Ryan’s “Extreme” Budget Takes Center Stage

Congressman Paul Ryan’s budget proposal for 2012 has set the agenda for the debate about spending in Washington.

With a government shutdown over this year’s budget narrowly averted, Washington turns to fight over spending in 2012. House Republican Paul Ryan, who chairs its budget committee, has proposed to cut more than $6 trillion in federal spending over the next ten years, including $4.4 trillion in cuts compared to the president’s budget.

Barack Obama’s 2012 budget was criticized by fiscal conservatives for its utter lack of entitlement reforms. The major health care and unemployment support programs account for the bulk of federal spending. Their costs are expected to skyrocket in years ahead unless their scope is significantly reduced.

By 2021, more than 50 percent of federal spending would have to be allocated to Medicaid, Medicare and Social Security alone. Along with defense, interest payments and unemployment insurance, it would be nigh impossible for the federal government to continue to finance education and other domestic programs unless taxes are raised substantially.

Ryan’s budget would transform Medicare for the elderly in a “premium support” program which subsidizes retirees’ health plan of choice. “We want to have comprehensive Medicare plans available to future seniors that they can pick from and have these plans compete against each other for their benefit,” he told NBC’s Meet the Press this Sunday. By introducing competition, such a reform measure would encourage health-care providers to enhance quality while reducing inefficiencies and costs.

The Congressional Budget Office has warned that unless Medicare is reformed, it could go bankrupt before the end of the decade. “Our goal is to repair the safety net,” Ryan said in response to criticism that his budget would cut benefits; “make it more sustainable.”

The growth of Medicaid, the health support program for the poor, would be reduced by block granting spending to individual states, forcing them to rein in costs however they see fit. “They will have more money over time than what they have now; it’s just the level of growth in those programs” that is affected, said House Majority Leader Eric Cantor on Fox News Sunday.

We believe that if you put in place the mechanisms that allow for personal choice as far as Medicare is concerned, as well as the programs in Medicaid, that we can actually get to a better result and do what most Americans are learning how to do, which is to do more with less.

Democrats have been skeptical and so far unwilling to reform entitlement programs that are popular with their millions of beneficiaries. Former House speaker Nancy Pelosi professed last year that reform should do “what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare.” Senate Majority Leader Harry Reid in January described Republicans’ efforts to repeal the president’s health reform law as “a gesture in futility” even as health-care costs are mounting faster than other expenditures.

According to senior White House advisor David Plouffe, who was Barack Obama’s campaign manager during the 2008 election, the president’s commitment to deficit reduction is “absolutely firm. But while we do that,” he told ABC’s This Week, “we’ve got to make sure that we are not hurting our ability for our people to get the education they need to compete with people in Beijing and Bangalore; that we are investing in research and development; that we’re investing in infrastructure.”

Balancing the budget requires a “balanced approach,” said Plouffe. “Certainly the wealthiest in this country are going to have to contribute something.”

Under Ryan’s plan, by contrast, “the average millionaire in this country would get at least a $200,000 tax cut while the average senior down the road is going to pay $6,000 more in health costs.” Republicans would lower both corporate taxes and the top income tax rate from 35 to 25 percent in a measure designed to stir investment and economic growth.

On the same program, conservative commentator George Will offered a different perspective. “This extreme plan by Paul Ryan,” which is how opponents have labeled it, “envisions over the next decade a 34 percent increase in federal spending. It envisions adding trillions of dollars to the national debt.” And it would only barely balance the budget by 2021.