Democrats, Republicans Brace for Budget Battle

As the Republican controlled House of Representatives voted to enact several tens of billions in spending cuts this week, Democrats are preparing for a tougher budget fight in the weeks ahead. Senior Democrat Chris Van Hollen of Maryland has warned that as many as 800,000 Americans could lose their jobs if Republicans insist on making “reckless” spending cuts. Republicans warn of a looming debt crisis unless serious cutbacks are made.

On a largely partisan vote, the lower chamber of Congress voted to cut some $60 billion in spending from the current budget, or 14 percent of discretionary domestic spending. The Democratic majority in the Senate is likely to block the austerity measures.

Earlier in the week, President Barack Obama introduced his budget for the next fiscal year which was declared dead by House speaker John Boehner mere days afterward. “This budget’s going to kill job creation in America because it spends too much, borrows too much and taxes too much,” he told Fox News’ Hannity.

Whereas the president has proposed $100 billion in yearly spending cuts for the next decade, Republicans intend to rein in the deficit much more aggressively. According to Senator Chuck Schumer on New York, “Speaker Boehner seems to be on a course that would inevitably lead to a shutdown.”

Unless a compromise is reached by March 4, when current funding expires, the nation could see a repetition of 1995 when President Bill Clinton vetoed a Republican spending bill that cut education, environmental protection, Medicare and public health funding. For two months, nonessential federal services were suspended while Republican approval rates plummeted. President Clinton comfortably won reelection the very next year.

In an appearance on CBS’ Face the Nation, Congressman Paul Ryan of Wisconsin, who chairs the House budget committee, said his party is not “looking for a government shutdown. But at the same time,” he stressed, “we’re also not looking at rubber stamping these really high elevated spending levels that Congress blew through the joint two years ago.”

The president has proposed to freeze discretionary spending levels for the next five years. Republicans believe that current domestic spending is far too high and stifling job creation.

On the same program, Congressman Van Hollen agreed that government has to rein in spending but he argued that drastic cuts this year could damage a still fragile economic recovery. He said that Republicans were taking the “wrong approach” toward mending the economy and proposed to close tax loopholes to increase revenue.

“We think we need to get the economy fully in gear, put together a plan now for cuts, and frankly we need to look at the revenue piece,” he said. “We need to close some of the tax loopholes for special interests like the oil companies — $40 billion worth of loopholes.”

With a deficit projected to reach $1.6 trillion next year, far more extensive tax or spending reforms are necessary to gain fiscal balance however. Ryan noted that entitlement programs are the main drivers of the nation’s “huge fiscal problem” and was disappointed that the president didn’t propose any changes to any of them in his budget. “We’re going to lead and propose serious solutions to this country’s problems so we can get growing again,” he announced.

Like the Democratic leader in the Senate, Van Hollen denied that Social Security was responsible for the rise in the deficit. “We’re not going to balance the budget on the backs of Social Security beneficiaries,” he professed. Democrats are opposed to reforming public pensions and the president has promised to preserve the current system “forever.”

The costs of Medicaid, Medicare and Social Security will skyrocket in the next decade and eventually account for half of all federal expenditures unless their scope is reduced. Republicans have urged entitlement reform but refused to volunteer specifics.

Boehner, Ryan Urge Deep Budget Cuts

While President Barack Obama wants to invest in education and infrastructure, the new conservative majority in the House of Representatives is talking about how much spending to cut. House speaker John Boehner as well as his new budget committee chairman Paul Ryan discussed their plans to reduce spending this Sunday.

Ahead of November’s congressional elections, Republicans pledged to rein in spending, somehow, short as they were on details. Less than two weeks ago, Republicans in the House unveiled several tens of billions worth of austerity measures — far less than the $100 billion they promised to cut during their first year in power.

According to Wisconsin Republican Paul Ryan, it’s just a start. “The spending limit measure marks another step in House Republicans’ continued efforts to change Washington’s pervasive culture of spending,” he explained.

