The Corner

Paul Ryan Is Being Honest about the Choices We Face

Rep. Paul Ryan’s budget isn’t going to be passed by a Senate with 53 Democrats or signed by a Democratic president. It isn’t meant to be. The point, rather, is to challenge the Democrats — and ultimately the American voter — to commit to a framework for bringing federal deficits under control.

The Congressional Budget Office reported last month that the path laid out in the Obama administration’s 2012 budget will require the federal government to borrow $9.5 trillion over the coming decade, doubling the federal debt to $20.8 trillion, or 87 percent of GDP. The clinical term “unsustainable” is, in this instance, too gentle a description for a reckless, contemptible, and ruinous fiscal policy. In the unlikely event the world’s lenders permit America to dig such a deep hole over the next decade, we will spend the following decades facing increasingly desperate choices for how to climb back out.

There are two ways to reduce federal borrowing: increase revenues or reduce spending. The Ryan budget proposal is receiving a lot of attention for its plans to cut spending. Its biggest departures from the Great Society would turn Medicaid into a block-grant program and convert Medicare from a defined-benefit into a defined-contribution health-insurance program. As Ryan points out in today’s Wall Street Journal, his spending plans would reduce federal outlays to below 20 percent of GDP, while the Obama administration calls for federal spending in excess of 23 percent of GDP each year for the next decade.

Ryan’s “Path to Prosperity” is equally important for what it does not do — increase federal taxes. Its proposals to close loopholes and simplify rates are meant to be, as a package, revenue neutral, stabilizing all federal levels between 18 percent and 19 percent of GDP.

Ryan’s path to long-term solvency, in other words, relies entirely on budget cuts to close federal deficits. By contrast, President Obama spent 2010 declining to address the question of how he wanted to reduce our deficits, preferring not to prejudge the question assigned to his Bipartisan Commission on Fiscal Responsibility and Reform. Now that the commission led by Erskine Bowles and Alan Simpson has had finished its work, the president has taken the opportunity to … say even less about what, if anything, he intends to do about the deficits.

This Sphinx of Pennsylvania Avenue routine, from a politician hailed just three years ago as an orator so compelling he would have driven Pericles into the tunic-wholesaling business, is the result of a political dilemma: Liberalism is much more forthcoming on the question of what the government ought to do than it is about how the government should pay for all its programs. This dilemma flows from the reality that people like the benefits liberalism confers much more than they like the sacrifices it requires. Intellectually honest liberals would accept the duty to convince people that they can’t have the nice stuff without the hard stuff, and must therefore pay higher taxes as the necessary and honorable price for all the improvements the liberal agenda would bring to America.

An intellectually dishonest liberal, on the other hand, would say something like, “Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” That is, government can fulfill all the promises it has encoded into legislation and regulations since 1932, and lots of additional ones incumbent upon a decent, compassionate society, without extracting even one additional dollar from 97 percent of the American people.

The counterpart to Paul Ryan’s all-cuts approach to fiscal policy would be an all-taxes one. The columnists Jonathan Chait and E.J. Dionne have endorsed something along these lines: Let all the Bush tax cuts expire at the end of 2012, which would increase federal revenues by $3.9 trillion over the ensuing decade. That policy closes less of the fiscal gap than Ryan’s spending cuts, but would get below a crucial threshold, allowing federal borrowing to grow more slowly than the economy, thereby reducing federal debt relative to GDP. Such a tax increase, wrote Chait, could banish all talk about cutting the federal workforce or reducing Medicaid in order to close the deficit.

The problem is that President Obama’s promise not to raise any tax on any American with an income below $250,000 takes $3.2 trillion of that $3.9 trillion off the table. And even liberal pundits, who won’t be facing the electorate in 19 months, are as reticent as President Obama about how to erase that deficit. “There are parts of the budget that could stand careful scrutiny and some cuts,” allows Dionne, evidently prepared to slash literally hundreds of dollars from federal outlays if that’s what it takes.

With the baby boomers starting to retire and the federal government’s credit card reaching its borrowing limit, push has come to shove. Those sunny, languid decades where we could enjoy a tax regime that placated Republicans and a spending regime that placated Democrats are coming to a close. Either Americans will decide that the federal tax burden should not be increased, and consent to spending reductions that conform to that revenue stream. Or they’ll decide that the federal spending commitments built up from the 1935 to 2010 should be held harmless, and acquiesce in the tax increases to make those commitments affordable. The difference is that one party, led by Congressman Ryan, respects the voters enough to be explicit and forthright about it means to balance the budget entirely through spending reductions. The other party wants Americans to endorse massive tax increases, but cravenly hopes they’ll come up with the idea on their own, without any politician having to take a stand.


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