CommunityFDL Main Blog

Paul Ryan’s Budget Priorities: Transforming Government

Paul Ryan's budgets evolved from openly crazy and destructive to hiding the destruction (photo: luna715 / flickr)

When you talk about “the Ryan budget,” you have to make a set of distinctions. There are actually, I believe, three Ryan budgets. The first, which pre-dates his ascension to the chair of the House Budget Committee, was a ridiculous conservative fantasy that slashed taxes and increased deficits by something like $60 trillion over time.

When he actually came into power, he had to come up with a more legitimate document, but only slightly. That led to the 2011 budget, which eliminated traditional Medicare entirely for people under 55 and turned it into a voucher program, where everyone gets a coupon, which shrinks in real value over time, to purchase health insurance on the private market. What Republicans recognized after 2011 is that this hit too close to home for their most reliable base of supporters, seniors. Even the exemption for the over-55 crowd didn’t comfort them, and it shouldn’t, because the risk pool would shrink as Medicare closes for younger seniors, and coverage would gradually get worse and worse.

So Ryan changed his budget for 2012, as it relates to senior programs. He dropped the privatization of Social Security, which he has been pushing since at least 2005. And in what is sure to get repeated often throughout the campaign, he teamed with Democrat Ron Wyden on a “premium support” plan, where seniors still get a voucher to buy insurance, but they get an option of traditional Medicare on the menu. In addition, the voucher is slightly more generous over time, although it will remain inadequate – that’s how the government derives savings from the plan, after all.

This still would present a problem with the shrinking risk pool, killing the bargaining power of Medicare, which leads to much cheaper health costs than private insurance. Seniors in traditional Medicare would get worse coverage. It resembles the “withering on the vine” of Medicare that the Gingrich plan back in the 1990s contemplated. And of course, it incorporates all of the Medicare cuts that they are now criticizing the Obama Administration for including in the Affordable Care Act.

(Incidentally, Wyden is backpedaling, saying that “Governor Romney is talking nonsense” about his teaming up with Ryan, and that he merely co-authored a policy paper, not legislation. Incidentally, Wyden voted against the Ryan budget when it came up in the Senate this year.)

What should get more attention is what Ryan did to his budget to compensate for these changes to his signature Medicare proposal. He had to extract money from elsewhere in order to make the numbers work (relatively speaking; his budget still doesn’t balance until the 2030s, and only then under very questionable assumptions). Ryan would block-grant Medicaid, cutting off the elasticity that comes into the program in times of stress, and over time dumping between 14 and 27 million from the Medicaid rolls. If anything, he’s even more severe to the rest of the federal budget:

Ryan really would decimate government funding, to the point it could no longer carry on many routine operations. According to the Congressional Budget Office, Ryan’s most recent budget would, by 2050, shrink spending in everything but the big entitlements (Social Security and government health insurance programs) and interest on the debt to less than 4 percent of gross domestic product. To give you a sense of scale, spending outside those entitlements and interest now represents more than 12 percent of GDP and has never, since World War II, represented 8 percent. What would this mean in practical terms? Massive, debilitating cuts to everything from law enforcement to education to highways to food inspections. (Ryan has said he wants to increase defense spending, which would mean steeper cuts to everything else.)

In fact, the Romney campaign has said that they would never reduce defense spending below 4% of GDP, which means the entire discretionary budget would have to have a negative rate of spending. That includes everything the government does outside of mandatory spending and things like Social Security with a dedicated funding stream. Ryan would also slash spending on mandatory programs for the poor. In fact, in his initial budget, 2/3 of all the spending cuts would hit the poor directly.

Tim Murphy has all of this in chart form. The bottom line is this: Ryan’s priorities have nothing to do with balancing the federal budget. His budget doesn’t do so for over 20 years. He voted for every single budget-busting program of the Bush Administration and he believes in federal spending to support his home district. Balancing the budget is a convenient crutch for his real goal – changing the way government works entirely. He thinks the poor don’t have a safety net, but a hammock. He wants to sever that hammock from the tree, and sever the relationship between government and its neediest citizens. He wants to either privatize government services or end them. Period, end of sentence.

