Two very different approaches to a budget deal
By Ezra Klein,
By Joshua Roberts/Bloomberg
It’s odd to say this, but I would really, really, really like for there to be, as Ross Douthat suggests, equivalence between the two parties on fiscal issues right now. Professionally, it’s much better for me to be able to say that the Democrats are falling short on entitlements while the Republicans have lost the thread on taxes. It makes me look more reasonable, more moderate, more middle-of-the-road. People like all that. It also makes it easier for me to get interviews with Republican politicians, which are great for traffic and are, to my mind, one of the more useful services I can provide. But it’s just not true. And it’s not true in important ways.
The specific question Douthat is asking is whether Democrats have been as unreasonable on entitlements as Republicans have been on taxes. But he answers his own question in the next post. Tom Coburn, the Republican Senator who has been most daring on taxes, is getting hammered by members of his party. And it’s working. On Thursday, he told Laura Ingraham that he would not allow “a significant tax hike.”
Now, maybe he’s just being tricky and he’ll eventually argue that capping various tax expenditures isn’t the same as hiking taxes, even if it has the same effect as hiking taxes. But does anyone really want to put money on that? Much less on the prospect that it’ll work? And this is, remember, the most daring legislator in the Republican Party on this issue.
Meanwhile, the Obama administration is trying to defend the cost-cutting Medicare board that they’ve already passed into law from a coalition of Republicans and Democrats who want to roll it back. At the same time, the Republicans just voted for a budget that adopted almost all of the Affordable Care Act’s Medicare savings — savings they’d previously mocked as completely unsustainable, and then ran against in an election. And Republicans have begun compari ng the basic structure of the Ryan plan to the Affordable Care Act’s exchanges — an accurate comparison, but in the ACA, those exchanges aren’t credited with saving money, while in Ryan’s plan, they’re the entire theory behind fantastic, never-seen-before reductions it assumes in the growth of health-care costs. So that’s one difference: Democrats have already made substantial cuts and reforms to entitlements, while Republicans are still knifing anyone who suggests we may need more revenues. But it’s not the only difference.
Another example is the gap between the Ryan Roadmap and the Ryan budget. I didn’t agree with a lot of what was in the Ryan Roadmap, but I was willing to defend it as a serious entry into the budget debate. More than that, I was willing to give it the benefit of the doubt: Independent analyses showed that the plan raised far less in taxes than it said it did, but since Ryan’s office swore that they would simply adjust the taxes upward if the Joint Tax Committee said the numbers didn’t add up, I was willing to call that as fair. I took a lot of flak for that, but it wasn’t the first time I’d seen a legislator’s proposal rely on overly optimistic assumptions, and if Ryan was willing to get serious about these issues, I was willing to meet him halfway.
So how’d that work out? Well, the budget is a direct descendant of the Roadmap, but it doesn’t pretend to bring taxes back to historical norms (much less raise them to share the sacrifice). Instead, it simply lowered the growth rates for its Medicare vouchers and Medicaid grants to inflation — a move that even conservatives have given up defending as anything but pure fantasy. And the differences — most all of which make the budget look fanciful and extreme — don’t end there. Josh Barro in particular deserves credit for being willing to say the plan’s health-care savings — which are where almost all of its savings come from — are unrealistic, and Peter Suderman and Reihan Salam deserve credit for being willing to back him up after he said that (though they’re mention is kinder to the Ryan plan’s much more unrealistic savings than they were to the Affordable Care Act’s much more realistic projections). But the fact is that the Ryan budget is misleading in ways the Roadmap simply wasn’t, and that the Affordable Care Act simply wasn’t, but it’s the plan that the Republican Party has yoked its fortunes to.
It’s obviously not conceptually impossible for one party to be playing a bit straighter than the other party. And it’s not surprising that it’s the party that controls the White House, as that party has certain resources, responsibilities and incentives that the party trying to regain the White House simply doesn’t. But if that’s happening, then it should be stated clearly. So far, the best defense I’ve heard of the Ryan plan is that it’s “designed to stake out a rightward pole in the deficit debate,” as Douthat says, or that it “isn’t going to become law soon” and so there’s plenty of time for the document to be “continually reworked to make sure the cost containment is feasible and to address valid criticisms,” as Joseph Antle says.
