The Corner

It’s Because They Don’t Have a Plan

Last year, Rep. Paul Ryan (R., Wis.) put forward a plan to balance the budget by overhauling the tax code and cutting entitlement spending. It attracted virtually no attention — the Democrats had not yet descended into their current morass. Now the political landscape has changed. Obamacare’s unpopularity, combined with frighteningly large deficits projected into the foreseeable future and no forthcoming plan from the administration to fix them, have the Democratic party reeling. So this year, when Ryan released version 2.0 of his Roadmap, liberals started bashing it immediately in order to distract attention from their own quagmires and failures of imagination when it comes to addressing spiraling entitlement costs.

First they went after Ryan’s proposed entitlement reforms (I’ve written about these attacks here and here). Liberals have every right to criticize Ryan’s ideas, involving as they do a complete re-imagining of the Democrats’ New Deal and Great Society defined-benefit social insurance programs. But only the most tendentious left-wing commentators would deny that these programs are going broke, and most of Ryan’s critics had to admit that he had offered a real plan to fix the entitlement crisis. By contrast, the Obama administration’s plan to balance the budget involves punting to a bipartisan commission.

Then Ryan embarrassed the president on national television, and now liberals have adopted a more aggressive strategy which involves denying that Ryan’s plan would balance the budget after all. Two left-leaning think tanks have issued reports on Ryan’s plan, each claiming that Ryan essentially fudged the revenue side of his Roadmap. Ryan has offered responses here and here, which I encourage you to read. I’ll sum up the key points below:

1. Ryan did not “fudge” the revenue side of his Roadmap, unless you consider all long-term estimates of economic growth to be inherently fudged due to the uncertainties involved (which they kind of are). For reasons that had nothing to do with fudging the numbers, Ryan relied on revenue estimates from Treasury Department experts instead of the CBO or the Joint Committee on Taxation. CBO didn’t want to step on the latter’s toes, and the latter informed Ryan’s office that it was not able to perform an estimate given the time frame of Ryan’s proposal. Treasury’s estimates do not get the same level of respect that CBO’s and JCT’s get, but there’s no reason to think Ryan fudged the numbers when it’s more likely that his estimates simply made different assumptions about future GDP growth than the two left-leaning think tanks.

2. With his Roadmap, Ryan has offered a starting point for debate, not a finished product. “Congressman Ryan stands by his numbers,” his office states, “and of course would be open to adjustments in the specified rates under his tax reforms if in fact [the Tax Policy Center’s] estimates are closer to reality than Ryan’s estimates.” But the point, his office states, is that “We clearly cannot chase our unsustainable growth in spending with ever-higher levels of taxes — and the purpose of the Roadmap is to get spending in line with revenue — not the other way around.”

3. Certain of Ryan’s liberal critics have stated that, compared to Obama’s tax plan, Ryan’s tax plan would involve tax increases for 90 percent of Americans while — again, compared to Obama’s plan — the rich would pay less. First of all, according to the very same Tax Policy Center whose work these critics are citing, Obama’s tax plan leaves gaping holes in the budget that, again, he has proposed no way to fill, save for his blue-ribbon panel (and we all know how effective that’s going to be). To pretend that we can close these gaps simply by increasing taxes on the rich is not realistic. Second, the policy change that has the biggest effect on the distribution of the tax burden under Ryan’s plan vs. Obama’s is that Ryan would replace the corporate income tax with a value-added tax. This is hardly as controversial as Ryan’s critics have made it sound, and there is a near-consensus among economists that VATs cause fewer economic distortions than corporate income taxes. Also, the changes to the tax burden are not as straightforward as Ryan’s critics allege. The share of the corporate income tax that is borne by lower-income Americans is obscured by the fact that corporations act as tax collectors, not taxpayers, and often pass the costs of the tax onto their employees and customers.   

I don’t agree with every single thing in Ryan’s Roadmap. Few would look at it and find nothing they would change, and the revenue provisions are probably where conservatives would disagree the most. But it is far more substantial than anything the other side has offered. Yet, rather than taking it as a starting point for debate, which is the spirit in which it is offered, Democrats are attacking it to distract from their political problems and to distract from the fact that they don’t have a plan. That’s a roadmap to bankruptcy.

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