryan's growth plan means that federal spending will grow very slowly after adjustment for inflation and that government spending as a share of GDP will decline. 


(Photo by Win McNamee/Getty Images)

Wonkblog's Graph of the Day: Who benefits from a stock market boom?

Wonkbook's Top 5 Stories: 1) A primer on the Ryan budget; 2) the 'big deal' talk is a big deal; 3) Obamacare and the role of government; 4) Obama selects Labor Secretary nominee; and 5) Intrade, RIP.

1) Top story: Everything you need to know before the Ryan budget lands

Ryan budget revisits 2012 proposals. "House Budget Committee Chairman Paul Ryan (R., Wis.) plans on Tuesday to introduce a proposal to overhaul Medicare and Medicaid that is almost identical to the Republican presidential platform in 2012. He will propose letting seniors buy private insurance or remain in Medicare, with premiums subsidized by the federal government, and turning Medicaid into a block-grant program. The moves would save hundreds of billions of dollars over 10 years, while potentially raising costs for Medicare beneficiaries and sharply cutting the number of Medicaid recipients." Damian Paletta and Kristina Peterson in The Wall Street Journal.

For your reference: Here are Ryan's previous budgets, for fiscal year 2012 and fiscal year 2013 respectively.

RYAN: The GOP plan. "Our opponents will shout austerity, but let's put this in perspective. On the current path, we'll spend $46 trillion over the next 10 years. Under our proposal, we'll spend $41 trillion. On the current path, spending will increase by 5% each year. Under our proposal, it will increase by 3.4%. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy." Paul Ryan in The Wall Street Journal.

Both House and Senate are working on budgets. "Congress this week will begin taking the first steps toward a more structured and orderly budget process, beginning what both parties hope is a move away from the vicious cycle of deadline-driven quick fixes...[T]he fact that both houses of Congress are working on their budgets simultaneously after years of impasse raised some measure of hope — albeit slight — that Democrats and Republicans might be able to work out some sort of compromise." Jeremy W. Peters in The New York Times.

Obama wants a 'fiscally sustainable path.' A balanced budget is not the goal. "President Obama is unlikely to balance the budget when he releases his budget blueprint next month. White House press secretary Jay Carney on Monday said Obama’s budget will seek to put the U.S. on a “fiscally sustainable path” that brings the deficit below 3 percent of gross domestic product." Justin Sink in The Hill.

@mattyglesias: Balancing the budget would be a bad idea. It reflects well on Obama that he’s not proposing to do it.

Senate Democrats are almost ready to roll out their plan. "Senate Democrats are drafting a federal budget blueprint that would raise nearly $1 trillion in new taxes over the next decade and slice roughly $1 trillion more from projected spending, according to Democratic aides familiar with the document...Aides said Murray will not offer explicit policies for raising new revenue or trimming expensive health programs, but will instead leave those details to other committees, including the tax-writing Senate Finance Committee." Lori Montgomery in The Washington Post.

@MattZeitlin: The fetishism of actually *balancing* the budget is weird. Policy shouldn't be mystically anchored at zero.

...Quietly, Democrats have just ceded major territory on the continuing resolution. "Senate Appropriations Chairman Barbara Mikulski (D-Md.) said last week that her measure would also keep to sequester funding levels, forgoing a major fight with Republicans. She had said then, however, that she hoped to include language in the measure that would give agency heads broad new authority to shift money from program to program to help manage the impact of the sequester. However, a Democratic aide said bipartisan negotiators agreed over the weekend to drop that provision in the face of determined Republican opposition in the House, a sign of Democrats’ commitment to smooth passage of the measure." Rosalind S. Helderman in The Washington Post.

@MichaelSLinden: .@TaxPolicyCenter estimated that Ryan's tax cuts would result in revenue=15.5% of GDP. Ryan's budget will claim 18.9%. Difference = $7 T.

...And Obama is trying to woo Senate Dems. "President Barack Obama has spent the past week urging Republicans to reopen talks to reach a broad deficit-reduction deal, a so-called grand bargain. When he travels to Capitol Hill this week, he likely will find he has work to do to move his own party toward an agreement as well. Some Democrats say they are worried that Mr. Obama will make concessions they dislike on entitlement programs such as Social Security or Medicare to build momentum for the talks, which likely would consider changes to other federal spending as well as taxes." Peter Nicholas and Colleen McCain Nelson in The Wall Street Journal.