The need for fiscal restraint has never been greater. The Congressional Budget Office has warned that unless serious spending reductions are enacted, the federal government will continue to spend hundreds of billions — if not trillions — of dollars it doesn’t have all through this decade. Under current projections, the national debt will equal 100 percent of GDP by 2021.

At this weekend’s Conservative Political Action Conference in Washington, Ryan recognized that the nation’s debt crisis isn’t merely a fiscal challenge. “It’s a moral challenge involving questions of principle and purpose,” he professed. “The size of the budget is a symptom of deeper causes, and it points to different ideas about government.”

Society’s potential problems are unlimited, so a government that would solve problems without limit must necessarily have power without limit to do it.

On Fox News Sunday, the congressman rallied specifically against deficit spending. “Today’s deficits means tomorrow’s tax increases and that costs jobs,” he said. “We just don’t buy into this neo-Keynesian belief that you’ve got to borrow and spend more money today to try and create jobs.”

Speaker Boehner told the same program last week that “there’s no limit to the amount of spending” his members are willing to cut. He reiterated that commitment on Meet the Press Sunday, adding, “We’re broke.”

In his State of the Union address, the president called for a five year freeze in domestic discretionary spending which excludes entitlements as well as defense. “Locking in that level of spending is way too much,” said Boehner. But he wouldn’t propose specific entitlement reforms either which are necessary to restore long-term balance to the budget.

Ryan has thought about entitlement reform. He would phase out Social Security, turn Medicare into a voucher program and dismantle Medicaid. “Rather than depending on government for your retirement and health security, I propose to empower people to become much more self dependent for such things in life,” he said in 2009.

The president’s own debt commission proposed a series of less radical reforms in November but even their plans were lambasted by Democrats who regard austerity measures as cutting “crucial” social programs or, in the words of The New York Times this week, “critical functions that only the government can perform.” (That newspaper seems to believe that defense cuts can balance the books even as the military’s total budget doesn’t account for even half of the deficit.)

While the Democratic leader in the Senate says that Social Security is just fine and doesn’t need to be reformed, Ryan urged the president to challenge his own party and come up with some bold proposals. “Presidents are elected to lead,” he said, “not to punt and this president has been punting.”

America’s Looming Entitlement Disaster

After billions in stimulus spending and bailing out banks and automakers, America’s public finances are in dire straits. Last year, the federal deficit reached almost $1.5 trillion while the debt has grown to $14 trillion, equaling the total annual economic output of the United States. Americans may need to brace for austerity but plans to rein in spending are few and controversial.

Republicans have pledged austerity in the new Congress. Several incoming Tea Party conservatives have promised to cut spending by up to $100 billion but this would not solve the country’s budget woes for the long term. Entitlements, which account for approximately a third of federal spending and will likely swallow up half of the budget by the end of this decade, have to be abolished or reformed in order to restore fiscal balance. But neither party likes to take away benefits from low-income families and seniors.

That is not to say that lawmakers don’t recognize the problems. According to Republican congressman Phil Gingrey of Georgia, 38 states across the country are already taking funds from other programs, including education, to continue to pay for Medicaid. On the Fox Business Network last month, he lambasted the Democrats’ health-care reform bill which prohibits states from making any changes to Medicaid for the next three years. “In 2014,” he added, “every state has to cover individuals up to a 138 percent of the federal poverty level.” Currently only Americans with incomes below the poverty line are eligible for health-care benefits.

Another congressman who has warned against runaway entitlement spending for many months is Wisconsinite Paul Ryan. He expressed concern in February of last year about Americans being “more worried about their material support from goverment than they are about their own liberties.” Many lawmakers in Washington believe that it is their job not merely to equalize opportunity, but to equalize the outcomes of peoples’ lives, he said. “The more we ask government to do for us,” Ryan warned, “the more government can take from us.”

Ryan has designed deep spending cuts and entitlement reform, including a privatization of Social Security for those who are under the age of 55. Medicare would be similarly dismantaled if Ryan had his way. Current recipients and those enrolling over the next ten years could continue to enjoy today’s program whereas in 2021, the system should become voucher based for new recipients.

