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A Conflict of Budget Visions


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Paul Ryan’s budget proposal for next year is the most ambitious conservative initiative since — well, actually, since ever. It includes more than $6 trillion in budget cuts over the next decade, as compared with Pres. Barack Obama’s budgets. If implemented, the plan would rapidly stabilize the national debt and then pay it down. Ryan proposes to repeal Obamacare, take on the massive health-care entitlements, privatize Fannie Mae and Freddie Mac, pare back agriculture subsidies, build on the success of welfare reform, and overhaul the tax code.

Not even a small fraction of this agenda can be achieved while President Obama and Senate majority leader Harry Reid retain their positions. The purpose of Ryan’s plan is to raise a standard to which Republicans can aspire in 2012. In the best-case scenario, their presidential candidate runs on most of these ideas, the party wins a mandate in the next election, and the work of making the government leaner and more sober can begin in earnest in 2013.

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People over 55 have spent their working lives in the expectation that the government would fund Medicare at a certain level, and Ryan would keep that implicit promise. People under that age would get a new deal. When they retire, they would be allowed to choose among health-care plans, with the government pitching in to help them make their premiums. No longer would the federal government attempt to micromanage the price of medical services; no longer would it encourage providers to perform more procedures regardless of patient outcomes.

The Ryan budget fixes the budgetary incentives in Medicaid, too. At the moment, the power to make funding promises is divorced from the responsibility to pay for them: The states set eligibility and benefit levels, and the federal government foots half the bill. Republicans would instead give the states a fixed amount of money to spend on the medical needs of the poor. By itself this reform would not make Medicaid a less crummy program for its beneficiaries. (The program’s patient outcomes are indistinguishable from those of people with no insurance at all.) But it would at least enable state-level reforms and stop the fiscal bleeding.

The fights over the continuing resolutions to fund the government through the end of September were just skirmishes. The real battle begins today, with this budget. The lines of attack on the Ryan budget are as predictable as they are spurious. We will hear ad nauseam that Republicans are savaging the poor and the middle class for the fun of it — as though the spiraling interest rates, currency crash, and slower growth that are the real alternative would advance the interests of the bulk of the population. We will be told simultaneously that the Medicare proposal is heartless and that Republicans will never follow up on it. The pro-growth tax reforms contemplated in the bill will come in for attack for favoring the rich.

Demagoguery isn’t the only obstacle. Americans do not know much about the federal budget, overestimating how much of it goes to foreign aid and how easily waste and fraud can be rooted out from it. The fiscal crisis Ryan means to preempt is not, for most people, a palpable reality.

If the political risks are big, though, so are the potential rewards for the country. We have reservations about the Ryan budget, as is only to be expected in such a far-ranging document. The parameters of Ryan’s tax reform, for example, will make it hard to avoid a tax increase on millions of middle-class families. But on the whole, the Ryan plan puts the Republican party on record for a government that is more modest in its goals, more able to match means to ends, and more respectful of the initiative of the citizens it serves. The last two years have been a forced march toward European social democracy. Ryan is pointing the way back toward a republic, and we are pleased to join his advance.



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