Ryan's 2012 Budget: Radical or Realistic?

Tuesday, Paul Ryan will formally present the Republican budget for Fiscal Year 2012 at noon. FrumForum will liveblog the presentation of the budget at AEI.

The new budget incorporates ideas previously discussed in Paul Ryan’s Roadmap as well the Ryan-Rivlin healthcare proposal. Ryan gave a preview of the budget on Fox News Sunday:

Ryan also has an op-ed in the Wall Street Journal that gives further details on the proposal.

Here are some of the questions to keep in mind:

1. When will the cuts be felt? The WSJ op-ed headlines announced that $6.2 trillion will get cut over 10 years. The question is whether the budget if passed would make those significant cuts quickly, or draw them out over several years.

2. How will the new Medicare system work? Paul Ryan is better known for advocating that Medicare for those over 55 remains the same while those younger than 55 instead receive a voucher. For the GOP’s own budget, Ryan still wants to keep Medicare the same for those 55 and over, but his reforms for those who are not yet retiring are different.

Ryan’s described his plan as a premium-support system. He’s not breaking new ground here, the CBO considered a premium-support system in 2006.

Ezra Klein described the new plan:

The current Medicare program would be dissolved and the next generation of seniors would choose from Medicare-certified private plans on an exchange.

If this sounds familiar, it’s because a key component of Obamacare is the creation of health insurance exchanges. It’ll be interesting to note how similar the Obamacare exchanges and the Ryan exchanges are, and what the anticipated savings will be.

3. Is Social Security completely untouched? In what may be an acknowledgment of the political difficulties that the GOP has in regards to proposing Social Security reform, none of the current news reports suggest that the GOP budget will touch the program.

Politico reported on this sentiment:

Republicans say they still haven’t settled on a plan for Social Security. It was just six years ago that they were burned by former President George W. Bush’s proposal to create private accounts in the system.

While the party isn’t likely to propose radical reform for this program, it would be notable if the GOP did not even invoke the recommendations of the deficit commission and try to raise the retirement age. Ryan’s op-ed states that he wants to “build upon ideas offered by the president's bipartisan fiscal commission” but failed to give specifics.

4. When will this balance the budget, if at all? The op-ed includes a chart which estimates that the Ryan budget will reduce debt as a percentage of GDP to 0% by 2050, but doesn’t mention if it will balance the budget.

The budget also reportedly keeps spending below 20% of GDP, but will it ever get below 18% and thus be able to pass under the Senate Republicans own balanced budget amendment?

5. How will the budget reform agricultural subsidies? Senator Tom Coburn has recently proposed ending very generous ethanol subsidies, but this has been criticized by Grover Norquist as it would violate Norquist’s taxpayer’s pledge. Removing a subsidy increases the revenue to the federal government which is not permitted under the pledge.

When he was interviewed by Fox News, Ryan was asked about whether his budget would do anything on the revenue side, and replied that the government “has a spending problem not a revenue problem” and that his budget would not seek to raise taxes. Yet in his op-ed, Ryan calls for “reforming agricultural subsidies” so it will be important to see how Ryan plans to do that without breaking the Norquist pledge.

6. How will the narrative be written? FrumForum will pay attention to what sort of questions the different media outlets will ask Ryan tomorrow. Liberals will likely be eager to criticize how the plan reportedly fails to bring in more money on the revenue side by ending many politically sensitive subsidies. Conservatives will probably be interested in how Ryan’s numbers compare to the president’s.

Finally, there is the question of what can be done to reduce medical costs beyond simply budget policy. While this is beyond Ryan’s immediate portfolio, the fact is that the costs of Medicare and Medicaid are rising because the costs of healthcare are increasing. To what extent will Ryan’s rhetoric reflect this reality?

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