Jonathan Rauch on the Ryan plan

Someone who at least tried [to cut spending] is Rep. Paul Ryan of Wisconsin, the ranking Republican on the House Budget Committee, who recently unveiled a new edition of what he calls a "Road Map for America's Future." Its willingness to reform entitlement programs is laudable. But it keeps taxes at 19 percent of gross domestic product while raising (repeat: raising) federal spending from 21.6 percent of GDP in 2012 to more than 24 percent in the 2030s. It balances the budget, all right — in 2063.

Here is the article, interesting throughout, it mostly focuses on George Wallace.


I like Bruce Bartlett better. He at least acknowledges past mistakes and is willing to both raise taxes and cut spending. His piece on starving the beast is classic:

Just so you know what is in Ryan's proposal (this is from Bartlett's Forbes article):

On Social Security Ryan would reduce initial benefits for retirees by changing the benefit formula. Private accounts would be established immediately for those under age 55 that would be partially funded by payroll taxes.

Ryan would also raise the age to qualify for Medicare from 65 to 69 years and 6 months for people born in the year 2022. After the year 2021, the Medicare program as we know it would cease to exist. Instead of receiving health benefits through Medicare, those over age 65 would instead receive government vouchers worth $5,900. These vouchers would be adjusted for age and health status, which would put the average voucher at $11,000. Medicare beneficiaries would buy private health insurance with the vouchers.

These amounts are considerably less than estimated Medicare spending per enrollee in 2022, so there is a sharp cut in spending right off the bat. Furthermore, these amounts would only be indexed to half the historical rate of price inflation for medical care. This means that the real, inflation-adjusted voucher amount would fall continuously. To cover the shortfall, Medicare beneficiaries would either have to pay out of their own pockets for medical care or buy private insurance over and above what could be purchased with the Medicare vouchers.

would also likely see a sharp reduction in their health benefits as well because Ryan would abolish the tax exclusion for health insurance. In other words, workers would have to treat whatever their employer pays for health insurance as if it were cash income. Workers would instead receive a new tax credit not to exceed $5,700 per family. It is not clear whether the credit amount would be indexed to inflation. This provision would constitute a significant tax increase for many workers.

In short, the core of Ryan's proposal is to implement George W. Bush's plan to privatize Social Security, which got virtually no public support even when the stock market was booming, and essentially abolish Medicare altogether while raising taxes on the health benefits of most workers. He basically assumes that the market for health insurance would somehow adjust to prevent a significant cut in the quality of health care.

The Ryan plan is, of course, politically ludicrous. It would be impossible to get Congress to even implement one of its major provisions, let alone all of them simultaneously. And I say this as someone who in principle supports many of the ideas in his plan. For example, I believe we must raise the retirement age, and it's hard to see how we can meaningfully reform the health system to reduce cost inflation as long as health insurance is free of taxation. But I don't delude myself that it is possible to implement such changes absent a major transformation in political attitudes or conditions that do not now exist.

That is why I think it is far more realistic to assume that nothing remotely like the Ryan plan has a snowball's chance in you-know-where.

Here's another thing, the people who earnestly deride and dismiss the Palin, Tea Partiers, etc. are going to be surprised when they realize how bad the government has been recently.

Ryan deserves more credit because I actually think people would go for some of his proposals even if it involved sacrifice if they thought there was a government worthy of managing itself to redemption. At least he didn't spend (all) his time cutting pork deals into the healthcare or stimuli.

And really lastly, people didn't even reject the idea. They rejected the idea that the government at the time, or maybe ever was trustworthy to manage it.

There are rumblings about IRA confiscation, so whatever percentage the rejection was a vote of no confidence in the government, they people were right.

The beast is finally starving. Why give up now? Because we are scared of what the beast might do? Nah.

But it keeps taxes at 19 percent of gross domestic product while raising (repeat: raising) federal spending from 21.6 percent of GDP in 2012 to more than 24 percent in the 2030s.

Federal spending will otherwise rise to 28% in the 2030s if we do nothing, mostly because of demographic effects. So it takes some pretty large cuts of what's the current baseline in order to have it only rise to 24%. Post 2030s, the largest effects are from health care cost inflation, but we have to deal with the baby boomer demographic transition first.

Bruce Bartlett has completely given up on cutting spending because he's decided that it's politically impossible.

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