My Latest Column: Understanding the Contrast Between Ryan’s Vision and Obama’s

by Reihan Salam

My latest column for The Daily tries to offer a broad overview of where Ryan and Obama disagree. Many observers, like James Surowiecki, have suggested that the House-passed budget proposal is “a profoundly radical document.” I try to offer an explanation for why Ryan believes that federal expenditures on Medicaid, SNAP, and other safety net programs can and should decline over time: in his view, as I understand it, (a) broad-based economic growth will lead to increased household income growth, which in turn will reduce the need for transfer programs; and (b) his approach to tax and regulatory reform will help foster broad-based economic growth.

Suffice it to say, many people don’t believe (b), i.e., many people believe that increases in public investment are the best way to encourage economic growth and household income growth. And some argue, with good reason, that (a) is an imperfect channel. As Lane Kenworthy has observed, growth in GDP per capita has “decoupled” from income growth for middle-income households in recent decades, which is why Kenworthy and other social democrats emphasize the importance of wage subsidies, work supports, and other social transfers. 

Though I’m sympathetic to Ryan’s vision — I really think that increasing household income growth should be our central goal, and that the best way to achieve this growth sustainably is to embrace the deregulation of the labor market (i.e., the rollback of licensing restrictions, etc.) and of (most) product markets, to improve the efficiency of the public sector, and to improve work incentives by reforming the tax code and social insurance programs — my goal was not so much to make the case for Ryanism as to explain the basic idea behind it. Critics of Ryanism see cuts in federal expenditures for programs devoted to aiding the non-elderly poor as an attack on the non-elderly poor; what they fail to understand is that maintaining or increasing current levels of spending on programs devoted to aiding the non-elderly poor isn’t necessarily the best, and is certainly not the only imaginable, strategy for encouraging upward absolute mobility. 

For a different take on the Ryan budget, I strongly recommend the scrupulously fair-minded breakdown provided by Loren Adler and Shai Akabas of the Bipartisan Policy Center.

And if you want to see how you might approach things differently, try CRFB’s excellent Stabilize the Debt budget simulator.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.