What Is the Purpose of the Paul Ryan Budget?

You can read Paul Ryan's budgets as cautionary 'What Not to Do' documents, but that's now how Ryan means them.

Jim Pethokoukis of the American Enterprise Institute says not to think about Republican Representative Paul Ryan's budget proposals as actual budget proposals:

"I view Ryan's previous plans more, ultimately, as fiscal education modules than actual budget blueprints. They highlight good ideas, such a Medicaid block granting and Medicare premium support, and suggest how those ideas might affect budgeting.
"The Ryan plans also quietly highlight challenges: Slow economic growth + (roughly) historical levels of tax revenues + a promise to spare retirees and near-retirees from Medicare changes = a long-road road to debt reduction + severe Medicaid cuts + severe discretionary spending cuts. My conclusion is that a) tax revenues and spending levels will in the future probably need to be above historical levels and the levels Ryan targets, b) we cannot settle for the level of GDP growth CBO forecasts, c) entitlement reform ASAP. Ryan has the right ideas — and certainly knows the need for faster growth — but implementation poses major political challenges."

This is roughly, circa 2011, how I used to write about Ryan's proposals. It's not how I write about them anymore, even though the substantive nature of my objections to his plans hasn't changed very much.

Here's why: Paul Ryan's budgets are not cautionary tales about the problem with waiting 10 years to start fixing Medicare, clinging to a 19 percent of gross domestic product revenue target, and slashing Medicaid and domestic discretionary spending to make the math add up. They are actual proposals to wait 10 years to start fixing Medicare, cling to a 19 percent of GDP revenue target (and not even hit it), and slash Medicaid and domestic discretionary spending to make the math add up.

It's no accident that Ryan's plan centers around low taxes and no near-term cuts to old-age entitlements; that's the natural position of a political party whose base tends to consist of old people and wealthy people. It's going to be hard to convince Republicans that these positions undermine their fiscal plan when they are the core of the fiscal plan.

If you took the House Republican approach to fiscal policy and adjusted it so that it started cutting Medicare now, collected more revenue, and did not impose severe cuts in Medicaid and discretionary spending, you would be left with something much closer to President Barack Obama's budget than Paul Ryan's budget.

So what does it mean to advance this critique and then say that Ryan "has the right ideas?" Ryan does advance a couple of good structural ideas that Pethokoukis cites. Medicare premium support would be a good component of efforts to control Medicare costs, particularly in the most recent forms of the proposal, which retain a Medicare public option. And Medicaid block grants would give states incentives to innovate and control costs in that program.

But is Ryan serious about these ideas, or are they gimmicks? Liberals tend to view Medicaid block grants as a fig leaf for the gutting of the Medicaid program. And as Ryan has proposed them, they're right -- He would grow the block grants so slowly that they would amount to an $800 billion cut in the Medicaid program over 10 years, over and above a repeal of the Medicaid expansion in the Patient Protection and Affordable Care Act.

And the Medicare reform looks gimmicky for two reasons. One is that, as Pethokoukis laments, it's always set to start "ten years from now." Republicans are for Medicare reform in the abstract but never anytime soon.

The other is that while Republicans would retain traditional Medicare for decades (or perhaps forever), they have mercilessly demogagued Democrats' specific and near-term efforts to control costs in that program. Republicans' desire for Medicare cost control through markets would look more sincere if they were also interested in controlling costs in the part of the program they admit will not be market-based.

If Republicans were willing to change in the areas Pethokoukis wants them to -- more revenue, Medicare cuts sooner -- they would surely be able to get structural concessions from the president on entitlement reform. In fact, the president's proposed sequester replacement is tax increases and near-term Medicare cuts. That should provide a good opportunity for the discussion Pethokoukis wants; instead, Republicans are flatly saying 'no,' because the structural reforms are not in fact a high priority for them.

So, Pethokoukis can read the Ryan budget as a cautionary tale, but that's not how Republicans are going to read it. It would be much easier to get Democrats to adopt the handful of good structural ideas out of Ryan's plan than to get him to abandon the misprioritization of goals that makes his plan so ugly. And that's why I've shifted out of the "good cop" camp of those trying to fix the right and into the "bad cop" camp.

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