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Paul Ryan’s budget: Social engineering with a side of deficit reduction

Here is Paul Ryan's path to a balanced budget in three sentences: He cuts deep into spending on health care for the poor and some combination of education, infrastructure, research, public-safety, and low-income programs. The Affordable Care Act's Medicare cuts remain, but the military is spared, as is Social Security. There's a vague individual tax reform plan that leaves only two tax brackets -- 10 percent and 25 percent -- and will require either huge, deficit-busting tax cuts or increasing taxes on poor and middle-class households, as well as a vague corporate tax reform plan that lowers the rate from 35 percent to 25 percent.

But the real point of Ryan's budget is its ambitious reforms, not its savings. It turns Medicare into a voucher program, turns Medicaid, food stamps, and a host of other programs for the poor into block grants managed by the states, shrinks the federal role on priorities like infrastructure and education to a tiny fraction of its current level, and envisions an entirely new tax code that will do much less to encourage home buying and health insurance.

Ryan's budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan's real point throughout his career.

But it takes a while to get to all that. The opening paragraph is a recitation of ills that Ryan's budget does little to fix, and the first chapter is an attempt to justify his cuts through a horror story that doesn't add up. Let us begin at the beginning.

The United States faces many challenges. This year, unemployment will hover around 8 percent, according to the Congressional Budget Office. Economic growth will remain tepid. The national debt recently eclipsed the size of our economy. Millions of families are stuck in foreclosure. Student loans are piling up. Gas prices are at historic highs. And soon, families will struggle with a new health-care bureaucracy, while medical costs further erode their paychecks.

But Ryan's budget isn't about most of these challenges. It won't create jobs this year, and will likely cost jobs in the years to come by putting the economy on a steep austerity ramp. There's no housing policy for the millions of families in foreclosure and no way to read Ryan's budget without assuming massive cuts to student-loans programs. That may mean fewer families watching student loans pile up, but only because they didn't get any in the first place.

As for medical costs, fully 59 percent of Ryan's savings come from new cuts to Medicare, Medicaid, Obamacare or other health-care programs -- and that omits the $800 billion in Medicare cuts he keeps from Obamacare. So there will be less health-care bureaucracy, sure, but also less health care. The nonpartisan Kaiser Family Foundation estimates that cuts on the order of what Ryan is proposing will mean around 35 million people lose their health-care coverage.

Ryan goes on to explain why such deep cuts are necessary:

Unless we change course, we will have a debt crisis. Pressed for cash, the government will take the easy way out: It will crank up the printing presses. The final stage of this intergenerational theft will be the debasement of our currency. Government will cheat us of our just rewards. Our finances will collapse. The economy will stall. The safety net will unravel. And the most vulnerable will suffer.
But it’s not too late. This budget provides an exit ramp from the current mess—and an entry ramp to a better future. Unlike the President’s last budget, which never balanced, this budget achieves balance within ten years.

These are tremendously important paragraphs. They're emphasized a few pages later, in the first real section of the budget, which is entitled "The Debt Crisis Ahead." These paragraphs matter because they serve as Ryan's justification for his budget. They are why we need to throw 35 million people off health insurance. They are why we need to cut deep into education and infrastructure and food stamps and housing assistance. They are why this budget is an act of mercy rather than cruelty -- because if this future is the only alternative, then this budget is painful but necessary medicine.

But it's not. Ryan's nightmare scenario isn't likely even in the absence of new policy. A reasonable assumption of future debt is about 112 percent of GDP come 2037 -- and that's assuming the repeal of the sequester. That's too high for comfort, and there's some evidence that debt at that level could harm the economy. But there's no evidence that it would create the kind of Mad Max-style scenario Ryan paints.

That, however, gives this argument too much credit. The relevant question isn't Ryan or nothing. It's Ryan or a more modest alternative that includes fewer spending cuts, more tax increases, and a significant, though slightly smaller, level of overall deficit reduction.

That more modest package that stabilizes and then slowly brings down our debt-to-GDP ratio would be equally effective as Ryan's plan in averting the debtpocalypse that he fears -- which is to say, the debtpocalypse, with its financial collapse and its stalled economy and its unraveling safety net, simply won't happen under either scenario. And the more modest plan also means much more modest cuts to programs for the poor.

The real justification for Ryan's budget and the choices it makes is not fear of a debt crisis but fear of government. This passage, which comes in the introduction, is both odd and telling:

While we belong to one country, we also belong to thousands of communities—each of them rich in tradition. And these communities don’t obstruct our personal growth. They encourage it. So the duty of government is not to displace these communities, but to support them. It isn’t to blunt their differences or to flatten their character—to mash them all together into a dull conformity. It’s to secure our individual rights and to protect that diversity.
We are a self-governing people. Yet, if we can’t manage our own affairs, we can hardly govern a nation. It’s in the assembly hall and the boardroom—in the town meeting and the state legislature— that we learn how to govern. And that’s where we forge our common bonds. Yes, government is one of those bonds. But it can’t unite 300 million people—not on its own. It needs our communities to tie us together.
Today, our communities—our families, in particular—face many dangers: rising health-care costs, a stagnant economy, a massive debt, an uncertain world. These dangers require a lean, dynamic government—one that can protect its people and keep its word. They also require government to respect its limits—to understand it plays a role in our lives, but not the leading one.
This budget seeks to revive our communities with an emphasis on six areas. It expands opportunity by growing our economy. It strengthens the safety net by retooling federal aid. It secures seniors’ retirement by reforming entitlements. It restores fair play to the marketplace by ending cronyism. It keeps our country safe by rebuilding our military. And it ends Washington’s culture of reckless spending.

It is Ryan's unusual ideology, and not the specific state of our finances, that justifies this budget. Ryan's view is that the federal government is strangling our community. When the federal government provides health care for the poor and the middle class, it muscles out states, communities and families that might otherwise fill some of the gap. When bureaucrats set up Obamacare's exchanges, they stifle the essential ingenuity of the private sector. When government does too much to provide for individuals, they are robbed of the bracing necessity of providing for themselves. When the government taxes success to alleviate hardship, it undermines and stigmatizes those who should be leading society.

Ryan's budget is, at its core, a set of very distinct, very ideological, and, over the course of Ryan's career, very consistent ideas about how to reform the relationship between the federal government and its citizens. Ryan was pushing these ideas in the late-'90s and early-2000s, too, when deficits were far less of a threat. The only item he's dropped is Social Security privatization -- but it was, remember, in the 2010 iteration of his budget. As I've written before, Ryan isn't a deficit hawk so much as he's a conservative reformer.

The problem is that these ideas are not, on their own, popular. In fact, they're deeply unpopular, and considered quite radical. That's why Newt Gingrich rejected Ryan's initial budget as "right-wing social engineering" -- it is, in a very serious sense, an effort to use policy reform re-engineer the relationship individuals have with their governments, their communities, and their families. But presented on their own, Ryan's plans scare people.

What Ryan has found is that the way they'll get a hearing is if they're presented as necessary, prudent measures to forestall an even more dramatic debt crisis. It's following Rahm Emanuel famous adage that "you never want a serious crisis to go to waste."

But whether these are good or bad ideas, they are not, under any reasonable definition of the term, necessary ideas. Compared to other possible policies that will also forestall a debt crisis, they are much more painful for the poor, much less painful for the rich, and much more about social engineering than deficit reduction.