Rep. Paul Ryan (R-Wis.), before President Obama lays out his budget plan in a speech at George Washington University. (Bill O'Leary/WASHINGTON POST)

For most of the past two years, the debate over fiscal policy has skirted the real questions, focusing on small-bore flash points rather than fundamental questions about taxing and spending that will shape the nation’s future.

But with President Obama’s deficit reduction proposal Wednesday and Rep. Paul Ryan’s last week, now the big stuff is on the table.

No longer is the debate about earmarks, as it was during the 2008 election — the sometimes-wasteful projects that lawmakers add to spending bills together account for one-20th of 1 percent of federal spending. It’s not about funding for National Public Radio, a major target of conservatives that receives an even smaller chunk of federal funding. Just last week, the government nearly shut down over how much to spend for the remainder of a fiscal year that ends in six months. The much-heralded compromise cuts about 1 percent of spending.

But now, after the release of plans from the White House and the House Budget Committee’s Republican chairman, the issues on the table are increasingly the ones that really matter for the nation’s economic and fiscal future: Medicare and Medicaid, the health programs that are the biggest drivers of the nation’s long-term funding shortfall; the George W. Bush-era tax cuts, which would increase the deficit by 55 percent over the coming decade if extended in their entirety; and military spending, which has been largely protected from previous efforts at deficit reduction.

It’s impossible to know if Obama and congressional Republicans will be able to strike a grand bargain to reduce the long-term budget deficit and, if they do, what exactly will be in it. But economic analysts say they see more substance and less symbolism in the competing proposals of the past week.

“The dialogue has clearly shifted,” said Nariman Behravesh, chief economist for IHS Global Insight. “Both sets of proposals are a little optimistic about how they get to where they’re going and a little vague about some of the details, but this is a step forward. Up until recently there wasn’t any serious talk about major deficit reduction plans.”

Reflecting this, financial markets reacted favorably to the Obama announcement Wednesday, with Treasury bonds, the dollar and the U.S. stock market all gaining value.

Market enthusiasm aside, assessing what the Obama or Ryan plans would mean for the economy in the years ahead is no simple task.

The sorts of immediate cuts that were the crux of last week’s budget showdown are relatively easy for economists to analyze. They plug the cuts into forecasting models that show, to a reasonable degree of accuracy, how much they will reduce economic activity. The $38.5 billion in cuts agreed to last week should reduce economic growth this year by perhaps two- or three-tenths of a percentage point, forecasters have said.

But the more recent proposals, which would shape the nature of government for decades, are harder to assess. They have many moving pieces and raise questions that are more philosophical than technocratic.

To reduce the cost of Medicare in the long run, for example, would it be better to keep the basic structure of the program in place but constrain its cost by limiting what treatments the program will pay for, as Obama proposes? Or would it be better to transform the system entirely by having seniors buy private insurance and capping the growth rate of vouchers to pay for that private insurance, as Ryan proposes?

The answer has more to do with one’s views on the proper role of government — and on the efficacy of government vs. the private sector — than anything that is routinely plugged into forecasters’ economic models.

Another aspect is that it is impossible to know how financial markets will evolve if no one does anything about the deficit.

If the bond market — the investors who lend the U.S. government money by buying its debt — is confident enough in U.S. economic prospects that it continues lending the government money at current low rates for many years, then deficit reduction is less urgent than the two plans imply.

On the other hand, if one thinks investors could change their view at any time and lose faith that the government can meet its obligations, then putting in place a deficit reduction plan is tremendously urgent, as it would keep interest rates low and help the economic recovery remain on track.