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Roadmap to Solvency
Congressman Paul Ryan responds to OMB director Peter Orszag.


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Paul Ryan

Congressman Paul Ryan recently put forward “A Roadmap for America’s Future 2.0,” a comprehensive entitlement-reform proposal. The CBO has certified that Ryan’s plan solves the long-term fiscal crisis. Ryan’s proposal has attracted the attention of the president and Office of Management and Budget director Peter Orszag. The Roadmap has proven attractive in light of the debt-exploding budget the administration has submitted to Congress. In a recent conference call with reporters, Orszag said the following:

Now, with regard to Representative Ryan — I have a lot of respect for Mr. Ryan, and I have read the plan that he put forward — it is worthy to delve into that for a moment, because it provides a contrast. His plan succeeds in addressing our long-term fiscal problem, which is a significant accomplishment. But let’s examine how he does that. He takes the Medicare program, and for those 55 and below turns it into a voucher program, so that individuals are on their own in the health-care market. And the voucher does not keep pace with health-care costs over time.

So it is not surprising that if you shift dramatically, both in terms of risk and expected cost, obligations from the federal government onto individuals, you can reduce the projected cost. He introduces individual accounts, privatization into Social Security. He has significant changes to the tax code that would provide large tax benefits to upper-income households, while shifting the burden onto middle- and lower-income households. He eliminates the tax preference that currently exists for employer-sponsored insurance.

So it is worthy of pausing. He has put forward an interesting plan. There are many aspects of that that are worthy of further discussion and debate, but it is a dramatically different approach in which much more risk is loaded onto individuals and in which the Medicare program in particular is dramatically changed from its current structure.

The following is Ryan’s response.

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Peter Orszag is right that the Roadmap dramatically changes the future structure of the Medicare program. But that’s the point. The Roadmap preserves the current program for those 55 and older — many of whom have planned their retirement years based on the current system — and begins a gradual transition to a reformed program that meets the needs of future generations.

And yes, Medicare costs will grow more slowly under the Roadmap than they would otherwise. Again, that’s the point. Even the president acknowledges that, absent reform, Medicare will go bankrupt. Director Orszag has stated in the past that nothing else we do on the fiscal front will matter if we fail to address the unsustainable future of Medicare; after the program goes bankrupt, it will drag down the entire federal budget and U.S. economy. Medicare’s trustees project that the program will go bankrupt within the next seven years.



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