House Budget Committee Chairman Paul Ryan has just released a recklessly bold, 73-page, 10-year budget plan.
It depends on whether (a) President Obama counters with a deficit-reduction plan of equal seriousness, rather than just demagoguing the Ryan plan till next Election Day, (b) there are any Republicans beyond the measured, superwonky Ryan who can explain and defend a plan of such daunting scope and complexity, and (c) Americans are serious people.
The conventional line of attack on Ryan's plan is already taking shape: It cuts poverty programs and "privatizes" Medicare in order to cut taxes for the rich. Major demagoguery on all three counts:
(1) The reforms of the poverty programs are meant to change an incentive structure that today perversely encourages states to inflate the number of dependents (because the states then get more "free" federal matching money) and also encourages individuals to stay on the dole.
The 1996 welfare reform was similarly designed to reverse that entitlement's powerful incentives to dependency. Ryan's idea is to extend the same logic of rewarding work to the noncash parts of the poverty program — from food stamps to public housing.
When you hear this being denounced as throwing the poor in the snow, remember these same charges were hurled with equal fury in 1996. President Clinton's own assistant health and human services secretary, Peter Edelman, resigned in protest, predicting that abolishing welfare would throw a million children into poverty.
On the contrary. Within five years child poverty declined by more than 2.5 million — one of the reasons the 1996 welfare reform is considered one of the social policy successes of our time.
(2) Critics are describing Ryan's Medicare reform as privatization, a deliberately loaded term designed to instantly discredit the idea. Yet the idea is essentially to apply to all of Medicare the system under which Medicare Part D has been such a success: a guaranteed insurance subsidy.
Thus instead of paying the health provider directly (fee-for-service), Medicare would give seniors about $15,000 of "premium support," letting the recipient choose among a menu of approved health insurance plans
Call this privatization if you like, but then would you call the Part D prescription benefit "privatized"? If so, there's a lot to be said for it. Part D is both popular and successful. It actually beat its cost projections — a near miraculous exception to just about every health care program known to man.
Under Ryan's plan, everyone 55 and over is unaffected. Younger workers get the insurance subsidy starting in 2022. By eventually ending the current fee-for-service system that drives up demand and therefore prices, this reform is far more likely to ensure the survival of Medicare than the current near-insolvent system.
(3) The final charge — cutting taxes for the rich — is the most scurrilous. That would be the same as calling the Reagan-Bradley 1986 reform "cutting taxes for the rich." In fact, it was designed for revenue neutrality.
It cut rates — and for everyone — by eliminating loopholes, including corrupt exemptions and economically counterproductive tax expenditures, to yield what is generally considered by left and right an extraordinarily successful piece of economic legislation.
Ryan's plan is classic tax reform — which even Obama says the country needs: It broadens the tax base by eliminating loopholes that, in turn, provide the revenues for reducing rates.
Tax reform is one of those rare policies that produce social fairness and economic efficiency at the same time. For both corporate and personal taxes, Ryan's plan performs the desperately needed task of cleaning out the many accumulated cutouts and loopholes that have choked the tax code since 1986.
Ryan's overall plan tilts at every windmill imaginable, including corporate welfare and agricultural subsidies. The only thing left out is Social Security. Which proves only that Ryan is not completely suicidal.
But the blueprint is brave and profoundly forward-looking. It seeks nothing less than to adapt the currently unsustainable welfare state to the demographic realities of the 21st century. Will it survive the inevitable barrage of mindless, election-driven, 30-second attack ads (see above)? Alternate question: Does Obama have half of Ryan's courage?
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The Progressives' Pap
Posted 04/07/2011 06:59 PM ET
Budget Battle: Fresh on the heels of the Republican budget plan unveiled this week by Rep. Paul Ryan, liberals in Congress are preparing to unveil their own. We've glimpsed some of the details. They can't be serious.
Paul Ryan's plan to restore fiscal sanity is many things, but insincere is not one of them. Too bad the same can't be said of the plan put forward by Congress' liberals, who think we can somehow tax and spend our way to prosperity.
Ryan's plan makes serious proposals to cut spending, reform entitlements and ease our out-of-control debt burden. It slashes outlays from Obama's budget by $6.2 trillion over 10 years, caps the top corporate and individual tax rates at 25% and reduces the expected $10 trillion in deficits over the next decade by $4.4 trillion.
Pretty potent — and workable — stuff. Now, worried that Ryan might strike a fiscally responsible chord in the American public, the Congressional Progressive Caucus is preparing to release its very own "People's Budget," according to documents given to Washington Examiner journalist Philip Klein.
On close inspection, the liberals' plan amounts to little more than odds and ends from a progressive-socialist wish list that can fairly be described as potentially ruinous, politically unworkable, divorced from reality and economically absurd. For example, the plan:
• Raises taxes on all Americans, especially the rich.
• Boosts tax rates on "millionaires" as high as 47%.
• Creates a progressive estate tax, as proposed by Sen. Bernie Sanders of Vermont, an avowed socialist.
• Adds new taxes on corporations' foreign income.