On NBC’s Meet the Press last November former Federal Reserve chairman Alan Greenspan expressed support for Ryan’s plans, noting that with government borrowing over a third of what it spends, to find spending cuts, lawmakers have to look for “not individual, piecemeal cuts or taxes,” but reconsider whole programs instead.

As incoming chairman of the House budget committee, Ryan will be at the helm of trimming federal expenditures for the next two years. Democrats, who maintain a majority in the Senate, have already announced that they will “protect” public pensions against reform efforts however.

When the chairmen of the president’s debt commission released their recommendations last November, then Speaker Nancy Pelosi professed that entitlement reform “must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare.” The president himself has pledged to preserve Social Security “forever.” He denounced privatization as “an ill conceived idea that would add trillions of dollars to our budget deficit while tying [people’s] benefits to the whims of Wall Street traders and the ups and downs of the stock market.”

Raising the retirement age by one month every two years after it reaches 67 under current law would achieve nearly $4 trillion in deficit reduction through 2020, according to the debt commission. The pension age would reach 68 around 2050 and 69 by 2075. But even under those circumstances, Social Security remains a “Ponzi scheme,” said Texas governor Rick Perry in an interview with Newsweek. He advised congressmen who aren’t willing to cut spending to “just go home.”

With Democrats adamantly opposed to entitlement reform and Republicans similarly hostile toward the notion of cutting defense spending, there wouldn’t seem to be much reason to assume that Washington will be able to avert the looming entitlement crisis.

Neither Party Cheers Tax Cut Compromise

With the current session of the United States Congress coming to an end, the tax cuts brought about during the Bush Administration are due to expire. After months of fierce discussion between Democrats and Republicans about the need of maintaining existing tax rates, a compromise was reached between opposition members of the Senate and the White House this week. But some Democrats in Congress have already vowed to vote against the deal.

Democrats and the president have routinely blamed Republicans for holding the extension of middle-class tax rates and unemployment benefits “hostage” to tax cuts for “millionaires and billionaires,” or the richest 2 percent of Americans. In recent months, Republicans have blocked other legislation in Congress before, they say, Washington assure the people that their tax rates will not go up next year.

Confronted with this stalemate, President Obama, in a statement last week, said that he was unwilling to let “working families across this country become collateral damage for political warfare” in Washington. “I’m not willing to see two million Americans who stand to lose their unemployment insurance at the end of this month be put in a situation where they might lose their home or their car or suffer some additional economic catastrophe,” he added. So he announced a compromise agreement: a two years extension of current tax rates coupled with a thirteen-month extension of unemployment benefits. “It’s not perfect,” the president admitted, “but this compromise is an essential step on the road to recovery.”

Some members of his own party beg to differ and Congressman Chris Van Hollen of Maryland explained why on Fox News Sunday. Even if there are some House Democrats who “haven’t adjusted to the post election reality,” most are willing to compromise but upset about the estate tax cut, he explained. “That doesn’t help the economy,” according to Van Hollen. “It hurts the deficit. And most importantly, the Republicans did not insist on the estate tax being part of the central portion of this deal.”

The estate tax break — which according to Van Hollen would cost the government $68 billion in revenue — would lower rates to 35 percent on estates over $5 million as opposed to the current 45 percent tax on estates worth more than $3.5 million. Paul Ryan, who will succeed Van Hollen as chairman of the House budget committee in the next Congress, characterized it as a double tax on death. “Economists will tell you that it’s really not a tax that soaks the rich,” he said, “but it’s a tax on capital that deprives business investment and therefore job creation.”

