Bump in the Roadmap
When House Budget Committee Chairman Paul Ryan endorsed Mitt Romney for president, the former Massachusetts governor got something more valuable than a little help before the Wisconsin primary. Ryan wasn’t simply another party leader seeking to expedite the end of the nominating process or to enter the vice presidential sweepstakes. He was offering Romney a chance to tie himself to a comprehensive conservative agenda on entitlements and federal spending, thereby giving a restive right a stake in his election.
It is no secret what Ryan had been looking for throughout the Republican primaries: a presidential candidate who would, if elected, help him realize his “Roadmap for America’s Future.” Alternately named the “Path to Prosperity,” Ryan has chalked out a fiscal blueprint that the Republican-controlled House has now twice voted to implement as a federal budget. All Ryan needs is a Senate that agrees and a president who will sign his plans into law.
Then again, that may be asking for a lot. As 2012 has progressed, the Republicans’ prospects for retaking either the Senate or the White House—to say nothing of both—have deteriorated. A Republican president and Senate majority willing to reform entitlements that benefit the middle class is even less of a guarantee. For much of the presidential race, Ryan had appeared skeptical of Romney and, much like the Wisconsin congressman’s admirers in the conservative press, seemed to prefer non-candidates like Indiana Gov. Mitch Daniels.
As Romney slunk toward the nomination, things changed. The shaky frontrunner became increasingly supportive of Paul Ryan’s budget proposals. Ryan in turn warmed to Romney. “I was not a fan of Bob Dole being our nominee in ’96, I didn’t support John McCain throughout the primary, I supported other people last time,” Ryan was quoted as saying. “This is not the same kind of candidate.”
This echoes an earlier courtship. Ronald Reagan endorsed the 1978 Kemp-Roth tax cut proposal and two years later made it the centerpiece of his economic agenda. Jack Kemp enthusiastically supported Reagan, a convert to supply-side economics who had raised taxes to eliminate budget deficits as governor of California. Ryan, who worked for Kemp, wouldn’t mind a similar dynamic playing out with Romney. Under this scenario, Romney gets a policy agenda that excites conservatives while Ryan gets a president who will sign his budgets into law as Reagan signed a version of Kemp-Roth.
There’s just one problem—what if grassroots conservatives aren’t excited by the Ryan plan? The question irks conservative journalists and economic policy wonks, who see in Ryan the most ambitious fiscal policy ideas embraced by a Republican with real influence since the Reagan years. In terms of tackling Medicare spending, which along with Social Security has long been considered the “Third Rail” of American politics, Ryan goes much further than Reagan himself ever dared.
The latest version of Ryan’s budget, we are reminded, reduces spending by $3 trillion and deficits by $5 trillion while avoiding $2 trillion in tax increases. Medicare is gradually transformed from a single-payer program to a premium support system, though seniors will now retain the option of old-fashioned Medicare under a plan co-authored by liberal Democratic Sen. Ron Wyden. Marginal tax rates would be slashed, the national debt would cease to gobble up the entire economy, and Obamacare would be repealed, if not exactly replaced. Save Social Security reform for the second Romney term, and what’s not to like?
Except many conservative activists didn’t like it. The Club for Growth, one of the most influential fiscal pressure groups on the right, pointed out that the plan didn’t balance the budget until 2040. They also denounced House Republicans for failing to implement all the spending cuts mandated by the failure of the supercommittee. Club president Chris Chocola, himself a former Republican congressman, said in a statement: “The Club for Growth urges Republicans to support a budget that balances in the near future and complies with the Budget Control Act.”
A blogger associated with FreedomWorks complained, “Unfortunately, the plan doesn’t really try to balance the budget or specify a single cabinet agency for elimination.” The Tea Party scribe also dinged Ryan for largely leaving defense and Social Security, two of the biggest line items in the federal budget, off the table. The baseline for the $5 trillion in deficit reduction isn’t current law, but President Obama’s budget, which the House rejected by a vote of 414 to 0.
Two conservative rising stars among the GOP House freshmen, Reps. Tim Huelskamp of Kansas and Justin Amash of Michigan, broke party lines in voting against the Ryan budget in committee. As a result, the Budget Committee only approved it by a narrow 19-18 vote. The margin in the full House was much wider, with Republican opposition rising only slightly from four “no” votes in 2011 to ten this year.
That final tally obscures somewhat the competition the House GOP’s official budget faced. Both the Senate Tea Party Caucus and the House Republican Study Committee introduced rival budgets that purported to balance within five years. Most of Ryan’s RSC colleagues voted for the main Republican budget too, but it is not clear that Senate Tea Partiers Rand Paul, Mike Lee, or even Jim DeMint will.
“This idea that we have to look 30 years out to balance the budget is not only unnecessary, but it’s improbable,” DeMint said in what looked like a thinly veiled shot at the House budget. “We cannot continue to spend at our current rate for 10 more years, much less 20 or 30 more years.” Since Capitol Hill lawmakers can’t bind future Congresses—or even themselves, if the abandonment of the debt-ceiling law’s requirements is any indication—what confidence should we have that the spending cuts can be sustained over decades?
