What the Ryan Budget Gets Right

I wrote yesterday about what is baffling in the Ryan budget plan.

What is positive?

1) The Ryan plan accepts that tax cuts must be "paid for" with offsets elsewhere in the budget. That's a welcome departure from the tax cut + borrow approach of the past.

2) The Ryan plan redirects Republicans away from the illusion that budgets can be balanced with cuts to NPR, foreign aid, etc. The money is in healthcare - and Ryan has started an important Republican discussion about healthcare.

3) The premium support plan for Medicare is an important modern advance over the 1965-vintage single-payer Medicare system. The Ryan plan points the way to a better American health care future: a future in which everyone is enrolled in competitive private insurance - and in which support goes to those who need it, not just those who happen to be over 65.

4) The Ryan plan wishes to unleash cost-saving on the health care sector. At 17% of GDP - 4 points higher than runner-up Switzerland - there is plenty of bloat in that system. It bids farewell to the idea that attempts to find efficiency = "death panels."

5) The Ryan plan joins medium term deficit reduction with a search for short-term job creation. I have my doubts that a drop in the top marginal tax rate will do the job. I'd prefer to see payroll tax holidays plus infrastructure spending, along with continuing Federal Reserve ease. That said: a cut in the top marginal tax rate is better than nothing. And * nothing * unfortunately has been the main GOP anti-recession policy to date.

6) Ryan ends the dual payer system for Medicaid, which he correctly assesses as an invitation to waste and irrationality. Block grants to states are a reasonable way to do the job for sure, and I've supported them in the past. Question though: given that premium support for employed people is now the law under Obamacare; given that the Ryan plan moves Medicare to a premium support model for under-55s; why not just fold Medicaid into that system instead?

7) The cuts to farm spending are welcome. The GOP did important farm reforms in the 1990s, relapsed with the 2002 farm bill. Ryan returns the GOP to its reforming traditions on farming.

8 ) The Ryan plan accepts that balancing the US budget is a decade-long project, and that most of the spending cuts should await economic recovery. The Ryan plan actually moves to balance slower than President Obama's (fanciful) budget proposals: that's a feature, not a bug.

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