If liberal Democrats successfully manage to stall or vote down the compromise agreement, Paul promised that Republicans next year, once they have a majority in the House of Representatives, will prevent any tax increase. “And we’ll do it retroactively after the first of the year.” Unsurprisingly, Van Hollen was quick to add that he did not intend to block the compromise altogether

The White House seems confident that the deal will pass. Senior advisor to the president David Axelrod said on ABC’s This Week that he expected “strong support on both sides of the aisle.” He warned Democrats that unless they accept the compromise, hundreds of thousands of unemployed Americans would see their benefits cut next year. The alternative is to “put money in the pockets of middle-class people,” he said.

Axelrod, who was Obama’s chief strategists during the presidential campaign, was all the more explicit on CNN’s State of the Union. “You can focus on what you don’t like and cut your nose off to spite your face, and that would be the wrong thing to do,” he said, adding that Congress should approve the deal because “everyone understands what it means to the economy if we don’t get this done.”

The greater question for the American economy is the ballooning national debt however. The federal government currently borrows more than a third of what it budgets and there are no plans to seriously rein in spending.

Even if restoring balance to the budget is possible at existing tax rates if only Washington freezes spending levels, it seems unlikely that Democrats will accept cuts during the next two years unless they are offset by some tax increases.

Congressman Ryan, who has proposed radical spending cuts and entitlement reforms in the past, was asked about the deficit on Fox News Sunday but wouldn’t say how exactly he intends to balance the budget next year. Extending the tax cuts isn’t so much a fiscal measure though. “I’m not going to make any bones about this and say this is a great growth package,” he told CNBC Wednesday. “They have some demand side Keynesian stuff in here I’m not particularly a fan of,” he complained then, “but this is probably the best deal we can get.”

On his Fox Business show this Friday, David Asman also criticized Democrats who pretend that stimulating consumption will help the recovery. “Our economy’s health is judged by how much we produce, not by how much we buy,” he said. “The more Americans work and produce, the stronger our economy grows. And that’s what gives us the wealth to buy and consume, not the other way around.”

With unemployment rates stuck at 10 percent, Asman said Congress shouldn’t do anything that could undermine job creation. “We need economic policy that encourages work and production a lot more than we need policies meant to encourage consumption,” he explained. “That’s why any tax increase is insanity right now.”

Debt Commission Proposes Deep Budget Cuts

Members of the president’s debt commission have proposed deep budget cuts in order to rein in government spending in the United States. Entitlement programs as Medicare and Social Security, which are responsible for the brunt of federal spending, would be hit especially hard.

The National Commission on Fiscal Responsibility and Reform, created by President Barack Obama in January of this year, was not supposed to release its recommendations for several weeks yet. Its two chairmen however, former Republican senator Alan Simpson and Democrat Erskine Bowles, who was President Bill Clinton’s White House chief of staff in the 1990s, came out with proposals this week already. They have stressed that theirs are personal recommendations, not the findings of the commission as such which includes eighteen members in total, among them Congressman Paul Ryan of Wisconsin who has previously proposed entitlement reform in order to balance the federal budget. Partisan deadlock may have compelled the chairmen to publish their own ideas after almost ten months of discussion.

Although the president has promised to preserve Social Security “forever”, describing privatization as “an ill conceived idea that would add trillions of dollars to our budget deficit while tying your benefits to the whims of Wall Street traders and the ups and downs of the stock market,” America’s pension system is in dire need of reform. Medicare as well as Social Security will bankrupt without intervention.

In order to save the programs and achieve “nearly $4 trillion in deficit reduction through 2020” while reducing the deficit to just over 2 percent of GDP by 2015, the chairmen of the debt commission, in a draft put out by them Wednesday, suggest to raise the retirement age by one month every two years after it reaches 67 under current law. The retirement age would then reach 68 around 2050 and 69 by 2075. There would be a “hardship exemption” however for those unable to work beyond the age of 62. Other proposals include:

  • Granting retirees the choice of collecting half of their benefits early and the other half at a later age to support phased retirement options;
  • Asking doctors and other health-care providers to slow the increase in health-care costs;
  • Reducing farm subsidies by $3 billion a year;
  • Freezing federal salaries and government employee bonuses;
  • Eliminating congressional earmarks

Several of the Democrats who sit on the commission have already voiced their opposition to these supposedly radical proposals. They warn that there will be no fourteen vote majority for many of these notions.

