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The Real Budget Debate



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Both Doug and Rich, below, make a crucial point: that the important debate about funding for the rest of the current year—a debate made necessary by the failure of the last congress to produce a budget—pales in scope and significance compared to the coming 2012 budget debate, which will begin as soon as next week.

 

The argument now raging about billions of dollars over the rest of this year matters a lot, but the debate soon to begin about trillions of dollars over the coming decades is by far the most important policy challenge this congress will confront. Republicans now seem poised to make pretty significant progress on the former—more or less achieving their original goal of reverting to 2008 levels for the remainder of the year—and then to press for far far greater progress on the latter.

 

Apparently the House Budget Committee will take up the 2012 budget next week, and if the early leaks and reports are to be believed, the budget Republicans will propose will not only involve dramatic cuts in discretionary spending and reforms of the budget process to cap future spending but also exceptionally ambitious structural reforms of our entitlement system—the kind of reforms that can actually help us avert a debt crisis that otherwise seems nearly inevitable while allowing the economy to grow. House Republicans seem willing to lead where the president chose to punt.
 
This article in The Hill today offers some early details about the Ryan budget. It suggests that Republicans will call the Democrats’ bluff on entitlement reform, making use of the strange posture that Harry Reid and other Democrats have adopted by which they deem Social Security (which for all its troubles is the least troubled of our major entitlements) off limits while remaining silent on the collapsing health-care entitlements. The Ryan budget, if this report is accurate, will require the president to propose Social Security reforms but will itself propose detailed and profound reforms of Medicaid and Medicare. The federal share of Medicaid would be transformed into a block grant to the states—giving the states more freedom to design their programs while saving the taxpayer hundreds of billions of dollars. In Medicare, meanwhile, they would leave the benefits of those now retired and nearly retired as they are but for younger people would transform Medicare into a defined contribution program which, rather than directly paying for services in an open-ended way, would give each senior a set sum of money to purchase private health insurance of his choice. Such a reform would not only offer immense savings directly and give seniors more options, it would also introduce far greater efficiency among providers that would help contain costs in our larger health-care system. And by leaving today’s seniors and near-retirees as they are, this approach could neutralize the foremost source of opposition to entitlement reforms.
 
If this report is true and the Ryan budget includes these kinds of reforms while repealing Obamacare, sharply curtailing domestic-discretionary spending, and introducing real spending caps, it would be by far the boldest and most ambitious conservative budget we have seen emerge from any congress. The Hill quotes freshman Republican David Schweikert on the significance of such a budget:
 
Schweikert told The Hill Wednesday that for him and other freshmen, the Ryan budget is much more important than the current fight over 2011 spending. “That document is everything,” he said.
 
That seems about right. A budget like that would show that Republicans understand what the 2010 election was really about, and it would form the foundations of the conservative policy agenda for 2012 and beyond. Let’s hope the rumors are true.


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