• Creates something called a "financial crisis responsibility fee."
• Imposes new "speculation" taxes on derivatives and foreign exchange.
• Creates a public option for health care, a backdoor to socialized health care.
• Boosts spending on Medicare and Social Security.
• Raises payroll taxes on workers and businesses.
• Forces drug companies to "negotiate" their prices with the government.
• Creates an "infrastructure bank," a permanent, TARP-like program.
• "Invests" $1.45 trillion in job creation, education, clean energy, broadband infrastructure, housing and R&D by slashing hundreds of billions of dollars from the defense budget.
What these proposals have in common is that virtually all would shrink economic activity, discourage entrepreneurs, depress incomes, lower the standard of living and kill jobs.
And yet, apparently with a straight face, the authors claim that, even with this massive expansion of spending and government regulation, the plan will "eliminate the deficits and create a surplus" by 2021.
It depends on whether (a) President Obama counters with a deficit-reduction plan of equal seriousness, rather than just demagoguing the Ryan plan till next Election Day, WHICH WILL BE VERY EASY (b) there are any Republicans beyond the measured, superwonky Ryan who can explain and defend a plan of such daunting scope and complexity,THERE AREN'T and (c) Americans are serious people. ARE YOU KIDDING?
(1) The reforms of the poverty programs are meant to change an incentive structure that today perversely encourages states to inflate the number of dependents (because the states then get more "free" federal matching money) and also encourages individuals to stay on the dole. THE MEDICAID "REFORMS" ARE MEANT TO MAKE THE ANTI-POVERTY PROGRAM GO AWAY. LET THEM DIE IN THE STREET.
On the contrary. Within five years child poverty declined by more than 2.5 million — one of the reasons the 1996 welfare reform is considered one of the social policy successes of our time. I SUPPORTED WELFARE REFORM THEN AND I SUPPORT IT NOW. THERE IS NO CONNECTION WITH RYAN'S PLAN. APPLES & ORANGES.
Thus instead of paying the health provider directly (fee-for-service), Medicare would give seniors about $15,000 of "premium support," letting the recipient choose among a menu of approved health insurance plans IF THE COST OF SUCH PLANS EXCEEDS THE PREMIUM - A VERY LIKELY SCENARIO - MANY SENIORS WILL EFFECTIVELY GO WITHOUT HEALTHCARE. THE GUARANTEED SERVICE OF THE PAST NEAR 50 YEARS WILL GO AWAY - A POLITICAL BOMB FOR WHICH THE GOP WILL BE SEVERELY PUNISHED.
Call this privatization if you like, but then would you call the Part D prescription benefit "privatized"? If so, there's a lot to be said for it. Part D is both popular and successful. It actually beat its cost projections — a near miraculous exception to just about every health care program known to man. PART D WAS A NEW BENEFIT, COMPLETELY UNPAID FOR BY BUSH & GOP CONGRESS. FREE CANDY + NO NEW TAXES = VERY POPULAR. JUST SEE HOW POPULAR PRIVATIZATION IS WHEN IT MEANS REMOVING GUARANTEES.
Under Ryan's plan, everyone 55 and over is unaffected. A POLITICAL MOVE THAT WILL PROVE UNSATISFYING FOR 73% OF AMERICANS. Younger workers get the insurance subsidy starting in 2022. By eventually ending the current fee-for-service system that drives up demand and therefore prices, this reform is far more likely to ensure the survival of Medicare than the current near-insolvent system.
(3) The final charge — cutting taxes for the rich — is the most scurrilous. That would be the same as calling the Reagan-Bradley 1986 reform "cutting taxes for the rich." In fact, it was designed for revenue neutrality. RYAN'S PLAN CUTS TAXES BY LOCKING IN THE CURRENT RECORD LOW REVENUES (15%/GDP) RATHER THAN ALLOWING MASSIVE DEFICIT CAUSING BUSH TAX CUTS TO EXPIRE.
Ryan's overall plan tilts at every windmill imaginable, including corporate welfare and agricultural subsidies. The only thing left out is Social Security. Which proves only that Ryan is not completely suicidal.I GIVE CREDIT TO RYAN FOR LAYING DOWN A MARKER. I CRITICIZE HIS PRIORITIES AND THE FACT THAT HE DOESN'T BALANCE THE BUDGET FOR 30 YEARS. WE NEED 20%+/GDP in REVENUES, NOT 15%. THAT 5% SHORTFALL IS HUGE AND THE PRIMARY CAUSE OF OUR DEFICITS OF THE PAST 10 YEARS.
But the blueprint is brave and profoundly forward-looking. It seeks nothing less than to adapt the currently unsustainable welfare state to the demographic realities of the 21st century. Will it survive the inevitable barrage of mindless, election-driven, 30-second attack ads (see above)? Alternate question: Does Obama have half of Ryan's courage? HOPEFULLY, WE WILL AVOID ANOTHER SHUTDOWN AND RAISE THE DEBT LIMIT IN MAY BY PASSING THE OBAMA DEBT COMMISSION RECOMMENDATIONS IN TOTAL.
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