Ryan’s ‘Courageous’ Budget Cuts Need Reality Test: Albert Hunt

Paul Ryan is John McCain, circa 2000, or Barack Obama in the last presidential election or Bob Strauss and Jim Baker for their entire careers: the darling of the Washington commentariat.

The chairman of the House Budget Committee, who released a budget last week that calls for dramatic spending cutbacks to politically sensitive programs such as Medicare, has been called a “rebel with a cause” by the television anchorwoman Diane Sawyer; to New York Times columnist David Brooks, he’s a “powerful elected official,” who is “willing to take a stand, willing to face the political perils.” A news search for the past three months shows the terms “courage” or “courageous” or “bold” were used 679 times in articles mentioning Ryan.

Whether the Wisconsin Republican emerges as one of the most influential national politicians of his generation -- the columnist-commentator George Will already has anointed him as the next vice president -- or whether this is merely his 15- minute Andy Warhol-like flash of fame, will rest on the political and policy credibility of his agenda, and whether he can expand his reach beyond fiscal issues.

There is no more attractive Republican on the national scene. The 41-year-old Ryan is articulate, personable, intelligent, deeply versed in policy, and conveys sincerity with few of the sharp edges and none of the harshness that mark some contemporary conservative politicians.

Voted for TARP

Neither is he an ideologue. A principled conservative, he nevertheless voted for the federal bailout for Wall Street banks, the No Child Left Behind education measure, the prescription- drug benefit for seniors and for a bill that bans employment discrimination based on sexual orientation.

He once worked for Jack Kemp, and describes himself as a disciple of the tax-cutting, minority-courting, buoyant late former congressman and vice presidential candidate. Yet while he has embraced Kemp’s tax cutting, he has displayed little of the outreach and racial inclusiveness of his mentor.

“There’s no comparison between Jack Kemp and Paul Ryan,” says Hilary Shelton, senior vice president for advocacy of the National Association for the Advancement of Colored People. “Jack was a friend and always accessible. We have little or no relationship with Ryan.”

There are many missing specifics from Ryan’s budget and the early fire has been more than partisan demagoguery. Alice Rivlin, the Democratic economist who co-wrote an earlier Medicare- overhaul plan with Ryan, opposes his current proposal as draconian.

Privatizing Medicare

The Congressional Budget Office suggests that eventually privatizing Medicare as Ryan’s plan advocates, with government “premium support” payments to insurance companies, will result in less coverage and higher costs for senior citizens. Many experts said his proposal to turn Medicaid, the health insurance plan for poor people, into a block grant to states will reduce benefits for the most vulnerable members of society.

In disputing those assertions, Ryan will have to demonstrate he isn’t curbing federal spending on the backs of the poor, elderly and disabled. Almost one-sixth of Medicaid beneficiaries are people with disabilities. Because they have greater health-care needs, they account for almost half of all expenditures.

Ryan is on the high ground when he talks about the need to rein in chronic deficits and the growth in entitlement spending. He loses that advantage if voters believe he’s advocating a massive transfer of wealth from lower and middle-income Americans to the most affluent and asking almost no shared sacrifice.

Estate-Tax Cut

When he takes any tax increases off the table, and passionately defends measures like a more generous estate tax, which benefits the richest Americans, it makes that challenge difficult. His own long-term budget proposal calls for lowering the top tax rate to 25 percent for both corporations and individuals; corporations now are subject to a 35 percent top rate, for individuals it is 35 percent, slated to go up to 39.6 percent.

The Wisconsin lawmaker says he would offset the dramatically lower rates he proposes -- the lowest for upper- income individuals since 1931 and for corporations since 1941 -- by broadening the base and eliminating tax loopholes.

Lost Revenue

Here’s where the politics and the math get complicated. His rate cuts would mean $3 trillion or more in lost revenue over a decade. The only way to make up that shortfall would be to enact measures such as eliminating the write-off for interest on home mortgages, the deductions for state and local income taxes and for charitable contributions, or the research credit for businesses.

That wouldn’t sit well with middle-income voters or some in the business community.

Interestingly, the punditocracy, which hails Ryan for his political courage, often fails to note he was a member of the bipartisan commission led by Alan Simpson and Erskine Bowles that recommended a comparable debt-reduction plan by both cutting back on spending and increasing taxes. Ryan was in the minority on the panel that voted against it, in contrast to Senator Tom Coburn of Oklahoma, a conservative Republican who swallowed his reservations about higher taxes, and Senator Dick Durbin of Illinois, a liberal Democrat who overcame his hesitancies about curbing Medicare and Social Security outlays.

Tax Increases

Every serious bipartisan proposal to tackle the long-term budget deficit -- Bowles-Simpson, the commission led by Rivlin and former Republican Senator Pete Domenici of New Mexico, the National Academy of Sciences -- calls for a combination of cutbacks in the growth of entitlement spending, curbing discretionary spending, including defense, and some tax increases.

Bill Galston, a scholar at the Washington-based Brookings Institution and former domestic-policy adviser to President Bill Clinton who has offered another proposal, notes that while Ryan’s plan “stands no chance of enactment,” it could be important in “jumpstarting the ‘adult conversation,’ which Obama and others have said is necessary.”

If a serious down-payment on long-term deficit reduction is enacted this year, it will have to be bipartisan and include cutbacks in entitlements and higher taxes; the real road map will be Bowles-Simpson. An important determinant of whether that’s possible will be the flexibility of the bright young congressman who is chairman of the House Budget Committee.

(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Albert R. Hunt in Washington at ahunt1@bloomberg.net.

To contact the editor responsible for this column: Max Berley in Washington at mberley@bloomberg.net.

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