@EJDionne: How can #PaulRyan produce a balanced budget with tax rates of 10% and 25%? Perhaps he has magical powers. Or Harry Potter's calculator.

KLEIN: Want to fix the deficit? That shouldn't be the priority. "The CBO’s irresponsibility scenario made sense in recent years, when the Bush tax cuts, sequestration and other unresolved fiscal policies made current law a faulty guide to future deficits. But the CBO’s alternative fiscal scenario has become a hindrance to sensible policy making. It misinforms the public (and Congress) about the severity of future deficits, contributes to an air of panic, and, perhaps worst of all, gives Congress an excuse for fiscal irresponsibility, because irresponsibility is already priced-in to the budget projections." Ezra Klein in The Washington Post.

ROBINSON: The Ryan budget is make-believe. "From the evidence, Ryan cares less about deficits or tax rates than about finding some way to dramatically reduce the size of the federal government. He has every right to hold that view. But it’s hard to take him seriously as long as he refuses to come clean about his intentions." Eugene Robinson in The Washington Post.

KLEIN: Paul Ryan's love-hate relationship with Obamacare. "Every Ryan budget since the passage of Obamacare has assumed the repeal of Obamacare. Kinda. Ryan’s version of repeal means getting rid of all the parts that spend money to give people health insurance but keeping the tax increases and the Medicare cuts that pays for that health insurance, as without those policies, it is very, very difficult for Ryan to hit his deficit-reduction targets...That’s the irony of Ryan’s balanced-budget...The Obama administration hasn’t given Republicans what they want, but at times, it’s given them what they need." Ezra Klein in The Washington Post.

Music recommendations interlude: Parov Stelar, "Your Man."

Top op-eds

SUNSTEIN: Want economic growth? Cut the red tape that wraps the whole wide world 'round. "Over the last decade, American businesses have been emphasizing the need to increase international regulatory cooperation, thus harmonizing requirements and eliminating “non- tariff trade barriers” (the technical term). At its best, such cooperation opens markets and promotes exports. As a result, it contributes to economic growth and job creation, and it can save consumers a lot of money." Cass R. Sunstein in Bloomberg.

AUTHERS: Why prediction markets still have a future. "[I]t is unlikely that this move spells the end for prediction markets as a whole. They are simply too useful, and they have been around too long; someone will find a way to make the concept work...In an era when politics has driven markets to an unprecedented extent, this had value. Intrade numbers are now widely cited in Wall Street research." John Authers in The Financial Times.

ROSENTHAL: Republicans, it's not just the rhetoric that needs work. "The party elders seem convinced that their problem is one of style. They don’t accept that voters heard them perfectly well and just rejected what they had to offer. But women voters, for example, didn’t misunderstand. They got that Republicans want to restrict abortion rights and access to birth control. The Republicans’ problem is substantive, but it doesn’t look like they will ever take that in." Andrew Rosenthal in The New York Times.

BROOKS: The axis of ennui. "My main impression over the past five years is that the conference circuit capitalists who give fantastic presentations have turned out to be marginal to history while the people who are too boring and unfashionable to get invited to the conferences in the first place have actually changed the world under our noses." David Brooks in The New York Times.

KLEIN: If you're from California, you should hate the Senate. "As part of the grand compromise that created the United States of America, the Senate overrepresents small states and underrepresents big states. That’s common knowledge. What’s less well-known is that the malapportionment of the Senate is much worse today than it was at the time of the nation’s founding...When the Senate was created, the population was about four million, and the maximum disparity in voting power between states was perhaps 11 to 1. Today, it’s closer to 66:1. Pity the Californians:" Ezra Klein in The Washington Post.

PONNURU: Don't meddle with medical malpractice. "[L]lawsuits over medical care have traditionally been governed by state law -- and they should continue to be. The federal government should keep out of this area, first, because we don’t really know the best way to reform the system...The second reason the federal government should let states set their own rules is that they can do so without imposing costs outside their borders." Ramesh Ponnuru in Bloomberg.

Instructive interlude: How to cook an egg with the sun.

