Paul Ryan's budget components need to be understood together as a 21st century government modernization effort

Ryan Streeter

Because most of the media's attention will fixate on the $6 trillion Paul Ryan's budget aims to cut from the President's budget in the next decade, it's worth capturing the main features of the document that Ryan lists in his WSJ op-ed today.

• Reducing spending: This budget proposes to bring spending on domestic government agencies to below 2008 levels, and it freezes this category of spending for five years. The savings proposals are numerous, and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates's plan to target inefficiencies at the Pentagon.
• Welfare reform: This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job—it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work.
• Health and retirement security: This budget's reforms will protect health and retirement security. This starts with saving Medicare. The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way. Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model.
• Budget enforcement: This budget recognizes that it is not enough to change how much government spends. We must also change how government spends. It proposes budget-process reforms—including real, enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.
• Tax reform: This budget would focus on growth by reforming the nation's outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all.

The plan is more than an "entitlement reform" plan, though the entitlement features are surely the most important since they are, in a favorite expression of Ryan's, "the drivers of our debt."

Three important aspects of the budget plan immediately stand out:

Government for the 21st century. By moving to a premium support model in Medicare, a block grant in Medicaid, and a consolidation of job training programs, the budget aims to bring the government up to date with both the demographic realities of the 21st century and the patterns of today's workforce. 

Government that lives within its means. A big part of the budget plan is changing the debate away from how much government is spending to how it spends taxpayer funds. We are at a point where the government has to be forced to live within certain spending boundaries. We used to be able to trust common judgment to limit how much our spending exceeds our revenues, but that trust has been broken, and we need to apply new boundaries. This plan does that.

Fairness at its heart. You'll hear a lot about how this budget achieves its savings on the backs of the poor, but the reality is that its tax reform proposals aim to end bailouts, simplify the way businesses pay taxes so that loopholes are closed, and create a tax system that makes sense. The tax reforms should be understood together with what Ryan calls welfare reform. I would have used "welfare and workforce modernization" as opposed to "welfare reform" to explain plans for programs aimed at low-income families, but no matter. The big idea here is to focus attention on those who need help the most, and become more disciplined in how we provide that help, so that welfare goes ONLY to those who need it - not corporations and not the upper middle class.

Comments

[J Baker]

Paul Ryan’s Medicare Fix Unworkable!
...
Wake up…Tea Party! You cannot parrot idealistic philosophies, which will not work in the real world. Do you wish to win; or, do you wish to preach the fundamentalist Christian view that all who are not properly baptized are lost forever. Did we not just pass through someone’s personal religious milestone when the earth failed to stop rotating at 6:00p on 21 May 11?
...
Ryan’s Medicare fix requires a degree of integrity and honesty, by both legislators and industry, which have never existed. We do not have honest representative government; and, we do not have any in industry, who are devoted to anything other than their bottom line. Ryan’s Medicare fix is based on a ‘free market’. We do not have a ‘free market’; and, we never have.
...
My great objection to his fix is that there is no provision for negotiating terms and pricing. Negotiation is fundamental to a free market. A single individual has no negotiating power; further, they can, and will have their insurance cancelled should they become ill, as has often happened in the past.
...
When only one party has the upper hand with pricing, it is not a free market. When only one party has the upper hand with contract terms, it is not a free market.
...
Ryan wants to send 65 year olds into the marketplace with a fixed sum of money, saying, “You are free to buy the insurance product you want”, now…get lost! This is gross abuse of a corpse!
...
The reason Medicare exists, is that the insurance industry would not insure those who were ill. I personally paid $2,500 per month for health insurance for my wife and I, at age 60, many years ago. We seldom used the insurance. Do you want your parents and grandparents paying $5,000 per month to obtain a policy that will cover their catastrophic needs?
...
There is not adequate competition within the insurance industry for such a program. Insurance companies are not allowed to sell their product in all states. Why not open our markets to qualified insurers worldwide? This is a free market!
...
The Medicare Advantage program confines the member to local or regional medical suppliers who are affiliated with the policy being offered. They are limited as to the specialists they can see. Ending this program can save Medicare money.
...
Medicare does not pay for medical services performed outside of the USA. You had better buy additional health insurance when on vacation in another country.
...
Medicare Part D is a joke! You taxpayers pay for this program; and, we who use it pay a monthly fee, plus co-pay. Then, we are charged list price for the drugs, and some critical drugs are not covered! Negotiating the same prices for these drugs that are offered to the VA, all branches of the armed forces, DOD, and Defense Supply Center Philadelphia, could save Medicare much money.
...
Negotiate! Negotiate! Negotiate!