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The Pump Handle

Presumptive Republican presidential nominee Mitt Romney’s selection of Congressman Paul Ryan (R-Wisconsin) as his running mate this past weekend has provided plenty of fodder for discussions about the role of the US government. Unlike Romney, who has often declined to provide specifics about policies he’d pursue as president, Ryan has been very clear about what he thinks the government should do. As chair of the House Budget Committee, Ryan authored the “Path to Prosperity” budget proposal that the House passed earlier this year.

The New Yorker’s Ryan Lizza describe Ryan’s evolution as a politician and charts the development of his budget proposals. In 2010, Ryan released the “Roadmap to America’s Future” budget, which proposed replacing Medicare with a voucher programs and Medicaid with lump-sum grants to states that they could use as they pleased and called for shifting a portion of Social Security into private accounts. In 2011, Ryan released the “Path to Prosperity,” an updated version of the Roadmap that, Lizza explained, scrapped the more controversial components in order to win votes. Compared to President Obama’s 2013 budget, this version of Ryan’s budget would bring in $2 trillion less in tax revenues and spend $5.3 trillion less.

The Congressional Budget Office scores major legislative proposals and calculates how the federal budget will be affected for years in the future if the proposed changes are made. Proposals that aim to reduce the federal deficit will often specify that programs like Medicare and Medicaid can only grow at a certain rate relative to GDP, and that rate is usually significantly lower than the growth rate over the past several years. If you convert these programs into Medicare vouchers or Medicaid block grants, you can easily peg the annual growth to GDP in some way — e.g., say that they can only grow at GDP + 1% annually. In this scenario, unless healthcare costs stop growing as quickly as they have been, each year the gap between the value of the vouchers or grants and the cost of healthcare will get bigger.

That’s an important point when considering Ryan’s Roadmap, but his more recent budget proposal doesn’t include vouchers. Instead, the latest proposals from Obama and Ryan specify a Medicare growth rate of GDP +0.5% and have different plans for cutting Medicare expenditures accordingly. Ezra Klein explains at Wonkblog:

Ryan’s budget — which Romney has endorsed — keeps Obama’s cuts to Medicare [holding the Medicare growth rate to GDP + 0.5%], and both Ryan and Obama envision the same long-term spending path for Medicare. The difference between the two campaigns is not in how much they cut Medicare, but in how they cut Medicare.

Democrats believe the best way to reform Medicare is to leave the program intact but vastly strengthen its ability to pay for quality. Republicans believe the best way to reform Medicare is to fracture the system between private plans and traditional Medicare and let competition do its work.

It’s worth saying there’s no particularly good evidence for either option. Competition hasn’t worked very well in the health-care system. Indeed, Medicare currently includes private options through the Medicare Advantage program. The idea was these private, managed-care alternatives would be cheaper than traditional Medicare. As it turned out, they ended up costing about 20 percent more.

As for the pay-for-quality revolution that the Obama administration envisions, that hasn’t been proven at Medicare’s scale, either.

But, in a post earlier this year, Klein pointed out that the biggest cuts in Ryan’s 2013 budget aren’t to Medicare:

From reading the coverage, I get the sense that people think Ryan’s budget works something like this: It lowers taxes, cuts the deficit and pays for all that by cutting deep into Medicare. That’s wrong.

It’s Medicaid and other health spending, which includes the Affordable Care Act, where Ryan really brings down the hammer: That category falls by 1.25 percent of GDP. So Ryan’s cuts to health care for the poor are almost twice the size of his cuts to health care for the old.

And then there’s the “everything else” category, which includes defense spending, infrastructure, education and training, farm subsidies, income supports, veteran’s benefits, retraining, basic research, the federal workforce and much, much more. And this category of spending falls by 2.5 percent of GDP.

That’s a lot of numbers. But it’s also clarifying. The big cut here isn’t to health care for old people, though that gets the headlines. It’s to health care for poorer Americans. The biggest category of cuts is “everything else,” which shrinks to implausibly low levels, and Ryan, to my knowledge, has never detailed, even in broad strokes, how he gets it that low. But since he’s opposed to further defense cuts — he in fact raises spending on defense in the next 10 years — it seems inevitable that the non-defense side of “everything else” would have to shrink considerably, and that means cutting quite a bit from income supports and veterans’ benefits and infrastructure.

From his budget proposals, we can tell that Paul Ryan’s priorities include reducing the deficit and getting the federal government out of the business of ensuring that the elderly and the poor have healthcare and at least a small amount of income on which to live. That’s not a pathway to a future I want to live in.


  1. james
    August 15, 1:20 am

    No one except the top few percent of the population that is wealthy enough to never worry about whether they will have access to Medicare, Medicaid, or SSI (or the unnervingly large percentage of working class that seemingly aren’t smart enough to understand how it will affect them) likes that kind of future scenario.

  2. Todd
    August 15, 5:42 pm

    Hmmmm…. I thought his budget reflected a priority to prevent the economic decline of America that is resulting from the socialist policies of the left in general and the current administration in particular. Its a pathway to a future that I hope the majority of voters want to live in.