CommunityThe Bullpen

Paul Ryan’s Budget Priorities: Transforming Government

When you talk about “the Ryan budget,” you have to make a set of distinctions. There are actually, I believe, three Ryan budgets. The first, which pre-dates his ascension to the chair of the House Budget Committee, was a ridiculous conservative fantasy that slashed taxes and increased deficits by something like $60 trillion over time.

When he actually came into power, he had to come up with a more legitimate document, but only slightly. That led to the 2011 budget, which eliminated traditional Medicare entirely for people under 55 and turned it into a voucher program, where everyone gets a coupon, which shrinks in real value over time, to purchase health insurance on the private market. What Republicans recognized after 2011 is that this hit too close to home for their most reliable base of supporters, seniors. Even the exemption for the over-55 crowd didn’t comfort them, and it shouldn’t, because the risk pool would shrink as Medicare closes for younger seniors, and coverage would gradually get worse and worse.

So Ryan changed his budget for 2012, as it relates to senior programs. He dropped the privatization of Social Security, which he has been pushing since at least 2005. And in what is sure to get repeated often throughout the campaign, he teamed with Democrat Ron Wyden on a “premium support” plan, where seniors still get a voucher to buy insurance, but they get an option of traditional Medicare on the menu. In addition, the voucher is slightly more generous over time, although it will remain inadequate – that’s how the government derives savings from the plan, after all.

This still would present a problem with the shrinking risk pool, killing the bargaining power of Medicare, which leads to much cheaper health costs than private insurance. Seniors in traditional Medicare would get worse coverage. It resembles the “withering on the vine” of Medicare that the Gingrich plan back in the 1990s contemplated. And of course, it incorporates all of the Medicare cuts that they are now criticizing the Obama Administration for including in the Affordable Care Act.

(Incidentally, Wyden is backpedaling, saying that “Governor Romney is talking nonsense” about his teaming up with Ryan, and that he merely co-authored a policy paper, not legislation. Incidentally, Wyden voted against the Ryan budget when it came up in the Senate this year.)

What should get more attention is what Ryan did to his budget to compensate for these changes to his signature Medicare proposal. He had to extract money from elsewhere in order to make the numbers work (relatively speaking; his budget still doesn’t balance until the 2030s, and only then under very questionable assumptions). Ryan would block-grant Medicaid, cutting off the elasticity that comes into the program in times of stress, and over time dumping between 14 and 27 million from the Medicaid rolls. If anything, he’s even more severe to the rest of the federal budget:

Ryan really would decimate government funding, to the point it could no longer carry on many routine operations. According to the Congressional Budget Office, Ryan’s most recent budget would, by 2050, shrink spending in everything but the big entitlements (Social Security and government health insurance programs) and interest on the debt to less than 4 percent of gross domestic product. To give you a sense of scale, spending outside those entitlements and interest now represents more than 12 percent of GDP and has never, since World War II, represented 8 percent. What would this mean in practical terms? Massive, debilitating cuts to everything from law enforcement to education to highways to food inspections. (Ryan has said he wants to increase defense spending, which would mean steeper cuts to everything else.)

In fact, the Romney campaign has said that they would never reduce defense spending below 4% of GDP, which means the entire discretionary budget would have to have a negative rate of spending. That includes everything the government does outside of mandatory spending and things like Social Security with a dedicated funding stream. Ryan would also slash spending on mandatory programs for the poor. In fact, in his initial budget, 2/3 of all the spending cuts would hit the poor directly.

Tim Murphy has all of this in chart form. The bottom line is this: Ryan’s priorities have nothing to do with balancing the federal budget. His budget doesn’t do so for over 20 years. He voted for every single budget-busting program of the Bush Administration and he believes in federal spending to support his home district. Balancing the budget is a convenient crutch for his real goal – changing the way government works entirely. He thinks the poor don’t have a safety net, but a hammock. He wants to sever that hammock from the tree, and sever the relationship between government and its neediest citizens. He wants to either privatize government services or end them. Period, end of sentence.

Previous post

Morsi Makes Bold Move Against Military in Egypt

Next post

McKayla Maroney is Not Impressed With...Paul Ryan

David Dayen

David Dayen