The Ryan Budget Plan May Be the New Centerpiece of Campaign 2012

By :: August 13th, 2012

Already, the Romney campaign insists that voters should pay no attention to Paul Ryan’s fiscal agenda.  It is the Romney-Ryan tax and budget plan, they say, not the Ryan-Romney plan.

Good luck with that.

Both Democrats and conservative Republicans will spend the next three months arguing otherwise. And like them or not, Ryan’s more comprehensive—and far more controversial—plans are likely to garner most of the attention.

After all, big ideas seem to make Romney nervous. Thus he ducks the pesky details. But Ryan charges ahead. He loves his ideas, and he wants to tell people why they should too.

Ryan has been nothing if not a fountain of policy: Social Security private accounts in 2004, his Roadmap for America’s Future in 2008, and his ambitious budgets in 2011 and 2012.

But, for Ryan, these ideas are about more than economics. They define the very relationship between people and their government. In my lifetime, only three presidential candidates—Bill Clinton, Barry Goldwater, and Adlai Stevenson—and one vp candidate—Jack Kemp--were as passionate about ideas as Ryan. (Of course, Goldwater, Stevenson, and Kemp all lost, while Clinton, the passionate centrist, won).

Ryan isn’t about winning political points, or power for its own sake. For him, controlling the levers of government is an opportunity to remake government.

In 2009, I interviewed Ryan at a Tax Policy Center forum. He was there to talk about tax reform, but he cast fiscal policy in much broader terms:

“We ought to have a safety net to help people who truly cannot help themselves…but [we]don’t want to turn it into a system in which people become dependent on the state, become complacent, substitute fear and dependency on benefits [for] liberty.…”

That’s why Ryan’s hot-button  tax and spending agenda  sometimes makes Republicans so uncomfortable.  They are looking win elections. He wants to change the world and isn’t shy about saying how.

In his wonderful New Yorker  biographical sketch, Ryan Lizza asked Paul Ryan about the difference between those who merely criticize and those who also offer alternatives:

 "If you’re going to criticize, then you should propose…I think you’re obligated to do that,” he said. “People like me who are reform-minded ignore the people who say, ‘Just criticize and don’t do anything and let’s win by default.’ That’s ridiculous.”

For Ryan, it isn’t about deficits. It’s about low taxes and small government. Indeed, his fiscal plan cuts taxes so deeply that even with substantial spending reductions, he wouldn’t balance the budget until at least mid-century.

Over the past few years, Ryan has scaled back his tax reform. His original Roadmap would have collapsed today’s six tax rates to just 2 (10 percent and 23 percent), abolished all taxes on capital gains and dividends, replaced the refundable tax credits that provide the basic safety net for low-income working families with a bigger standard deduction, and dumped the corporate income tax for a consumption tax.

The most recent House budget, however, was more mainstream GOP fare. It would cut the top individual rate to 25 percent (Romney would cut it to 28 percent), tax investment income at no more than 15 percent (like Romney), and keep the corporate income tax but lower the top rate to 25 percent (as would Romney).

The Tax Policy Center estimates the revenue elements of the House budget would add about $4.5 trillion to the deficit over 10 years, and raise only about 15.5 percent of GDP in revenues.

Ryan would offset some of this by cutting back tax deductions, credits, and exclusions. Like Romney, Ryan won’t say exactly how. But unlike the man at the top of the ticket, I get the sense Ryan can’t wait to do so. In our 2009 interview, he spoke with great enthusiasm about how he'd defeat the lobbyists who protect these tax breaks.

In ’09, Ryan said he’d replace the tax exclusion for employer-sponsored health insurance with a refundable tax credit. GOP presidential nominee John McCain backed that idea in 2008, but Romney has, so far, been unwilling to go there.

Even more controversy will come on the spending side, where Ryan has consistently proposed deep cuts in government programs: He’d slash Medicaid by $800 billion over 10 years, shift Medicare from a guaranteed insurance program to one where seniors get a government subsidy to buy their own coverage, and chop all other spending from about 13 percent of Gross Domestic Product to about 4 percent. Here, again, Romney has been far less specific.

Like it or not, Romney now owns Ryan's agenda. In a different world, Obama would present his own serious alternative deficit reduction plan, not just attack Ryan’s. If he did so, we might have the kind of fiscal debate so many of us hope for. But in the real world, Ryan’s ideas will be red meat.

 

8Comments

  1. Michael Bindner  ::  4:41 pm on August 13th, 2012:

    Ryan does not get that people in nursing homes have no choice but to become totally dependent on the government, at least under current policy. You can’t really sell an insurance policy that anyone without assets can afford to buy that replaces Medicaid doing so – unless of course you take the onus for paying for Medicaid off of individual taxpayers and put it on employers through an employer paid consumption tax with offsets for either providing long term care or paying for long term insurance for employees and retirees.

