Ryan's Budget Is Radical? Far From It
Ryan's Budget Is Radical? Far From It
No sooner had Mitt Romney announced Paul Ryan as his running mate than Democrats and their backers started attacking the Wisconsin Republican as a "radical."
President Obama's campaign manager, Jim Messina, immedi ately sent an email out to supporters calling Ryan the "author of a budget so radical the New York Times called it 'the most extreme budget plan passed by a House of Congress in modern times.'"
Milwaukee Mayor Tom Barrett said "Paul Ryan's radical budget would ... end Medicare as we know it."
Adam Green, co-founder of the Progressive Change Campaign Committee, called Ryan "a right-wing extremist."
A Google search of "Ryan radical" turns up more than 91,000 hits over just the past three days.
Obama himself blasted Ryan's budget plan last spring, calling it "thinly veiled social Darwinism" and "an attempt to impose a radical vision on our country."
Average, The New Radical?
But Ryan's budget plan is far from radical.
His proposed spending and revenue levels are above historic averages. His Medicare reform has strong bipartisan support. His tax reform plan is similar to one proposed by Obama's own bipartisan debt reduction commission.
Ryan's budget, which passed the House last March, would set the federal government on course to spend an average of 20% of GDP over the next decade. That's slightly higher than the post-World War II average of 19.8%.
His tax plan would produce revenues averaging 18.3% of GDP. That, too, is somewhat higher than the 17.7% post-war average. What's more, Ryan's plan would set tax and spending rates higher than every Democratic president before Obama.
By this measure, what's radical is Obama's tax and spending plans.
His last budget, issued in February, would set federal spending over the next decade at 22.5% of GDP, on average, according to the Congressional Budget Office.
For context, federal spending reached or exceeded that level in only seven years out of the past 65 — and three of those were under Obama.
And Obama wants federal revenues to average 19.4% of GDP. That's higher than all but six of the past 65 years.
Democrats have also zeroed in on Ryan's Medicare reform plan, endlessly claiming that it will "end Medicare as we know it."
But under his plan, Medicare spending in the near term would track levels set by Obama. Unlike Obama, however, Ryan wouldn't use any of those near-term savings to finance ObamaCare, but would direct all that to extending the Medicare Trust Fund.
And starting in 2023, Ryan would offer retirees — who are today 55 or younger — the ability to choose from a range of private insurance options, as well as traditional Medicare, with the government providing a fixed level of premium support.
The thinking is that this will unleash competitive insurance market forces, keeping costs down, while providing greater control over federal spending. But Ryan's plan would let Medicare spending continue to climb over the long term, just not as fast as projected under current law.
Despite efforts by Democrats to cast it as a Medicare killer, Ryan's Medicare reform actually has a strong bipartisan pedigree, attracting the support of Sen. Ron Wyden, D-Ore., as well as former Democratic Sen. John Breaux, who developed a similar "premium support" reform as part of President Clinton's bi-partisan Medicare commission.
His plan has also gained support from former Clinton administration budget director Alice Rivlin, who told the Huffington Post earlier this year that Democrats who say premium support will end Medicare "are lying, not to put too fine a point on it."
Breaux told lawmakers this spring that he expects Democrats to embrace some form of premium support after the election.
Obama himself has acknowledged the need to reform Medicare to slow its spending and keep it solvent.
"With an aging population and rising health care costs, we are spending too fast to sustain the program," he said in a speech before Congress last fall. "And if we don't gradually reform the system while protecting current beneficiaries, it won't be there when future retirees need it."
"We have to reform Medicare to strengthen it," Obama said. So far, he has failed to offer any specific Medicare reform plan.
Nor is Ryan's tax reform plan outside the mainstream. Under his proposal, the existing six tax brackets, which range from 10% to 35%, would collapse to two — 10% and 25%. Ryan would offset the rate reductions by closing loopholes that end up benefiting primarily the rich.
That plan is similar to the 1986 tax reform under President Reagan, which passed the Senate, 97 to 3. The Reagan reform also collapsed a slew of tax brackets to two — 15% and 28% — in exchange for closing many loopholes.
Ryan's plan also is similar in its basic outline to ideas put forward by Obama's ownSimpson-Bowles debt commission. One of the fiscal panel's proposals had three brackets — 8%, 14% and 23%.
That commission was emphatic about the need for tax reform, saying that since 1986, "Washington has riddled the system with countless tax expenditures, which are simply spending by another name."
And it was equally emphatic about the kind of reform needed. "Tax reform must," it said, "lower marginal tax rates for individuals and corporations — thereby simplifying the code, improving fairness, reducing the tax gap, and spurring economic growth."
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