Note that these are not the usual Republican critics who are unnerved that Ryan is talking about spending cuts or Medicare reform at all. Those timorous Republicans still exist, of course, carping anonymously to the Washington Post: “Didn’t they learn their lesson? House Republicans are still under the mistaken impression they have to lead. It’s a presidential election year; they’re along for the ride.” (Conversely, Politico described Democrats as regarding the Ryan budget as “Christmas in March.”) But most of the on-the-record pushback came from conservatives who wanted even bolder leadership, election year or not.
The Wall Street Journal editorial page, long required reading for those who like their tax rates low, chided these defectors for “taking shots at the best chance in decades for serious government reform.” In the process, they ran the risk of large tax increases justified on deficit-reduction grounds. “By stressing budget balance over growth,” the editors continued, “Mr. Chocola and the tea-party critics are falling into Mr. Obama’s deficit and tax trap.” This too was a debate among Republicans during the Reagan-Kemp years. Back then, the deficit hawks lost and the supply-siders won. But Ryan, who bills himself a “second-generation supply-sider,” aims his budgetary ideas at both types of fiscal conservative.
Call it the paradox of Paul Ryan. No Republican outside the congressional backbenches has dedicated more time to the politically thankless task of coming up with ways to cut entitlement spending. This has earned him anathemas from liberals who claim he wants to “end” Medicare and has even won him a cameo appearance in a Democratic attack ad, as a villain pushing a wheelchair-bound old woman off a cliff.
Yet Ryan’s voting record on issues ranging from the Medicare prescription drug benefit to the Wall Street bailout more closely resembles that of the Republicans who have lost to Tea Party primary challengers than that of a ruthless government-cutter. And Ryan has tried valiantly to make his spending cuts not just arithmetically sound but politically saleable. Sometimes, however, it is hard to do both.
Last year, there was an incident where a Heritage Foundation analysis projected that the 2011 version of the Ryan budget would reduce unemployment to 2.8 percent in 2021. Ryan didn’t count on such a rosy scenario for his deficit reduction projections and Heritage quickly adjusted the numbers. But when faced with predictions that this year’s House Republican budget would balance by the 2020s, taking into account the economic growth its tax reforms would stimulate, it does make you wonder. Even if one is justifiably skeptical of the assumptions underlying static accounting—the idea that a 10 percent tax increase should produce 10 percent more revenue, as if real-world economic behavior would be unchanged—how reliable is dynamic scoring?
As it is, many details of the tax reform plan that would support its revenue neutrality are still missing. We know the tax rates, but not what would be done to expand the tax base. The Republican budget document alters the fiscal landscape most dramatically by reducing spending commitments and accelerating economic growth. But both the cuts and the growth are only accomplished if the underlying policy assumptions are valid. Even if an extremely gradual transition to a premium support model for Medicare can be seen to fruition, the insurance exchanges must work, there must be a somewhat level playing field between traditional fee-for-service Medicare and the new model (something many conservatives thought impossible with regard to the Obamacare public option), and most importantly market competition must be able to lower healthcare costs enough to realize the projected savings.
On that last point, nearly all of Ryan’s conservative detractors are vulnerable as well. Rand Paul’s Medicare plan relies on consumer-directed cost controls via the competitive Federal Health Benefits Plan to rein in medical costs and thus cut government spending. The RSC proposal shares Ryan’s assumptions. There are good reasons to think competitive bidding will work, but how well? Thanks to Medicare Advantage, the prescription drug benefit lowered costs and came in under budget. But the creation of the benefit in the first place still increased Medicare’s unfunded liabilities by trillions of dollars rather than cutting them.
“[A]t least Senate Democrats are honestly cowardly and decline to put forward a budget proposal at all,” writes Forbes contributor Josh Barro. “House Republicans, with budget proposals that gloss over challenging details and make unrealistic assumptions, aren’t doing much better.” Without the painful details behind the cost-control measures, Barro argued in City Journal, “spending targets—whether Ryan’s, Obama’s, or someone else’s—are just numbers on a page.”
Yet the debate over what entitlement reform should broadly look like may be more important at this early stage. Republicans control the House, but are powerless to enact their budget into law while Democrats retain the Senate and presidency. The two parties are not close to a compromise on these issues, as the abject failure of both the Simpson-Bowles commission and the supercommittee make clear. Even some of Ryan’s conservative critics, such as Barro, like much of what he proposes to do to Medicare’s basic structure—many of them want Ryan to start the reform process much sooner.
What then does it harm the country for Republicans to attempt the big argument now—at great political risk to themselves—and work out the details later? Reason’s Peter Suderman writes that Ryan “doesn’t want to let the perfect be the enemy of the good, or even of the very slightly better.” And while Tea Party sympathizers have a sense of urgency about the debt crisis, polls suggest even they don’t fully grasp the enormity of the entitlements program. Get the government’s hands off my Medicare, indeed.
There are also possible areas of compromise between Ryan and his right flank. Front-load more of the savings. Reform Medicare slowly, but abolish the Commerce Department now. Marry Ryan’s entitlement reforms to Rand Paul’s huge discretionary spending cuts.
The devil, as always, lies in the details. It remains to be seen whether a Romney-Ryan tag team is up to this task. But Paul Ryan, at least, seems willing to give it a try.
W. James Antle III is associate editor at The American Spectator.