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Kudlow’s Money Politics

Larry Kudlow’s daily web log of matters political and financial.

Ryan to Kudlow: Budget Defunding of Obamacare Is the Right Thing to Do



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House budget chairman Paul Ryan told me on Tuesday that his plan to balance the budget — in part by defunding Obamacare — is the right thing to do. By including that provision, it appears the proposal will be dead on arrival for the White House and Senate Democrats. But when I asked him if the plan was both good policy and bad politics, he responded, “Do you think we should give up our principles just because we’re submitting a budget? We believe this is a terrible law that will collapse under its own weight.”

Ryan further explained that a big part of his savings plan focuses on stopping the billions of dollars in Medicare now scheduled to be shifted out of the program and into the new health-care-reform system. But he also signaled that he may be willing to compromise on health care and many other parts of his plan.

“Do you start with your best offer when you start a negotiation? This is just the beginning,” Ryan said.

But getting to a balanced budget anytime will soon rely heavily on Republicans winning the battle on repealing large parts of the health-care law. That’s because the biggest savings in the Ryan plan come from cancelling the massive Obamacare expansion of Medicaid. Ryan says that part alone accounts for about $815 billion in savings out of the almost $5 trillion in cuts inside his proposal.

Entitlement reform is also a major focus of the Republican budget proposal. Ryan believes the same kinds of welfare reforms that succeeded in the late 1990s can be seen again, especially in the ever-expanding food-stamp program.

“We see food-stamp reform as part of welfare reform. We want to send it back to the states, and give them more flexibility,” Ryan said.

Ryan also talked about his plans for broad-based tax reform, explaining that lowering the rates and broadening the base is the best way to grow the economy and increase revenues. I agree.

Ryan did admit that he doesn’t expect to get all he wants in any negotiations with the White House. He conceded that he probably won’t be able to get the full $5 trillion in cuts he seeks, and that he would accept a “down payment” on that amount.

Finally, the congressman expressed cautious optimism about the chances of ever making a deal with Team Obama. He was positive, but realistic, about the administration’s new outreach toward Republicans.

“Trust but verify.” That’s how Paul Ryan characterizes the president’s charm offensive of recent days.



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