Several dozen of Democratic legislators immediately released a joint statement after the commission chairmen released their findings, urging the president to protect Social Security. “If any of the commission’s recommendations cut or diminish Social Security in any way, we will stand firmly against them,” they have pledged.

Democrat Raúl Grijalva of Arizona, who is considered one of the most liberal of congressman, complained that “we have waited through nine months of backroom negotiations only to be told that the American people will have to tighten their belts another notch while defense spending continues to grow and corporate bonuses continue to expand.” Congress should have a “realistic, productive conversation” about deficit reduction, he believes. “Instead, we’re debating a proposal from a commission dedicated to cutting crucial social programs and reducing corporate and upper income taxes at the same time.”

The commission chairmen have proposed to reduce income tax rates but attest that the losses in revenue can be offset by closing tax loopholes and eliminating scores of tax deductions which currently make the American tax code incredibly complicated.

According to Speaker of the House Nancy Pelosi, who will lose her job next year since Republicans regained control of the lower chamber of Congress in this November’s midterm elections, pension reform as considered by the commission is utterly unacceptable. “Any final proposal from the commission,” she has declared, “must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare.”

Conservatives on the commission, including Paul Ryan, have cautiously praised the chairmen for their suggestions. Although Republicans are divided on entitlement and earmark reform, fiscal hawks as Ryan would rather reform be more comprehensive. His “Roadmap for America’s Future,” which is a detailed plan to restore balance to the federal budget, represents, as then Office of Management and Budget Director Peter Orszag put it in February of this year, a “dramatically different approach in which much more risk is loaded onto individuals.” Congressman Jeb Hensarling of Texas and Senator Tom Coburn of Oklahoma are also renowned for their opposition to deficit spending but the other five Republican members of the commission may be more inclined to compromise. They have all spoken out against raising taxes however.

At a press conference Wednesday afternoon the two commission chairmen acknowledged the difficulty of reforming entitlement programs, something that has long been anathema to lawmakers from both sides. “We’ll both be in a witness protection program when this is all over,” joked Simpson. Bowles added that they weren’t asking anyone to vote for their plan. “This is a starting point,” he explained.

Republicans with Few Solutions on Sunday

With the Republican Party now in the majority in the lower house of Congress, for the next two years, the party must stop boasting and prove that it can govern again.

Republicans have offered some clues of what they will do with their halfhearted Pledge to America. But other than promising to rein in spending somehow for the past two years in opposition, the party has largely refrained from suggesting concrete measures to reduce the deficit. Several prominent Republican legislators, some newly elected, appeared on the Sunday morning talk shows this week to discuss their prospects of political leadership in America for the next two years.

Quite probably the most libertarian of Tea Party candidates, Rand Paul of Kentucky, said on ABC’s This Week that the single largest concern of Republicans today should be the national debt. “I think we’ve been fiscally irresponsible for a generation or more here,” he said. “Republicans doubled the debt when we were in charge, and then Democrats are tripling the debt.” Read more “Republicans with Few Solutions on Sunday”

Republicans’ Halfhearted Pledge to America

In a move reminiscent of the “Contract with America” which Republicans introduced six weeks before the 1994 midterm elections, the opposition this week offered a “Pledge to America” — a similar, if larger series of campaign promises, explicitly framed as an alternative to the “big government” policies of the ruling party.

The initiative, which is spearheaded by House Minority Leader John Boehner as well as Congressmen Eric Cantor of Virginia, Mike Pence of Indiana and Paul Ryan of Wisconsin, features some thirty proposals, including a government hiring freeze, caps on domestic spending accounts, the extension of Bush era tax cuts and a promise to “repeal and replace” the health-care reform bill that was enacted by Congress in March.