    The other element, which Ryan would blanch at, would be to treat for-profit health providers (both hospitals and nursing home chains) as public utilities subject to price regulation. There is no real cost problem in medicine. For profit drug makers, hospitals and nursing homes are expert at controlling cost. They also price whatever they can get – and when the have virtual geographic monopolies in an insured market, they can get quite a bit. This is where some regulation is necessary and proper (and not what I would expect from Ryan).

    The Achilles heal for electing Ryan is not Medicare, its Medicaid.

  2. Tax Roundup, 8/14/2012: Can the rich guy pick up the tab? Plus mugshot modeling! « Roth & Company, P.C  ::  9:41 am on August 14th, 2012:

    […] Gleckman, The Ryan Budget Plan May Be the New Centerpiece of Campaign 2012: Even more controversy will come on the spending side, where Ryan has consistently proposed deep […]

  3. AMTbuff  ::  10:13 am on August 14th, 2012:

    “We ought to have a safety net to help people who truly cannot help themselves…but [we]don’t want to turn it into a system in which people become dependent on the state”

    Is that really an extreme or even controversial statement? Really?

    When the government can no longer afford to throw money at the non-needy to buy their votes, it’s time to stop. That time is now.

    As Michael says, nursing home care for the poor will be expensive. We need to get creative about saving money there, but most of all we need to stop giving money to people who were and are capable of taking care of themselves. Other developed countries are not as stubborn and have already done this.

  4. Not Convinced  ::  9:51 am on August 16th, 2012:

    Paul Ryan, Mitt Romney, and the entire host of Grover’s Anti Revenue minions in both houses of Congress have painted themselves into a corner with no feasible egress that will satisfy their base or more importantly their big $ campaign donors. If the only way to get approval for these extreme budget cuts while simultaneously relieving the wealthy of their tax burdens is by blocking access to the polls by those most affected by the slashing of every budget line except defense, they either have some heavy lifting to convince the great American public of the newly discovered laws of math that make these plans even remotely feasible. Revenue must exceed spending until the debt is fully discharged. Ryan’s plan cuts revenue so deep that it will take more than a generation to balance the budget. The debt will continue to grow in the 30 years it would take to balance the budget. With all the infrastructure
    Problems that exist now, how does Mr Ryan propose we address those while he slashes investments in restoring deficient roads, ports, bridges, etc? HE DOESN’T! Once again the GOP is deferring responsibility for this neglect to future generations, when costs will be higher. The only solution to our fiscal mess is a balanced plan for reductions in spending in all areas, including defense, while simtaneously increasing revenue and cutting out wasteful spending wherever it may be. Despite the alleged courage of his budget plan, Mr Ryan has not convinced me that he has the courage to address the bigger threat to our nation and denouncing the Grover Norquist agenda to “starve the beast” of the Federal Government until it is “small enough to drown it in the bathtub.” Where do Grover’s minions think the infrastructure came from that provided the opportunity for them to make their fortunes? Without a strong national government who will protect their interests overseas?

  5. AMTbuff  ::  11:30 am on August 16th, 2012:

    I love it when people cite roads and bridges as the reason we must keep making transfer payments to the non-needy. Medicare is not infrastructure.

    The math is the math. Transfer payments to the non-needy will be curtailed dramatically. There is no alternative. The question is whether this will happen before or after the Chinese stop lending to us.

    I suppose the other question is whether roads and bridges will be neglected so that the non-needy can keep getting checks. The “roads and bridges” threat sounds like the Washington Monument ploy to me.

  6. CFL68  ::  10:27 pm on August 21st, 2012:

    The responsible ‘adult’ thing to do is to let tax rates adjust automatically to balance the budget, and pay down the debt at an agreed upon rate. Once we are actually paying for what we spend, then our great democratic system kicks in and we prioritize spending. If we don’t actually have to pay for things, then it is hard to exercise discipline and set priorities. This is where we are now. This isn’t rocket science.

    Sure taxes will jump – especially on the wealthy, but this is doable. For example, taxing the top 5% AGI at 50% basically eliminates the deficit instantly.

    What if the government stopped subsidizing the wealthy by not allowing them to offset capital gains with their capital losses? We can come up with plenty of reasonable policies once we accept responsibility to pay for what we spend.

  7. Inspector Fu  ::  4:48 am on September 3rd, 2012:

    No, the responsible ‘adult’ thing to do is to match the BUDGET with REVENUE. The government serves the people, not the other way around.

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