The Agenda

The Ryan Budget and Political Shadowboxing

We’re seeing a growing number of reactions to Rep. Ryan’s budget proposal. Let me make note of a few:

* David Leonhardt finds the fact that Medicare shifts to a premium support model for under-55s only very problematic:

Yet there is at least one big way in which the plan isn’t daring at all. It asks for a whole lot of sacrifice from everyone under the age of 55 and little from everyone 55 and over. Representative Paul Ryan, the Wisconsin Republican who wrote the plan, calls the budget deficit an “existential threat” to the United States. Then he absolves more than one-third of all adults from responsibility in dealing with that threat.

Last year, Josh Barro and I argued that over-55s should be part of the solution as well, so this is reasonable enough. But I think Leonhardt is doing something rather different: he’s suggesting that the delayed onset of the reform is political. And that, naturally, is what many readers have latched onto. 

There are many reasons to build in a transition to a premium support model. One straightforward reason relates to an argument that Eugene Steuerle, quoted in Leonhardt’s piece, made back in November of 2009 in an column titled “Can the New Health Subsidies Be Administered?”


Under Congress’s current plan, families and households would receive subsidies pegged to their income, marital status, number of children, and cost of insurance. To determine your subsidy in 2016 on the basis of your 2016 income, however, is pretty hard since you haven’t yet earned it. The idea is to rely on your tax returns—not some onerous welfare-type application. But your 2015 returns often aren’t filed until April 2016. So Congress has decided that your 2014 income tax return is the go-to source for info on your income- and family-status eligibility in 2016.

Steuerle was talking about the health reform effort, but this basic dynamic applies to any program, including Medicare premium support, that offers a subsidy tied to income levels. Indeed, Medicare premium support would also vary according to health status, which introduces yet another level of complexity. I would make adjustments to Medicare for over-55s, and the Ryan budget actually does take on the components of PPACA tied to reducing Medicare expenditures over the next ten years. But it’s fairly clear that there are real-world administrative hurdles.

Indeed, a much stronger criticism of the Ryan budget is that it doesn’t make enough of an accommodation for transition costs, etc. Medical providers will presumably need time to transition to the new system.

I think Leonhardt’s objection is sincere. After all, I share his objection. I have noticed, however, that many readers have reacted to the delayed transition in the following spirit: “Ah, he’s made the program marginally less politically poisonous, which will make it harder for us to demonize him. Now let’s attack him for hypocrisy!” I mean, I get it. But also: let’s move on.

* Jacob Weisberg offers cautious praise for Rep. Ryan’s budget. I don’t know what to make of this, as he also attacked one of the best ideas I’ve ever heard last year in terms that left me convinced that he’s deeply hostile to my worldview. (That doesn’t mean he’s not a good guy, I hasten to add.) Various liberals have been haranguing Weisberg for his measured response to Rep. Ryan, so we’ll see what happens.

* David Weigel offers his astute thoughts on the short-term political implications:


Everybody thinks it’s in his or her best interest if Ryan’s budget proposal, and Ryan in particular, captivate Washington. It’s good for Republicans because they get to shift theOverton Window yet again—they’ve been doing quite a lot of this—and start a discussion about privatizing Medicare and turning Medicaid payments over to states in the form of block grants. In the space of a couple days, these have gone from the desks of AEI and Heritage researchers and onto, well, “Morning Joe.”

It’s good for Democrats (they think) because they have an unbroken record of ripping Republicans apart whenever there’s a chance that Medicare or Medicaid could be cut. That was the basis of the 1995-96 shutdown, when the GOP’s budget included a more modest reform than Ryan’s. That was the basis of the 2005 counterstrike on the newly re-elected George W. Bush, who spent six months campaigning for private Social Security accounts and got exactly no Democratic support.

Later in the article, Weigel adds:

Ryan’s budget proposal does go after entitlements in a way that no Democratic budget, and none of George W. Bush’s budgets, ever has. It’s not nearly as bold about attacking Republican shibboleths. Actually, it’s timid when it comes to all of that.

That is absolutely true. But it’s not clear that it makes sense for Rep. Ryan to negotiate with himself. He has put down a marker, and now is the time for his critics to make a counter-offer. 

* Greg Ip makes a related point at The Economist’s Free Exchange blog:

There are many problems with this strategy but it’s worth keeping in mind how remarkable it still is: a legislative proposal that takes dead aim at the real source of the long-term fiscal imbalance, namely, entitlements. Republicans now have an answer to editorials and Democrats demanding to know what their plan is for tackling that looming crisis. Of course, the proposal remains just that, a non-binding resolution that leaves the grimy details to other legislators who may wad them up and toss them in the rubbish bin. But for now, Mr Ryan may have turned what has long been an arcane part of the budget process, the annual budget resolution, into a focal point for long-term debate.

Ip goes on to offer many solid criticisms of the revenue assumptions and the fill-in-the-blankness of the proposal.

* David Wessel of the Wall Street Journal has written the best short critical take on Rep. Ryan’s proposal so far. It strikes me as a fairly honest, fair-minded description of the issues at stake, and the basic takeaway is this:


The vision in the Republicans’ 2012 budget he outlined Tuesday is for smaller government. It is for the most significant reshaping of government-benefit programs in 50 years. And it is for overcoming government addiction to deficits and debt by cutting spending, not raising taxes.

In sketching out that plan, Mr. Ryan may inadvertently be making the case for tax increases.

This is the debate we need to have: deep entitlement cuts or tax increases? Or, as some of my left-of-center friends suggest, deep entitlement cuts or tax increases on high-earners and everyone who uses carbon-based energy plus a Medicare-for-all system that would further centralize decision regarding medical care in Washington, D.C.?

I can’t predict the outcome of an open, frank debate between these two visions of the American fiscal future, but until we have it out in the open we’re engaging in a frustrating form of shadowboxing in which we’re pitting deep entitlement cuts against TK TK TK.  

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

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