Ryan’s magic

So, Paul Ryan has a budget plan.  In brief, his method for addressing rising health care costs and the Republican-engineered burgeoning deficits is

  • to just stop paying for health care for seniors and the poor
  • in order to reduce taxes for the rich.

The plan is full of fantasies.  Krugman outlines the biggest ones:

  • Ryan projects unemployment will plummet from 8.8% to 6.4% next year, then to under 4% (the level of the Clinton boom) by 2015, and later to 3%, a level we haven’t had since the 1950s, and in fact would trigger anti-inflation measures by the Fed.
  • If you were born after the magic cutoff date of 1957,  you don’t get Medicare; instead you get a voucher which (as the CBO calculates) will pay less than a third of your health care costs.  You’d pay the rest; if you rely on Social Security you’d pay 2/3 of your income for health insurance; how you pay for rent and food Rep. Ryan does not say. 
  • The savings from health care goes right to tax cuts for the rich.  To actually reduce the deficit Ryan resorts to pure magic: he asserts that all government spending besides health and Social Security can be reduced from 12% of GDP today to 3.5% in 2050.   Somehow 70% of the government goes away without explanation, including defense.

Sadly, Ryan is getting credit from otherwise skeptical bloggers like Andrew Sullivan and Jacob Weisberg.  They note some of the unrealities but call the plan “serious”, as if a politician deserves a gold star simply for recognizing that health care costs are rising.  Ryan’s plan is no more serious than the tactical libertarianism we’ve been hearing from Republicans for the last twenty years.  (They’re for getting rid of everything when a Democrat is in office; when they’re in power they increase government and balloon the deficit.)

The vision of seniors spending 2/3 of their money on health care, by the way, is only the starting point.  Ryan lets his vouchers rise with GDP, but health care costs are rising faster than GDP.  He has nothing to address this– he has less than nothing, since he wants to repeal Obamacare, which includes dozens of ideas on reducing health care costs.  So his plan simply amounts to eliminating Medicare over time.  The reason we have Medicare is that seniors are freaking retired.  They don’t have a job to pay for health care.

Plus, private health care is going to be more expensive than what the government can provide.  That’s why the public option was killed– Republicans actually objected that it would kill private insurance; they knew that Medicare was more efficient.  (It costs 27% less than private insurance.)  The government can just pay doctors; insurance companies have to take off a chunk for profit, marketing, and paying people to deny claims.  Without Obamacare, how are seniors, who will pretty much all have pre-existing conditions, get any insurance at all?

The proof that Ryan doesn’t believe in his own remedy is that he exempts anyone over 55.  If he thinks vouchers will improve medical care, why doesn’t he extend the benefits to the current elderly?  They’re fervent Republican voters, so they’re bribed to ignore the destruction of Medicare with the continuation of the Democratic programs they’re used to.

But at least he’ll lower your taxes, right?  Only if you’re in the top 2% of incomes.  Ryan promises to maintain the Bush tax custs, lower the top rate to 25%, and keep overall revenue the same.  The only way to achieve all those at once is to increase taxes for the middle class.

And just because there wasn’t enough stupid in his plan, he also wants to remove regulations on financial institutions, so we could repeat the 2008 Bush recession.

Sullivan asks what liberals would do about the deficit instead.  But it’s been said many times:  the deficit is looming largely due to the Bush tax cuts.  Repeal Bush’s tax cuts, and wind down Bush’s wars, and that would deal with about 2/3 of the deficit by 2019.  And that would give us breathing room to see if the cost savings of Obamacare are starting to kick in, and if not to put in some more.

Ryan is willing to talk about entitlement cuts, which does put him above Boehner.  But there’s something inherently fishy about plans that promise spending cuts far in the future, and hand out candy today.  The real pain starts to happen in twenty or more years, when the vouchers are covering less and less of seniors’ health costs (to say nothing of the 75% cuts in everything else that he’s proposing).  And the 2011 Congress, or even President Palin in 2013, can do nothing to force the seniors or the Congress of 2032 to keep following Ryan’s plan.

It will be interesting to see if Ryan’s plan actually gets support from his own party.  Is the Tea Party, which actually objected to Obamacare for cutting Medicare, going to sign on to its elimination? 

But if this is the fight they want to have, let’s go for it.  Let the Republicans spend 2012 arguing for middle class tax increases, Medicare/Medicaid elimination,  denying health care for pre-existing conditions and extending that to the elderly, and eliminating 75% of defense spending, all so the richest 2% of the population can pay less taxes.  And let them continue to attack teachers, immigrants, gays, and lesbians.  This might be a harder sell come November 2012 than they expect.