2) Why talk of a 'big deal' is a big deal

The President is on Capitol Hill this week. He wants it to be 'Deal Week.' "This week! For three days only! President Obama plans to spend three days on Capitol Hill trying to make nice with lawmakers who’ve been feeling neglected and hoping that Republicans will accept that he’s serious about cutting big deals on tax reform, spending cuts, gun control and immigration. The president’s high-profile lobbying effort begins with Senate Democrats on Tuesday, followed by a visit with House Republicans on Wednesday. Finally, Obama plans to visit the Hill for meetings with Senate Republicans and House Democrats on Thursday." Ed O'Keefe in The Washington Post.

Why Obama's charm offensive is headed for immediate pressure testing. "[T]his week could well reveal more than any period since the president was reelected about whether the White House and congressional Republicans can even begin to talk about working toward a landmark deal to rein in the nation’s deficit or whether efforts will, once again, fall short. And given both what’s happened before and what’s coming up, there are plenty of reasons to have more faith in the latter scenario." Sean Sullivan in The Washington Post.

...And why charm has its limits. "It’s week two of the president’s charm offensive, and already there is dissension in the ranks...It was a caution to those swept away by the notion that an entirely new and amiable Obama White House has suddenly emerged: Charm is hard...At the same time, White House reporters say they’ve noticed a softening in Obama advisers’ tone since Bob Woodward’s public spat with White House official Gene Sperling. The phone calls and e-mails from the president’s aides have become less confrontational and less vulgar, they say." Dana Milbank in The Washington Post.

Pontifex interlude: The Daily Show takes on the papal elections.

3) How Obamacare is changing medicine and the role of government

How Obamacare is changing the real estate of medicine. "[Scott] Mason leads the health-care practice group at Cushman & Wakefield, the world’s largest, privately held real estate firm. And from his vantage, there’s a lot to be learned from how health-care real estate is changing right now — changes that ought to make us optimistic about the future of health-care spending...[T]here’s a wave of consolidation sweeping the health-care industry right now, with health-care systems buying up doctors’ practices and building more integrated systems...For one health-care system, that meant retrofitting grocery stores as their new office buildings." Sarah Kliff in The Washington Post.

Florida Senate panel rejects Medicaid expansion--but it's not dead yet. "[A]s of Monday afternoon, they don’t appear inclined to move forward: Committees in the Florida House and Senate have rejected the Medicaid expansion as proposed by Gov. Scott...[T]he Senate have also put forward an alternate plan for the Medicaid expansion. Legislators there proposed using Medicaid expansion dollars to buy private insurance for the same population." Sarah Kliff in The Washington Post.

The states push for a privatized Medicaid system. "A pair of states are proposing to use new Medicaid funding to help the poor buy private health insurance, a new twist in how to implement the 2010 federal health-care law that is winning support from some Republicans...The new option could appeal to conservatives, who argue that the private sector could provide care more efficiently than the government-run Medicaid program. It would also meet the Obama administration's goal of coaxing into the expansion several states that have signaled they would pass on it, citing problems with Medicaid and concerns about increased government spending." Ana Campoy and Louise Radnofsky in The Wall Street Journal.

The Heritage Institute worries about disincentives in Obamacare. "People will pass up higher-paying jobs so they can keep receiving subsidies under President Obama's healthcare law, the conservative Heritage Foundation argued Monday...Because subsidies decrease as income rises, Heritage argued, some employees will pass up better jobs so they can keep collecting healthcare subsidies." Sam Baker in The Hill.

Meanwhile, Big Soda wins its day in court. "New York City’s ban on big drinks has, apparently, run into some big trouble. A New York State Supreme Court judge has halted the new regulation banning sugary drinks larger than 16 ounces, which was supposed to take effect Tuesday." Sarah Kliff in The Washington Post.

Creepy interlude: The website that records the last tweets of the deceased.

4) Cabinet almost stocked

Obama's second-term Cabinet comes into focus. "[O]nly four Cabinet or Cabinet-rank spots [are] left open: Commerce Secretary, Transportation Secretary and the chiefs of the U.S. Trade Representative and the Small Business Administration. Here’s a snapshot of the remaining openings and some possible fillers." Emily Heil in The Washington Post.

