RALEIGH – Paul Ryan, the Republican chairman of the House Budget Committee, has offered a serious plan for reducing the size, cost, and intrusiveness of the federal government over the next 10 years.
Judging by the initial reaction of furious Democrats and cowardly Republicans, the Ryan Path to Prosperity budget plan has little chance of becoming law. On both sides of the aisle, Ryan’s critics seem willing to indulge the fantasy that existing federal obligations can be brought into balance by a combination of gingerly budget nibbles and painless tax hikes on rich people.
These are either simple-minded or dishonest politicians. They are not leaders.
As a matter of public policy, the Ryan plan is, if anything, insufficiently audacious. While it would incur $4.4 trillion less federal borrowing than the Obama budget baseline assumes over the next decade, reform the federal tax code to boost fairness and economic growth, and bring the federal operating budget into balance by 2015, the Ryan plan would leave federal spending well above the post-war average as a percentage of gross domestic product – and when federal debt service is included, the total federal budget under the congressman’s plan would continue to run deficits as far as the eye can see.
I’d like to have see Ryan do more to consolidate, downsize, or eliminate federal agencies and departments. I’d like to have seen him pursue significant savings in the defense budget, which ought not to escape the careful scrutiny of any fiscal conservative.
Still, it would be difficult for any fiscal conservative not to praise such ideas as converting Medicaid into block grants to the states and converting Medicare into a premium-support program. Restoring budgetary balance and limited, constitutional government in Washington requires immediate, meaningful action on these large, rapidly growing entitlement programs.
To do anything less is to accede to the creeping nationalization of health care finance in the United States. Naturally, those who think the only real problem with Medicare and Medicaid is that they aren’t already universal have no interest in arresting the nationalization of health care finance. ObamaCare accelerates the process. It is primarily a Medicaid-expansion program, despite all the attention to its other provisions.
The Ryan plan contemplates a repeal of ObamaCare and the beginnings of a rational, affordable approach to establishing a 21st century safety net within a free society. As it is a dramatic proposal that was announced during the daytime, I think that the terms of daytime drama fit it well:
• Ryan’s Hope. By spelling out in substantial detail how his proposed Medicare, Medicaid, tax reform, and budget provisions would work, the congressman said he hoped to spark an “adult conversation” about the nation’s fiscal challenges. He hopes that those concerned about his proposed entitlement reforms will ask their own senators and representatives for alternatives.
If we don’t change the incentives in Medicaid through block grants, how will Congress and state legislatures pay for it? If we don’t change the incentives in Medicare by encouraging competition and discouraging wasteful consumption of medical services, will we instead adopt the Obama administration’s proposed solution of massive cuts in reimbursement rates to physicians and other providers?
• All My Children. The Obama budget assumes that the federal debt alone will rise to 77 percent of GDP by 2021. The Ryan budget will hold that figure to 68 percent in 2021 (still up a few percentage points from today) and pulls it down after that. If our children are to inherit a free society, a dynamic economy, and an affordable tax burden, we need a plan for paying down our total debt, not making it worse.
• One Life to Live. Politically, I mean. Ryan knows full well that he is taking a major political risk by spelling out his plans in such detail. He expected the ensuing demagoguery. But in his view, what’s the point of aspiring to leadership if you aren’t willing to take risks? What’s the point of pretending to care about the nation’s fiscal woes while doing nothing of consequence about them?
• General Hospital. While tax reform, domestic spending, regulatory reform, and other matters are clearly important, the single-biggest fiscal issue in the United States is health care. Medicare and Medicaid are driving federal deficits. Here in North Carolina, Medicaid and the state employee health plan are major causes of the state’s fiscal imbalance.
You can’t balance the budget or restore freedom without reforming health care. And I mean really reforming it, through patient power and competition, not “reforming” it through a government takeover.
Will Ryan succeed at his task? This is not a cliffhanger that will be resolved on tomorrow’s episode. We won’t know for years. As did Erskine Bowles before him, Ryan certainly deserves credit for making the attempt.
Hood is president of the John Locke Foundation.