Ryan and His Budget Are a Gamble for Romney
Published: August 11, 2012
WASHINGTON — To date, Mitt Romney has been criticized for the lack of detail behind his promise to reduce the nation’s rising debt through sweeping spending cuts and tax changes, but also politically insulated by it.
Now, his gamble in tapping as his running mate Representative Paul D. Ryan, the author of the audacious House Republican budget plan, changes all of that.
The budgets that Mr. Ryan, the chairman of the House Budget Committee, has pushed through the Republican-controlled House this year and last have defined nothing short of a conservative reordering of the nation’s tax and spending priorities for the 21st century. His blueprint would greatly shrink the government, largely undoing the social safety net by shifting more costs onto individuals and essentially converting Medicare into a capped voucher program. It also would adjust the progressive income-tax system, which, like the safety net, was built through the 20th century under Republican as well as Democratic presidents.
The Ryan budgets were predictably blocked by the Democratic-controlled Senate and President Obama. Yet should Mr. Romney win election, it is far from clear how a Romney-Ryan budget would fare even in a friendlier Congress, given the politically and fiscally fraught particulars that Mr. Ryan and his House Republican colleagues have proposed.
The Ryan plan, which Mr. Romney endorsed during the hard-fought race for the Republican nomination, would cut about $6 trillion from projected spending in the first 10 years. But the plan also would cut revenues by $4 trillion, and more over time, by slashing individual and corporate income taxes. The government would not run a surplus for three decades, according to the nonpartisan Congressional Budget Office — an outcome that would have been heresy to pro-tax-cut but anti-deficit Republicans of the past.
The trajectory of Mr. Ryan’s budgets and his rise in the party parallel the shift in Republican fiscal thinking on Capitol Hill and in statehouses. Though colleagues saw Mr. Ryan as an intellectual force in the party, his push to rein in federal spending was viewed with caution by party elders like Representative John A. Boehner of Ohio. Mr. Boehner, now the speaker of the House, appreciated Mr. Ryan’s enthusiasm but was wary of the political implications of his plans to reshape Medicare and Social Security.
When Mr. Ryan rolled out a retooled version of his fiscal “Roadmap for America’s Future” in 2010 amid the Republicans’ battle for control of the House, Mr. Boehner lauded it but stopped short of embracing it as party policy. Yet many conservative running that year saw in Mr. Ryan’s plans just what they sought — a blueprint for slashing the size and scope of the federal government and unleashing business to spur the economy.
With their victories, the tide of Tea Party newcomers propelled Mr. Ryan, of Wisconsin, and his fellow “Young Guns” Eric Cantor of Virginia and Kevin McCarthy of California into the House leadership. Ideas deemed extreme just a few years ago were front and center. With the allegiance and admiration of many freshman lawmakers, Mr. Ryan essentially became the House majority’s ideological leader.
Still, many colleagues were unnerved early in 2011 when, after an unpopular spending showdown with Democrats nearly caused a government shutdown, Mr. Ryan pushed ahead with his budget remaking Medicare for future retirees. Newt Gingrich called it “right-wing social engineering” before backtracking, but Mr. Ryan countered that voters would reward Republicans for their willingness to make hard decisions.
When House Republicans passed the plan with few defections, Democrats were astonished — and giddy at what they saw as a political windfall. Republicans approved a similar budget this past spring, and now, with Mr. Ryan’s selection, it becomes a centerpiece of the presidential race and American political debate.
Nonpartisan analyses of Mr. Ryan’s proposed income-tax cuts reached conclusions much like that in recent weeks about Mr. Romney’s tax proposals: “The tax cuts in Paul Ryan’s 2013 budget plan would result in huge benefits for high-income people and very modest — or no — benefits for low-income working households,” Howard Gleckman, a senior fellow at the Urban Institute, a policy-research organization, wrote in summarizing the findings of the Tax Policy Center.
The center, a joint effort of the Urban Institute and the Brookings Institution that includes economists and tax experts with experience in both Republican and Democratic administrations, concluded that a tax-code overhaul meeting Mr. Romney’s goal — a 20 percent cut in all rates without adding to annual budget deficits — would leave wealthy taxpayers with a large tax cut but 95 percent of Americans with a net tax increase once tax breaks for items like mortgage interest are curtailed to keep deficits in check.
Both Mr. Romney and Mr. Ryan would extend the Bush-era tax cuts, which are due to expire at year’s end, until a rewrite of the tax code could become law.
As for spending, Mr. Ryan would not only reduce but also remake the entitlement programs, Medicare and Medicaid, whose projected growth drives the forecasts of unsustainable federal debt as medical costs keep rising and the population ages.
Medicare would become a voucher program, with beneficiaries getting a fixed sum to buy private insurance; critics point out that the amount would rise at a rate that most likely would not keep pace with health care costs. And Medicaid, which covers medical care for low-income people and, increasingly, nursing home care for formerly middle-class Americans, would become a block grant to states. The federal contribution would be sharply limited.
“Washington has not been telling you the truth,” Mr. Ryan said in a short video last spring announcing his latest plan. “If we don’t reform spending on government health and retirement programs, we have zero hope of getting our spending — and as a result out debt crisis — under control.”
He did make concessions to the political risks of tackling the popular entitlement programs: His proposed Medicare changes would not apply to current beneficiaries or to those within 10 years of eligibility. And unlike in 2011, when Mr. Ryan supported the eventual privatization of Social Security, he left the program untouched this year. Like Mr. Obama, he said any changes to fix its long-term finances would have to result from bipartisan compromise, protecting both parties from voter reprisals.
Analyzing the 2011 proposal for Medicare, the Congressional Budget Office said that “most elderly people would pay more for their health care” -- $6,400 on average by 2022 – requiring older Americans to “reduce their use of health care services, spend less on other goods and services, or save more in advance of retirement.” Since then, Mr. Ryan has said beneficiaries could keep existing Medicare benefits, though that concession could significantly reduce the savings he seeks.
While most of his savings would come from the costly entitlement programs, which are about 40 percent of the federal budget, spending reductions under his plan would be felt most, and sooner, in the in the so-called discretionary domestic programs — agriculture, education, transportation, science and much more — that account for roughly 15 percent of the budget. Mr. Ryan would not cut military spending, which is roughly 20 percent of the budget.
Mr. Romney boasts that his own tax-cut plan is similar to the 2010 debt-reduction recommendations of a majority on the Bowles-Simpson fiscal commission, which Mr. Obama appointed, though the two have little in common, as panel members have said. Mr. Ryan was on that commission and opposed the majority’s report, objecting that it would raise taxes and not cut enough from health programs.
Alice M. Rivlin, a former director of the White House and Congressional budget offices who was in the commission majority, said: “Paul Ryan is a likable, attractive, smart, thoughtful conservative. He deeply believes in smaller, less intrusive government and greater personal responsibility.”
But she added, “His budget proposals imply cuts in basic public services that few Americans would accept.”
Senator Tom Coburn, Republican of Oklahoma, also was in the Bowles-Simpson majority. While he differed with Mr. Ryan on that panel, Mr. Coburn said in a statement that Mr. Romney had “made an outstanding selection.”
“When most elected officials have offered only rhetoric,” he said, “Ryan has had the audacity to offer specifics and a plan that has transformed the landscape of American politics.