Paul Ryan is not a fiscal conservative…
This is further confirmed by the following:
1. Paul Ryan’s main short-term suggestion in his FT piece today is: Cut taxes. Anywhere else in the world you would be laughed out of the room for suggesting this as the first step towards bringing a government’s fiscal house to order.
2. For concrete proposals on spending cuts, Mr. Ryan refers us to the Republican “Pledge to America“. But that Pledge has no such detail on anything that would make a first-order difference, i.e., add all their proposals together and it wouldn’t even make a noticeable dent in the government debt path. If a politician can’t summarize his main suggestions in an op ed, there are no real suggestions.
3. Mr. Ryan is right to bring up the need to make small adjustments to Social Security; this has been done before and makes sense. But the major budget buster in the CBO baseline, as you get out to 2030, is Medicare. What exactly is Mr. Ryan proposing in terms of controlling those costs? On current demographic and technology projections – with the existing cost structure – even if you cut benefits substantially, Medicare becomes unaffordable. Who will be squeezed over time – beneficiaries, providers, or payers – and how exactly? This will be a tough and emotional conversation – the lobbies here are almost as powerful as banks – but Mr. Ryan is not even starting us in the right direction.
It is up to the Obama administration to explain clearly and widely why Mr. Ryan’s proposals do not deal with the first order problems that have increased government debt dramatically in the past decade and that threaten future fiscal stability. Let us hope the White House has learned from the midterms that there are dire electoral consequences when the president shrinks from directly confronting misleading ideas.