How Refreshing to Have a Plan with…Brace Yourself…Details!
Congressman Paul Ryan’s Roadmap for America’s Future 2.0 is a standout accomplishment if for no other reason than that it deals with details. Imagine that, a lawmaker who backs up his views on the role of government with actual proposals.
In a perfect world, this is how budget discussions would look: policymakers would articulate a point of view, fill in the details with policy proposals, and then, the public could evaluate the competing visions. Bigger government, you pay higher taxes; smaller government, you figure out how to support grandma. The myth of the free lunch would be replaced with a focus how to pay for lunch, while still planning for dinner and saving for breakfast.
What is remarkable about Ryan’s proposal is how unusual it is. Usually, politicians who talk about fiscal responsibility fall back on process issues such as paygo or commissions (don’t get us wrong – we support all these improvements, but they are not nearly as courageous as specific reforms.) Instead, the roadmap lays it all out. Ryan would:
- Change Social Security by reducing benefits in a progressive manner for participants younger than 55 and create individual savings accounts funded with a portion of the payroll tax.
- Reform healthcare by eliminating the tax exclusions for employer-provided health care (yeah!) and replacing it with a credit, means-testing Medicare, increasing the retirement age for Medicare, creating a voucher program for younger participants, and slowing the growth rate for Medicaid.
- Implement a nondefense discretionary freeze from 2010 through 2019, rescinding all unused stimulus funds, scaling back TARP, and capping the growth rate of other areas of spending.
- Cap federal revenues at 19% of GDP (along with a number of other tax reforms.) For more details, read the plan and the CBO report.
Here’s the problem. Under this courageous, aggressive, and specific plan, the deficit would grow to above 5% of GDP throughout the mid-2030s, before it turned to surpluses in the 2060s.
The debt would reach 100%—100%!—in 2043, before shrinking as a share of the economy.
The Roadmap numbers reflect the challenge of creating a budget that would keep the debt from exploding during the baby-boom-bubble. (A similar plan to the Roadmap without the diversion of payroll taxes into Social Security investment accounts would be much more deficit-friendly.) No one knows at what point excessive debt levels, would lead to a fiscal crisis, but 100% is much higher than most experts belief is safe.
The Peterson-Pew Commission recommends getting to 60% in the medium term, and lower over the subsequent decades. Here is an example of what that would take.
So we are left with two conclusions: First, Congressman Ryan deserves a blue ribbon for fiscal courage: He treads where few politicians dare to go, and judging from his rising political star, this is a model others should copy rather than fear. His willingness to get specific is commendable.
But second, it is going to be impossible to get the deficit and debt down to reasonable levels without increasing revenues. If Paul Ryan can’t do it, no one can. (Our guess is he’ll agree with our first conclusion but not our second – but we’d love to know how he responds.)