The plan seems an effort on the part of a new generation of Republican leadership to give political meaning to the powerful wave of anti-government resentment that inspires the Tea Party movement. The “Pledge to America” document is constitutionally conservative and includes a notable provision which demands future bills to state explicitly from which article of the Constitution they derive legitimacy.

Minority Leader Boehner, who is likely to replace Nancy Pelosi as Speaker of the House this fall if Republicans indeed manage to secure a majority in that chamber, described the document as testimony to a “new governing agenda, built by listening to the people” on Thursday. It “offers plans to create jobs, cut spending, and put power where it belongs — in the hands of the people.”

The notion is hardly new but as Congressman Ryan likes to stress, the Pledge is not supposed to “reinvent” but to “reclaim” America. Social conservatives have been critical though, complaining that traditional values and positions on issues as abortion and gay marriage are largely absent from the document.

Aside from promises to rein in spending, repeal Obamacare and reform the government-sponsored mortgage entities Fannie Mae and Freddie Mac which were unmentioned in the financial reform bill hammered out by Democratic lawmakers in June, the document is vague on details. The future and sustainability of entitlement programs as Medicare, Medicaid and Social Security which, beside defense, constitute the largest expenditures of the federal government, are hardly addressed.

Ryan, whose “Roadmap for America’s Future” has been hailed by libertarians and fiscal conservatives as an extensive plan to solve America’s long-term budget woes, does have fresh ideas. He would radically reform the federal tax system, largely privatize Social Security for Americans under the age of 55 and dismantle Medicare as it currently exists during a period of ten years to replace it with a voucher system. “Rather than depending on government for your retirement and health security, I propose to empower people to become much more self dependent for such things in life,” he explained last year.

The “Pledge to America” doesn’t contain similarly bold policy solutions. But that hasn’t stopped Democrats from scaremongering, threatening that Republicans would take away people’s health insurance and pensions in order to finance tax cuts for the rich.

White House spokesman Robert Gibbs characterized the document as “the same litany that got us into this mess — tax cuts for the rich that costs millions of dollars.” Speaker Pelosi’s office was all the more ferocious, alleging that “Republicans are pledging to ship jobs overseas; blow a $700 billion hole in the deficit to give tax cuts to millionaires and billionaires, turn Social Security from a guaranteed benefit into a guaranteed gamble, once again subject American families to the recklessness of Wall Street and take away patients’ rights.”

Paul Ryan’s Radicalism

Congressman Paul Ryan of Wisconsin stubbornly persists in his crusade for free-market capitalism though criticism of his “Roadmap for America’s Future” is fierce.

In February, Office of Management and Budget Director Peter Orszag deconstructed Ryan’s plans, stating that although they address long-term fiscal problems, many lawmakers might find them “objectionable” because, as Politico put it, they “would shift risks and costs onto individuals and their families.” According to Orszag, Ryan’s is a “dramatically different approach in which much more risk is loaded onto individuals.”

That, apparently, is a bad thing.

“Democrats have followed up,” notes Time, “with a flurry of withering attacks, all of which signal a tactical shift: after months of painting their opponents as obstructionists willing to sacrifice critical legislation for electoral gain, Democrats are now tripping over themselves to juxtapose their ideas with a substantive Republican policy proposal.”

Ryan, unfortunately, is hardly typical of today’s GOP, no matter what his opponents may argue. He is typical of the GOP of thirty or even fifty years ago when Republican stalwarts as Ronald Reagan and Barry Goldwater brazenly defended individual responsibility and American capitalism. “I don’t see these things as third rails anymore,” Ryan told Time. “You literally crush our economy no matter if you try to tax or borrow your way out of [debt]. It’s just that unsustainable. The sooner we acknowledge that, the better off everybody’s going to be.”

Voters appear to agree. The British Telegraph ranked Ryan as the most influential Republican legislator, and the ninth most influential American conservative after Dick Cheney, Robert Gates and several prominent figures in media. The reason is hardly surprising. Where Democrats try to taint the GOP as the “party of no,” Ryan is one of the few Republicans with true vision.

