The Main Event

While Congress continues to battle over this years budget, with a potential shutdown looming Friday, Rep. Paul Ryan was on Fox News talking about the House budget for the next fiscal year, which he will unveil Tuesday. Ryan appears ready to take on the entitlement issue head on, telling Chris Wallace that he will propose over $4 trillion in program cuts, including the conversion of medicaid and medicare to block grants. While the specifics will wait until Tuesday Ryan indicated that he will also recommend tax code changes, but appeared to rebuff the notion that these changes will require anyone to pay more than they do today. He hung his hat on the Bowles-Simpson report, which he voted against as a member, to lower rates while closing tax loopholes. It appears that Ryan would like to lower rates, but seemed reluctant to talk about the closing loophole portion.

From what I take out of the interview Ryan will propose changes in the following areas:

1) Discretionary Spending: President Obama has called for a 5 year cap on discretionary spending. Ryan agrees, but wants the number to be set lower than the Obama threshold, mentioning 2008 figures as a baseline. He also talks about “statutory caps”, which would use hard numbers, not percentages, as a ceiling under law for this spending. Exceed the limit and the option would only be to cut spending elsewhere.

2) An overall spending cap, set as a percentage of GDP, that would be enshrined in law. Ryan was coy about what that number will be, but I would guess it will end up at about 18% of GDP. It is around 25% today.

3) Defense??? Did not hear a lot about defense spending, which divides Republicans. Any attempt to impose budget discipline on the domestic portion of the budget while exempting defense, in my opinion, makes the entire exercise suspect. Lets wait to see what the Ryan budget does in this area.

Ryan hit the President pretty hard, talking about the lack of a plan for deficit reduction, and accusing him of punting on entitlements. He also admitted that his plan will draw plenty of flak from Democrats, allowing them to accuse him and Republicans of targeting elderly and the poor. He can count on that.

I have attached three documents. One is the Rivlin-Ryan plan itself, the CBO evaluation of the plan, and a link to the Center on Budget and Policy Priorities evaluation of the plan.

Ryan will need to address many questions, but one major issue, in my mind, is how you hold down medicaid and medicare spending to the Ryan projections without dealing with overall health care costs. That issue is dealt with in the Center on Budget piece. Not sure that the Ryan plan will work without addressing the rate of increase in health care costs without leaving gaping holes in coverage for the most vulnerable part of the population.

Ryan will take plenty of heat, and much of it will likely be deserved. But he is putting forward a plan, and so far the Democrats are limited to sniping at Republican proposals. Yes, the Democratic complaints about the Republicans ridiculous position on revenue is justified, but you cannot simply say that there is plenty of revenue at the top to cover EVERYTHING. Democrats need to produce plans to deal with the deficit, and explain to folks what is needed to keep entitlement plans going in their current form. So far they have produced nothing, and the entire framework of the debate now favors the Republicans. Criticize him or not Ryan is producing a plan that reflects Republican orthodoxy. He has had the courage of his convictions. Where is the Democratic alternative?

Ezra Klein talks about the similarities between Rivlin-Ryan and “Obamacare” here.

http://video.foxnews.com/v/embed.js?id=4624119&w=466&h=263Watch the latest video at video.foxnews.com

rivlinryan

rivlin-ryan_preliminary_analysis-cbo

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