Yesterday morning, Paul Ryan released a rehashed version of the “Path to Prosperity” – and it’s nearly identical to the Romney/Ryan economic blueprint roundly rejected by Americans in November. Medicare is turned into a voucher system, Medicaid is block-granted to the states, Obamacare is repealed, marginal tax rates are lowered.
That being said, examining his budget reveals some of Ryan’s glaring omissions, inconsistencies, and the extent to which he attempts to redefine the role of government in America.
Let’s begin…
“Today, Washington budgets by crisis.” -p.4
In and of itself, this admission is obvious and insignificant, primarily serving to tap in to widespread disgust at ‘Washington’ playing politics. But looking back, the crisis atmosphere was ushered in by Congressional Republicans – primarily in the House – who held America’s bond yields hostage during the debt ceiling debate of 2011. From that act of intransigence, the Budget Control Act of 2011 combined with the pending expiration of the Bush tax cuts to create the fiscal cliff, which in turn pushed off sequestration until March.
Paul Ryan appears to be ducking blame for his role in engineering these manufactured crises, which have become all too commonplace.
“The House Republican budget reduces deficits by $4.6 trillion over the next ten years. It targets wasteful Washington spending and reforms the drivers of the debt.” -p. 7
Paul Ryan’s short-term goal for deficit reduction – $4.6 trillion over ten years – isactually less than that achieved under Simpson-Bowles 1.0 or 2.0, according to figures from Ezra Klein’s Wonkblog.
Here’s what the “Path to Prosperity” does to government spending as a share of GDP:
-p.9
This gets back to what’s beneath the surface in the Ryan Budget – it’s a blueprint for Grover’s quest to shrink the American government until it’s small enough to drown in a bathtub.
From Nate Silver, here’s a chart that shows government spending as a percentage of GDP hasn’t been that low since the early 50s:
“…Bill Gross, bond-fund manager at PIMCO, estimates that we would need to cut spending or raise taxes by 11 percent of GDP (or $1.6 trillion) over the next five to ten years to keep our debt below a crisis level.” p. 15
It doesn’t help Ryan here that he cites an expert on bonds arguing for significantly less deficit reduction than he’s proposing. This begs the question, is deficit reduction really necessary given the persistent high levels of unemployment?
In economies with depressed aggregate demand, cutting government spending serves as a headwind to GDP growth. Unemployment has also been on the rise in indebted European nations, which embraced austerity or had austerity thrust upon them.
“Congress should pursue patient-centered health-care reforms that actually bring down the cost of care by empowering consumers.” p. 33
Patient-centered health-care reform is nothing more than a focus-group approved sound bite. It is worth mentioning that Ryan takes no concrete measure to guarantee that the cost of care will be brought down. The notion that consumers have a greater ability to bring about reduction in costs than federally imposed price ceilings or the government’s purchasing power through economies of scale, however, is downright farcical.
In Medicare, the federal government has tried to address cost pressures by cutting provider payments in ways that hurt quality and restrict access for seniors. -p. 37
Paul Ryan really wants to cut federal spending on health care. I think he’s proven that beyond a shadow of a doubt.
Let’s use an admittedly simplistic example to examine federal health care expenditures to Medicaid, while keeping in mind the realities of an aging population. Assume the federal government spent $10 billion in 2012 to pay for 10,000 Medicare recipients to undergo back surgery. If 10% more people needed the procedure next year, spending can either go up 10%, or the federal government can force providers to accept payments that are about 9% and spend the same amount, but at a lower rate per surgery. Or, the federal government can choose to spend the same amount at the same rate, and people won’t receive the care they need.
A failure to scrutinize the size of provider payments signals Ryan’s unwillingness to examine measures which would curb the cost of care – instead, he focuses on the singular task of cutting government spending on health care.
“This budget calls for directing any potential Medicare savings in current law toward shoring up Medicare, not paying for new entitlements.” -p. 40
What Ryan’s actually doing here is simple: choosing a short-term continuation of the status quo for Medicare at the expense of Medicaid.
“Washington’s spending problem did not just develop in the last few years.” -p. 55
Too true. As I’ve written before, the deficit drivers have been the Bush tax cuts, two wars on the nation’s credit card, and an unfunded expansion of Part D to Medicare.
Paul Ryan voted in favor of all of those measures.
BONUS: One thing in the Ryan Budget you should pay more attention to…
-p. 30
He’s hit on something here in this chart, which illustrates a sad truth for lower income single-parent families: as income increases, government benefits are lost – in effect negating part of the impact of those extra dollars earned.
One thing this chart shows is how little Barack Obama’s proposed minimum wage hike would help under this scenario. If a mother with one child worked 50 weeks for 40 hours/week and saw her hourly wage go up to $9.00 from $7.25, the income increase would cause her family to lose government benefits and effectively serve as a high tax on her additional earnings. Very little would be retained after these additional expenses and taxes are incurred.
If Republicans began proposing tax reform that addresses the costs borne by impoverished individuals as they move up the income ladder, well, that’s a national conversation I’d enjoy having.