The congressman spoke about his principles with John Stossel on the Fox Business Network last February 12. Americans, he said, are increasingly “more worried about their material support from goverment than they are about their own liberties.” Those in the federal goverment meanwhile, have apparently convinced themselves that their job is not merely to equalize opportunity, but to equalize the results of peoples’ lives. “The more we ask government to do for us,” warned Ryan, “the more government can take from us.”

Health care reform is a case in point. Ryan has repeatedly warned, even in conference with the president, that under the Democrats’ plans, costs will skyrocket and plunge the country further into debt. Obama announced on March 3 that his reform package will cost about $1 trillion over the next ten years; Ryan estimates that the real cost will be close to $2.3 trillion. The truth is, no one knows for sure.

Instead of treating Ryan’s alternative as a “serious proposal”, which is how both the president and Orszag described it, his objections were shuffled aside by Democrats who threaten that he, as Congresswoman Loretta Sanchez of California put it, would leave Americans exposed to the “whims of Wall Street.”

As health-care reform reached the floor of the House of Representatives once again on March 21, Ryan made a passionate last stand for liberty, recognizing, unlike so many of his colleagues from both sides of the aisle, that the matter before the House that day was not merely a health-care bill. “We are being asked,” he said, “to make a choice about the future path of this country.”

“This is really not a debate about prices, coverage or choosing doctors,” said Ryan. “This is ultimately about what kind of country we are going to be in the twenty-first century.”

He cited the Declaration of Independence which professes that man’s rights are derived, not from the state, but from nature and nature’s God. This guiding principle of American government has been violated repeatedly by massive entitlement programs and pervasive restrictions and controls on both businesses and individuals. Health care reform only accelerates a process that leaves “more Americans [dependent] on the federal government than on themselves for their livelihoods.”

Should we now subscribe to an ideology where government creates rights, is solely responsible for delivering these artificial rights, and then systematically rations these rights?

Do we believe that the goal of government is to promote equal opportunity for all Americans to make the most of their lives — or do we now believe that government’s role is to equalize the results of peoples’ lives?

The latter, evidently, is the philosophy of the Democratic Party today: a philosophy which Ryan described as “paternalistic” and “condescending” and one that “tramples upon the principles that have made America so exceptional.”

Health care reform, at least for now, has passed, yet its place in history, said the congressman, has not yet been decided. “The quest to reclaim the American idea is not over,” he promised. “The fight to reapply our founding principles is not finished, it’s just a steeper climb. And it is a climb that we will make.”

Paul Ryan’s Free-Market Crusade

As today’s Republican Party appears without direction, few among the opposition’s lawmakers remember the free-market principles once so staunchly defended by conservatives. It was a Republican president who gravely extended government’s interference with the housing market and it was a Republican administration that initiated the massive Wall Street bailouts which represented the single greatest distortion of American free enterprise since the New Deal.

There is however one GOP congressman who did what none of his colleagues dared — design a plan to control long-term government spending and deficits. Representative Paul Ryan of Wisconsin proposes to freeze domestic discretionary spending, privatize Social Security and turn Medicare into a voucher program that depreciates against medical costs.

Ryan, who serves as the ranking member on the House Budget Committee, found himself denounced by fellow Republicans. The reason? Ryan is an admirer of Ayn Rand’s free-market philosophy and reportedly requires staffers and interns to read her novel Atlas Shrugged (1957). In a speech before the Conservative Political Action Conference in February of last year, he even warned that some of the Democrats’ initiatives sound eerily similar to the collectivist measures enacted in Rand’s novel. “Citizens who had governed themselves will become mere subjects of the state,” he said, “more concerned about security than liberty. Once we reach this ‘tipping point,’ the friends of freedom will be reduced to silence.”

This sort of rhetoric is apparently considered controversial even by Republican standards. Before moving on to his critics however, a quick look at Ryan’s precise budget proposals is in order.

