Ryan’s Budget Proposal: Anything But Extreme

Ryan’s Budget Proposal: Anything But Extreme

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The ritual denunciation of House Budget Committee Chairman Paul Ryan’s 2012 budget proposal has already begun.  It is “extreme,” we are told, “radical” even.  It “slashes” spending “indiscriminately.”  It is designed to “eliminate government.”

Nonsense.  If anything, Ryan could have, and should have, gone further.  In fact, it says something about the fiscal mess we are in that despite these supposedly “extreme” cuts, Ryan’s “Path to Prosperity” proposal doesn’t actually bring the budget into balance until somewhere around 2040.  Over the next decade, it adds roughly $6 trillion to the national debt.   

That’s still a huge improvement over President Obama’s proposed budget that would actually increase the size of government relative to GDP, and add more than $13 trillion to the national debt.   But then again, Obama set the bar pretty low.

For instance, Ryan could have made much bigger cuts in defense spending.   Ryan more or less leaves the Obama administration’s defense request.  That would involve nearly $83 billion in cuts from the current baseline, but is largely an exercise in the Washington game of calling a decrease in the rate of growth a cut.  Under Ryan’s budget, the U.S. government will still spend nearly $6.5 trillion on the military over the next decade.   Had Ryan been willing to wind down the wars in Iraq and Afghanistan (and Lybia), he could have saved $125 billion next year alone.  And eliminating other unnecessary overseas commitments would allow structural changes that could save another trillion dollars over the next decade.

On domestic spending, Ryan essentially rolls back spending to 2008 levels.   That’s a good start, but it still leaves in place the huge domestic spending binge that took place during the Bush administration.   For example, Ryan would cut farm subsidies by roughly 20 percent.   By why should any of these environmentally destructive, corporate welfare payments survive?   Additionally, the Bush administration dramatically increased education spending without any corresponding increase in educational outcomes or test scores.   Why should those increases survive? 

Even on entitlements, Ryan could have gone further.   For example, he essentially ducks the need for Social Security reform in this budget, calling instead for a “trigger” that would force Congress to act in the future.  Ryan’s had solid ideas for Social Security reform in the past, including proposals for personal accounts.  He should have included them.  At the very least he could have gone as far as the president’s bipartisan deficit commission and recommended raising the retirement age or otherwise restraining benefit growth.  

And, since Ryan’s Medicare proposals would actually produce a better program with more choices for seniors, while saving money, it is a mystery why, other than politics, he delayed its implementation until 2022.   Indeed, Ryan’s approach to Medicare reform (developed with that arch-rightwinger Alice Rivlin, President Clinton’s budget chief) is the only way to control Medicare spending while protecting seniors from government rationing.  Delaying its implementation merely continues to overtax today’s workers, while denying seniors better quality care.

That is not to say that there isn’t a great deal to like in Ryan’s proposal.  For one thing, it represents the first serious attempt to control the growth of the federal government in recent memory.   And, Ryan understands that the real issue is not just the budget deficit, but the size of government.  Accordingly, he resists the siren song of tax increases.   He would return the federal government to about 20 percent of GDP by 2022.  That’s slightly higher than the 18 percent of GDP that the federal government consumed under Bill Clinton.  But it’s a whole lot better than the nearly 25 percent of GDP that it consumes today.  And by 2050 its goal is to reduce government spending to roughly 14 percent of GDP.  In contrast, current projections would put government spending at 42 percent of GDP by 2050.

Given the realities of politics – Republican skittishness and Democratic obstructionism – Ryan has probably gone about as far as it was practical to go.   But given our perilous fiscal shape, his plan is anything but “extreme.”

Michael Tanner is a senior fellow at the Cato Institute and head of research into health care reform.

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