The Man With the Plan

April 9, 2010 05:42

Paul Ryan’s “Roadmap” to save America from its looming fiscal collapse.

By at American Spectator

In late January, President Obama dazzled political reporters when he addressed a gathering of House Republicans in Baltimore. The press marveled at Obama’s intelligence, command of the facts, and ability to swat down GOP arguments effortlessly during the 90-minute exchange. But at one point, Obama took a question from Wisconsin Rep. Paul Ryan, the Republicans’ resident policy whiz, and clearly met his match.

In his State of the Union address just two days earlier, Obama had vowed to “freeze” non-security-related discretionary spending as part of a new White House campaign to create the appearance that the administration was doing something to address ballooning deficits. Unlike mandatory spending on entitlement programs, such as Medicare and Social Security, that grow without any explicit action by Congress, new discretionary spending must be passed by Congress and signed into law by the president.

“I serve as a ranking member of the budget committee, so I’m going to talk a little budget if you don’t mind,” Ryan said to Obama. “The spending bills that you’ve signed into law, the domestic discretionary spending has been increased by 84 percent. You now want to freeze spending at this elevated level beginning next year. This means that total spending in your budget would grow at 3/100ths of 1 percent less than otherwise. I would simply submit that we could do more and start now.”

In his response, Obama said he wanted to “just push back a little bit on the underlying premise about us increasing spending by 84 percent.” He insisted, “The fact of the matter is, is that most of the increases in this year’s budget, this past year’s budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession.” (The term “automatic stabilizers” refers to government payments such as welfare and unemployment benefits that tend to increase during an economic downturn.)

But Ryan shot back by noting a basic flaw in Obama’s analysis. “I would simply say that automatic stabilizer spending is mandatory spending,” he explained. “The discretionary spending, the bills that Congress signs that you sign into law, that has increased 84 percent.”

In a tacit acknowledgement that he had been bested, Obama replied, “We’ll have a longer debate on the budget numbers, all right?” and then proceeded to the next question.

A BIT LATER IN THE SESSION, however, Obama moved back to Ryan on a different topic. After a year of arguing that Republicans had presented no ideas on how to address the nation’s fiscal crisis, Obama mentioned that Ryan had produced a “serious proposal” to do just that — before offering his critique.

The proposal in question was Ryan’s “Roadmap for America’s Future,” a sweeping plan to stave off the nation’s looming economic and fiscal collapse by changing the tax code, overhauling the health care system, and reforming the nation’s major entitlement programs. Its debt-reducing claims aren’t based on mere fantasy — the Congressional Budget Office has determined that the plan would boost economic growth while making Medicare and Social Security solvent. And it accomplishes these aims without raising taxes or affecting the benefits of current retirees.

If the Baltimore event accomplished anything beyond giving the media a new reason to swoon over Obama, it drew attention to the “Roadmap,” which had largely been confined to the conservative policy ghetto since an earlier version was introduced in 2008. In the days and weeks following the summit, Ryan won praise from pundits on the right and left for at least having the courage to present serious solutions to the nation’s fiscal crisis. But at the same time, it became clear why most other politicians were unwilling to do the same.

“The entire Democratic political machine, right through the DNC, launched into a very organized attack mode,” Ryan recalled in a phone interview with TAS.

The praise Obama offered for the plan soon looked like a trap intended to elevate the plan just so Democrats would have something to knock down. It became a way for their party to go on offense after being clobbered for a year on the economic stimulus package, as well as the cap and trade and health care bills.

Peter Orszag, director of the Office of Management and Budget, tore into the Ryan plan. Democrats distributed “fact sheets” and held a media conference call to rip into the proposal further. “[I]t’s a roadmap right into the economic ditch that we got ourselves to begin with,” Rep. Chris Van Hollen, who serves as chairman of the Democratic Congressional Campaign Committee, told the influential liberal website Talking Points Memo. “Put it this way. For seniors on Medicare, it’s a dead end.”

In the wake of the uproar, Republican leaders tried to distance themselves from the proposal, emphasizing that while it contained good ideas, Ryan’s plan wasn’t the official Republican budget. In an election year during which the GOP is poised to make big gains, Republicans don’t want to give Democrats an easy opportunity to paint them as the party keen on destroying Social Security and Medicare. But if Republicans are to regain any credibility as a party that wants actually to limit government (as opposed to just talk about it when in the minority), then they can’t shy away from this debate. The looming fiscal crisis is too severe, it’s approaching too soon, and it’s far too big of a threat to the American way of life.

LAST OCTOBER, a new government took power in Greece and revealed that the nation’s annual budget deficit would be more than twice what had previously been forecast. In the ensuing months, the country’s creditors fled, its debt was downgraded, and its cost of borrowing surged — just when the country desperately needed money. In response, the government scrambled to roll out proposals to get its deficits under control by slashing social spending, dramatically hiking taxes, and freezing public sector wages– triggering nationwide strikes. Before long, Greece was pleading with other reluctant European Union member states for a bailout.

One of the major obstacles to addressing the looming entitlement crisis in the United States is that it’s very difficult to communicate the urgency and magnitude of the problem. Screeds about the long-term Medicare deficit of $38 trillion, or America’s combined unfunded liabilities of $107 trillion in current dollars, often fall on deaf ears because the numbers involved are inconceivable. And even when people accept the vague idea that we’re on an unsustainable fiscal path, hearing projections about where we’ll be decades from now makes them think that we have plenty of time to figure things out, somehow, at some point, down the road. While there are always caveats involved in drawing economic parallels among countries, the Greek collapse demonstrates what a fiscal crisis means in human terms. It also serves as a warning that the day of reckoning could come a lot sooner than we imagine.


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