Explainer: 5 things you should know about Tom Perez, Obama's pick for Labor SecretarySuzy Khimm in The Washington Post.

...And how that Cabinet will shape the second term. "Defense Secretary Chuck Hagel, CIA director John O. Brennan and Secretary of State John F. Kerry are the three men who will aim to downsize the military while still maintaining America’s position as a global leader prepared to tackle both terrorism threats and instability abroad...This group is composed largely of veteran Obama adminstration, and for that matter, Clinton administration officials, who face the formidable challenge of boosting the nation’s economy and resolving the ongoing battle over sequestration and the future standoff over the debt limit. And in the best of all possible worlds, they will strike a grand bargain to ensure the long-term viability of the nation’s Social Security and Medicare programs." Juliet Eilperin in The Washington Post.

The link you're going to send to everyone right now interlude: Jazz that nobody asked for, an animated short.

5) Intrade, RIP

Rest in peace, Intrade, the last hope for pundit accountability. "We live in a world of punditry in which there are large amounts of, to put it nicely, horse manure. Those of us who write and talk about what will happen inevitably rely on vague predictions, full of qualifications...On Intrade, by contrast, the traders who participate and collectively set market prices, are forced to choose--and put money where their mouths are...In a world in which people hold their pundits to a higher standard, people spouting off on the economy (or politics, or foreign affairs, or the selection of the pope) would be forced to make specific, testable predictions, and attach probabilities to those guesses." Neil Irwin in The Washington Post.

WonkTalk: Why we need more sites like Intrade. Neil Irwin and Brad Plumer in The Washington Post.

Even without Intrade, billions will still be wagered on 2016. "The billions I’m referring to, however, will be wagered somewhere else: Wall Street. Consider what happened to a series of stocks on Nov. 7 of last year, the day after Barack Obama won the election. Four large banking stocks — Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley – declined by an average of 7 percent on Nov. 7 as investors speculated that another term for Mr. Obama would provide a less favorable regulatory environment than one under Mitt Romney. Collectively, these stocks lost about $24 billion in market value on Nov. 7. Similarly, a series of coal and oil stocks were off by anywhere from 3 percent to 30 percent on Nov. 7, and lost a collective $18 billion in market value. A few industries benefited from Mr. Obama’s victory, however." Nate Silver in The New York Times.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Absolutely everything you need to know about the papal electionsDylan Matthews.

Graph: Who benefits from a stock market boom? Brad Plumer.

Jay Rosen's one-sentence summary of the current state of the American pressEzra Klein.

Even mummies get clogged arteriesSarah Kliff.

Why Californians should hate the U.S. SenateEzra Klein.

Florida in Medicaid limboSarah Kliff.

WonkTalk: Why we need sites like IntradeNeil Irwin and Brad Plumer.

Paul Ryan's love-hate relationship with ObamacareEzra Klein.

RIP Intrade, the last best hope for pundit accountabilityNeil Irwin.

5 things you should know about Tom Perez, nominee for Labor SecretaryDylan Matthews.

Big Soda goes to court, wins extra-large caseSarah Kliff.

Why your doctor might be moving, and the reorganization of medicineSarah Kliff.

Will China ever get its pollution problem under control? Brad Plumer.

Et Cetera

Must-read interview: John Boehner, part I and part II. David M. Drucker in CQ Roll Call.

Republicans warn Boehner to follow Hastert RuleJake Sherman in Politico.

The Fed's new focus: jobs, jobs, jobsYlan Q. Mui in The Washington Post.

Obama plans Wednesday gathering of donors and activistsMichael D. Shear in The New York Times.

Gun control continues to advance in ColoradoAshby Jones in The Wall Street Journal.

Why nuclear power is in retreat in the U.S, and it could have to do with federal subsidies for wind energySteven Mufson in The Washington Post, and Julie Johnsson and Naureen S. Malik in Bloomberg.

The head of the U.S. Navy Pacific Command says climate change is the threat about which they are most worriedZack Colman in The Hill.

Energy-efficiency push losing power in CongressZack Colman in The Hill.

Got tips, additions, or comments? E-mail me.

Wonkbook is produced with help from Michelle Williams.

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Sarah Kliff · March 11, 2013