But that’s the soft bias of ideological affection talking. Republicans control the House of Representatives now. They’ve put this budget forward as a serious plan. If Republicans want it to be treated as a messaging document, the way the House Progressive budget is treated, or the Republican Study Committee’s budget is treated, that’s fine. But you can’t have it both ways. You can either take this thing seriously, in which case its numbers have to add up, or you can largely dismiss it, in which case people have to stop pretending Republicans have come forward with a serious plan to balance the budget.
Worse, while it’s true that the Ryan budget won’t become law, it’s also true that it could impede something more serious from becoming law. Wonks may understand that the budget is based on an absurd fantasy about holding Medicare and Medicaid to inflation by shifting the costs onto seniors and states, but most Republicans don’t. They think they’ve got a real, workable budget that takes care of the entitlement problem and the deficit problem while holding to low, low tax rates. That’s making it much harder to have a serious conversation about how to weave taxes and spending cuts into a coherent package, as Republicans are being convinced — falsely, but loudly — that tax increases aren’t needed and that privatization can simply win the day.
The situation moves from depressing to dangerous when you realize that the leverage they want to use to make this fantasy into law is the debt ceiling, which is to say, the United States’s credit rating. But Ryan's budget would not only require an increase in the debt ceiling, but would also violate the balanced budget amendment and spending caps that Republicans have proposed as the cost of increasing the debt ceiling. If there’s anything approaching this level of reckless incoherence on the Democratic side, I have yet to hear about it.
There’s no doubt that the Obama administration deserves its own demerits. I’ve criticized them for being slow to release a long-term budget vision of their own and for making an absurd — and already broken — pledge to protect all income under $250,000 from tax increases. Their Social Security posture is much more open than Douthat realizes — it’s pretty careful not to rule out cuts for future retirees, contrary to his suggestion — but we can have that argument. They’re making some moves to strengthen cost containment in the health-care law, but they could go further. Their energy plan is terrible. Their budget plan arguably does not go far enough — I think the Committee for a Responsible Federal Budget is at least persuasive that it does not go as far as the administration says it does, or as far as Simpson-Bowles does.
But it’s also true that the Obama administration thinks, with some justification, that whatever they endorse immediately becomes polarized, and they thought that there was hope for a bipartisan negotiation process that would begin shortly after the continuing resolution debate ended. They got that wrong: the CR debate dragged, and then the Ryan budget came out before it finished, and then the ideological battle was joined before the negotiations could commence. That was a misjudgment on their part, but it wasn’t a crazy theory. They haven’t taken taxes off the table, or tried to get their base invested in anything overly ideological or politically impossible. Their plan looks a lot more like Simpson-Bowles than it does like any liberal approach to deficit reduction. There’s no strong public option, and Medicare doesn’t get the power to negotiate drug prices. The Bush tax cuts don’t expire, and there’s no short-term stimulus, or even protected fund for investment.
The sort of plaudits Ryan’s plan deserves are plaudits for a form of unflinching radicalism. He really does take a hatchet to Medicare which, if nothing else, is a political risk. But does he deserve more credit than someone who supports single-payer health care — a cost-containment strategy that’s far more tested than vouchers? It’s hard to see how. Once you’re giving out credit for being willing to propose policies that are politically impossible, you have to start giving out a lot of gold stars, and it’s very hard for me to see why Ryan deserves more of them than other members of the House.
What sets Ryan apart is that his plan has migrated to the mainstream of the Republican Party, where it can both attract more attention and do more damage. Moderates don’t tend to think it’s a good thing for the debate to get wrenched towards one ideological pole or another, because that often makes an eventual agreement more difficult. But moderates also like ambitious policies to balance the budget. So many of them have attempted to honor the aim of Ryan’s plan even as they dismiss its policy. That strikes me as a mistake.
As someone who praised a previous Ryan proposal for being mostly honest and undeniably ambitious even if I didn’t agree with it, what Ryan has released now, and what the Republicans have committed to, both wouldn’t work in practice and is tricking Republicans into thinking that they don’t need to make any compromises to get the budget back on track. That’s very different from what the Obama administration did, which was to release something that could plausibly serve as the start of a compromise and that took a bunch of contentious issues that liberals believed in — the public option, further stimulus, etc. — off the table. Yet people, for various reasons, want to argue that the two sides are approaching this question similarly. That’s not just untrue, but it’s untrue in ways that are important to getting to a) protecting the country’s credit and b) getting a budget deal.