Ryan’s Budget: Hard to Imagine Something Equally as Extreme

By JOSEPH WHITE, The Fiscal Times April 7, 2011

Rep. Paul Ryan's, R-Wisc., draft budget resolution is very important, but not because there is any chance it could be adopted. It is so extreme that Senate Democrats appear strongly opposed to it, and there will surely be very little public pressure to eviscerate Medicare and Medicaid, cut taxes even more for higher-income Americans, fast-track cuts to Social Security, and otherwise follow Ryan's new "roadmap" to 19th century robber-baron capitalism.

Instead, the Ryan plan is important for what it reveals about the attitudes influencing the budget debate, and how it structures the pressures on legislators going forward.

First, it appears that Ryan, and the vast majority of Congressional Republicans, seriously believe in his budget plan. People should understand how stunning that is. In the 1980s the conservative dream was a constitutional amendment that would limit government spending to no more than 21 percent of GDP, but today that is considered "big government" to Ryan and his colleagues. Additionally, in the 1980s President Reagan would contemplate tax hikes to deal with deficits, but now Republicans believe deficit reduction should be accompanied by tax cuts, even when the deficits are twice as large as a share of the economy. And finally, in the 1980s, the Reagan administration and Republican Senate leaders worked for a balanced plan to improve Social Security's finances and build up the trust fund, but now Republicans reject any revenues and claim the trust fund is fake.

In short, current Republicans make Ronald Reagan look like Lyndon Johnson -- or, at least, Nelson Rockefeller. This is not a matter of the 'Tea Party." Ryan was the GOP's bright new budget star before the Tea Party hype began. For some reason, this does not yet appear to be fully understood within the press. But imagine the comparable "Democratic" budget plan.

Actually, it's hard to think of something equally extreme. But I guess it would involve massive taxes on upper incomes and especially on financial manipulation. Instead of eliminating government guarantees for medical care it would replace the U.S. health care system with Medicare-for-all and a budget cap mechanism. It would provide a guaranteed annual income (as we might as well give away some extra money to the poor, in response to Ryan's giveaways to high income, in the name of "deficit reduction"). It would cut the defense budget in half with a mindless automatic formula, regardless of need (as opposed to slashing domestic discretionary the same way).

I seen no sign of something like this being proposed by Democratic leaders, and that shows the lopsided nature of the debate. Yet think of the reaction to Ryan. Sure his plan has been criticized. But it also has been widely praised for its "courage" and "honesty" in addressing the deficit problem. Personally, I don't find making up economic projections, making up assumptions about the effects of vouchers, and making up assumptions about the effects of block grants "honest.” The key point is that even the most radical conservative proposal can be treated as a serious alternative among Washington's budget mavens. Yet if the Democrats proposed a "left" equivalent I doubt that the Washington Post would praise them for the "courage" to take on the medical establishment, the military industrial complex and Wall Street. Somehow it is "serious" to want to cut "entitlements," but not as serious to want to have taxes to reverse the huge increases in inequality over the past four decades, or use government's power to control health care costs, or rethink America's role in the world.

There is another aspect of the current debate that makes me yearn for the 1980s. Back then, centrists talked about the need for a "three-legged stool" of deficit reduction, including defense, domestic spending and taxes. This was particularly common from moderate Republicans and conservative Democrats. In their recent statement of "principles" for deficit reduction, however, the Blue Dog Coalition only referred to "tax reform." This reflects a similar skittishness among many Democrats. Senate Democrats, after all, were not even willing to go to stand up last fall and let the Bush tax cuts for higher incomes expire. Nor has President Obama exercised any leadership to set the stage for higher revenues.

What this means, then, is the Democrats do not think they can hold their ranks to propose even a much more moderate, but clearly "Democratic" plan, for substantial deficit reductions. The public opinion evidence does not appear to support any claim that Ryan's approach actually is more popular than a Democratic alternative with some higher taxes on Americans below the $250,000 line. But Republican politicians, being true believers, are far more willing to take risks. The imbalance is true even at the level of mass opinion, with polls showing that the Democrats are more willing than Republicans to compromise.

Enter Bowles-Simpson. As Henry Aaron and I both explained at the time it was released, the plan drafted by the chairs of the President's fiscal responsibility commission is extremely flawed. A short list (with not all of which Henry might agree) would include that Bowles-Simpson "merely" echoes conservative dreams about spending limits from the 1980s, rather than exceeding them. It involves unrealistic caps on spending categories. It only pretends to have health care savings policies. It emphasizes cutting middle class tax preferences rather than raising rates on the people who have, as Jacob Hacker and Paul Pierson emphasize in their recent book, benefited from three decades of "winner take all politics." Yet some in the media, the Committee for a Responsible Federal Budget, and other voices have taken the opportunity to argue that Ryan shows how moderate Bowles-Simpson is.

In this context, Senate moderate Democrats who really care about deficits seem even more likely to decide that the Bowles-Simpson plan is the "moderate," "responsible" thing to do. Never mind the facts or the consequences. What matters in politics is images and positioning. One of the things about “centrists” is they keep trying to figure out where the center is. They look at other politicians and press clippings to figure that out. As the Republicans have moved steadily right, so has the center – and the Ryan budget looks like it could be another stage in that dynamic. The Ryan budget is pushing the political system towards what would have been a conservative triumph in 1985 -- and the only hope for those like myself who feel it is terrible policy, I suspect, may be that the Republicans will be too extreme to realize it.

Joseph White is Director of the Center for Policy Studies at Case Western Reserve University.

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