The Wisconsinite intends to largely privatize Social Security for those who are under the age of 55 by 2011. For citizens over that age, the program would remain unchanged. His alternative is to establish individual investment accounts, funded with part of peoples’ payroll taxes and protected against inflation by a government guarantee.

Medicare would be similarly dismantled if Ryan had his way. Current recipients and those enrolling over the next ten years could continue to enjoy today’s program whereas in 2021, the system would become voucher-based for new recipients. With their vouches, people could buy Medicare-certified, private insurance.

“Rather than depending on government for your retirement and health security, I propose to empower people to become much more self dependent for such things in life,” explained Ryan in a speech to the Hudson Institute last June.

His budget further involves a simplification of taxes, with people able to choose between either the existing system or his alternative which includes no deductions and virtually no special tax breaks. Above a taxfree amount ($39,000 for a family of four), taxpayers would know only two rates: 10 percent up to $100,000 for joint filers and 25 percent on incomes over that.

Critics are positively infuriated. While Republicans have been reluctant to admit support for Ryan’s proposals, economist Paul Krugman believes that his vision “does, in fact, represent what the GOP would try to do if it returns to power.” Ryan’s economic agenda, claims Krugman, “hasn’t changed one iota in response to the economic failures of the Bush years.” The opposite is true — Ryan is trying to steer his party toward the promotion of free-market capitalism once again after President George W. Bush not only expanded government but left the country in serious debt.

Krugman’s response to the proposed dismantling of Medicare is all the more revealing. Where on February 1, he complained that the Republican Party “literally has no ideas about how the nation should actually be governed,” in his bashing of Ryan, the New York Times columnist describes the one plan that is distinctly different from anything the Democrats offer as “deliberately confusing gobbledygook.”

Younger people wouldn’t be covered by Medicare as it now exists, cries Krugman. Instead, they “would receive vouchers and be told to buy their own insurance.” What could possibly be more gruesome? Surely, you can’t expect of people that they take care of their own insurance! That, apparently, is much too confusing.

Jonathan Chait, editor at The New Republic, closes ranks on the left by blaming both Rand and Ryan for their supposed “inability to grasp the enormous differences between American liberalism and socialism or communism, seeing them as variants on the same basic theme. The historical reality,” according to Chait, “is that the architects of American liberalism saw it as a bulwark against communism.” Of course, the “historical reality” is that communism didn’t exist at the time American liberalism was framed but this, perhaps, is just such another inability to grasp the obvious.

More significant is the consequence of this alleged confusion on the part of those who champion the free market however. “The result is a tendency to see even modest efforts to sand off the roughest edges of capitalism in order to make free markets work for all Americans as the opening salvo of a vast and endless assault upon the market system.” Chait leaves readers with the impression that this sort of thinking is nothing short of lunacy.

Ryan’s proposed reforms of Medicare and Social Security aren’t actually so radical as Krugman and Chait would have us believe. He still sees a role for government which is certainly not what Ayn Rand favored. What’s more, both entitlement programs are by no means “modest efforts” in response to alleged shortcomings of capitalism — they rank among the greatest expenses of government and are, in part, responsible for the high costs of health insurance in the United States.

Upon closer scrutiny, Chait’s argument falls apart entirely for it follows the familiar logic of those who vain to speak in favor of free-market capitalism but really forward its undoing. Chait defends the correction of just the “roughest edges” of capitalism; the “excesses” of laissez-faire so commonly persecuted these days. The charge rests on the premise that in order for the free market to work best, it needs to be less free. The inevitable result of “making it work” for everyone, is that everyone has to make do with less.

Paul Ryan’s plan deserves attention for it is without doubt the boldest and forward looking the GOP has offered since the Democrats most recently assumed power. Republicans hesitate however because Ayn Rand seems such an easy target for critics to shoot at. Indeed, Rand herself and blatant misrepresentations of her philosophy are often denounced yet her ideas are hardly ever specifically assessed, let alone undermined. Ryan has adopted just part of her thought to plan for America’s future. Legislators of both parties ought to pay attention.