In 2003, Paul Ryan was one of 207 Republicans in the House of Representatives who voted for the Medicare prescription drug benefit championed by President George W. Bush -- a reckless expansion of a huge program that was already heading for bankruptcy. This week, Ryan, who now chairs the House Budget Committee, did partial penance for that budget-busting blunder with a plan that includes ambitious Medicare reforms as well as $5.8 trillion in spending cuts during the next decade.
At a time when Democrats and Republicans are squabbling over whether to cut $33 billion or $61 billion in spending this year -- neither of which would make much of a dent in a deficit that is expected to hit $1.6 trillion -- Ryan's plan may seem breathtakingly bold. But while it is admirably forthright in some respects, it dodges several important questions. It's too bad there is no opposing party to keep the Republicans fiscally honest.
Compared to President Obama's budget proposal, the Ryan plan is a model of restraint, calling for $6.2 trillion less in spending and $4.4 trillion less in new debt over 10 years. Even so, it would not balance the budget until 2040 or so, and it would increase the federal debt, currently about $14 trillion, to more than $23 trillion by 2021. As the Cato Institute's Chris Edwards notes, spending continues to rise during the next decade under the Republican plan, albeit at a slower pace than Obama envisions: 34 percent vs. 55 percent.
Ryan proposes making Medicare solvent by changing it, beginning in 2022, from an open-ended entitlement to a system of premium subsidies that the government would pay to private insurance companies. While Democrats predict that retirees would be stuck paying more and more for their coverage as the subsidies failed to keep pace with health care inflation, Ryan argues that competition among medical plans and clearer price signals will help control costs. This is an argument worth having.
Likewise the debate about Medicaid, which Ryan would transform into capped block grants, saving $750 billion over 10 years while giving states more flexibility in helping low-income families obtain health care. Given Medicaid's unsustainable fiscal path, complaining that Republicans are mean to poor people does not qualify as a counterargument.