Five Things to Know about Paul Ryan's Plan
Long before he won the Republican presidential nomination, Mitt Romney had enthusiastically endorsed the budget of Wisconsin Representative Paul Ryan as the template for his own proposals. As I detailed in the Prospect's print magazine, Romney promises to extend the Bush tax cuts, cut income-tax and capital-gains rates, and reduce corporate taxes.
Now that Romney has selected Ryan as his running mate—and the former Massachusetts governor says he'll play a key part in his administration—odds are even higher that this plan will be implemented by the Romney administration. Both candidates envision a rearrangement of the federal government and its responsibilities, but Romney has always been responsive to the needs of a presidential election. Not Ryan. As someone responsible to congressional Republicans, his proposals had room to be far-reaching and radical. Here are five charts that illustrate his proposals and give a sense of his true priorities.
Ryan wants to end most taxes on the top earners
On average, according to the Tax Policy Center, people earning more than $1 million a year would receive a tax cut of $265,000 under the Ryan plan. For the richest Americans, after-tax incomes would increase by 8.7 percent:
Ryan achieves this by eliminating all taxes on capital gains, interest, and dividends (by contrast, Romney only wants to reduce them). And because he also calls for large cuts to existing social services, the effect of this arrangement is to raise taxes on the poorest Americans, by way of lower benefits and fewer services. To give a concrete example of what this means, a multi-millionaire who receives his income through investments—Mitt Romney, for instance—would see his taxes decline to an effective rate of 0.82 percent on income of over $21 million. This isn't a 0 percent tax rate, but for the wealthy, it's close enough to nothing.
Ryan would end guaranteed health care for seniors
Late last year, Florida-based fact checkers PolitiFact gave their “Lie of the Year” distinction to the Democratic claim that the Ryan Budget would end Medicare. “The Democratic attack about 'ending Medicare' was a pervasive line in 2011 that preyed on seniors’ worries about whether they could afford health care,” wrote the outlet. Their argument was straightforward: The Ryan plan changes the mechanism of Medicare—giving pre-paid vouchers to seniors to buy private insurance—but doesn’t end the program itself.
That’s a semantic quibble. Medicare was created as a program of guaranteed health care for seniors—a promise that our elderly would not go without health care due to an inability to pay. The Ryan plan breaks that promise:
The problem is that the vouchers aren't meant to keep pace with rising health care costs—Medicare payments are placed on a budget, and anything more is the responsibility of seniors. Yes, he preserves the original, government-run program as an alternative. But because all new beneficiaries would be moved to the vouchers, eventually, original Medicare would become too small and too expensive to survive. The Congressional Budget Office found that, under the Ryan plan, heath-care spending would double for the typical 65-year-old. By any reasonable logic, that is an end to the traditional guarantee of affordable health care for seniors.
Ryan would “save” Medicaid by slashing its budget
Besides Medicare, the other major government health-care program is Medicaid, which provides health insurance for low-income Americans, as well as care for the elderly and disabled. Traditionally, the states share the cost of Medicaid with the federal government. On average, the government pays for 57 percent of a state’s Medicaid costs. Ryan goes a different route: Under his budget, the government provides a block grant to states—essentially, a check.
This check is pegged to the state's Medicaid funding for 2011, adjusted for population and inflation on a year-to-year basis. But health-care costs grow faster than overall inflation, and over time, the grants would lose their value. The result is a huge cut to the program:
States could deal with this by paying more of their own money, or by raising eligibility requirements and kicking people out of the program. According to the Center on Budget and Policy Priorities, between 14 million and 27 million people would lose health-care coverage as a result of this plan, on top of the 17 million who would lose coverage as a result of repealing the Affordable Care Act. To pay for his tax cuts, Ryan would take health care from millions of people.
Ryan is not a deficit hawk
Ryan presents himself as a fiscal conservative, and his ideas as necessary to reducing our debt and fixing our economy. For this vocal concern, he has won praise from journalists and pundits. In its write-up of Saturday’s vice presidential announcement, the Associated Press described Ryan as “an ardent conservative and devoted budget cutter.” Likewise, Slate correspondant Will Saletan called Ryan “a real fiscal conservative.” That's absurd. He’s nothing of the sort:
This chart shows the trajectory of debt under President Obama’s budget and the House Republican budget, crafted by Ryan. With Ryan’s plan to drastically cut taxes, lower revenues, and raise defense spending, debt grows by more than 10 percent over the next decade. Is Paul Ryan a conservative reformer? Yes. Does he plan to reduce the debt or balance the budget? Absolutely not. Which brings us to the final point ...
Ryan actually wants to shred the social safety net
In its analysis of Ryan’s plan, the Congressional Budget Office found that, by 2050, it would shrink government to 15 percent of GDP, about where it was in 1950. At The Atlantic, Derek Thompson produced a chart to compare the Ryan government of 2050 with the actual government of 1950:
In 1950, the programs that made up the bulk of today's federal spending didn’t exist. In order to shrink the federal government to 1950s size, you have to either end all social insurance programs, or preserve them—in much smaller form—and eliminate everything else. Ryan’s budget does the latter; he shrinks “all else” to 3.75 percent of GDP, with a significant portion reserved for defense. So what is "all else"? In 2011, "all else" (excluding defense) came to $646 billion, or just over 4 percent of GDP. This pays for everything we associate with the federal government, from food stamps and Pell Grants, to weather monitoring, law enforcement, and regulation. Long-range budget predictions are difficult, but if this stays unchanged in terms of GDP, then by 2050, "all else" should come to more than $1.4 trillion. Under the Ryan budget, Thompson estimates, it's $100 billion. To shoehorn today's federal government into $100 billion dollars would require draconian cuts. To do it in 2050 would require an end to the federal government as we know it.
Ryan bills himself as someone who wants to make government sustainable, but his rhetoric is littered with references to “makers,” “takers,” and “government dependency.” Alone, this doesn’t tell us much. But put it together with his budget and the picture is clear: He wants to rid the United States of social insurance. In Ryan’s world, if you suffer any misfortune, you’re on your own. If you weren’t born with the advantages of wealth and privilege, you’re on your own. If you want clean air, clean water, safe products, and protection from abusive employers—you guessed it—you’re on your own.
If Romney was looking to energize his conservative base, he didn't have to put Ryan on the ticket. Virginia Governor Bob McDonnell and Louisiana Governor Bobby Jindal are popular, right-wing, and well-liked with movement conservatives. Romney chose Ryan to send a message: This election is about ideas, and if you elect me, these are the ideas I'll pursue. It's a radical vision for America, and it's now the official platform of the Republican Party. Romney's prior moderation shouldn't fool you into thinking otherwise.
One other thing to remember. Republicans have a large enough majority in the House that they're likely to keep it, regardless of who wins the presidency. But the Senate hangs on an edge, and the most competitive seats are in swing states. Because of that, if Romney wins the election (by winning a majority of swing states), odds are good that Republicans will have picked up the Senate. With the White House and a unified Congress, it's a near-certainty that the GOP will go full-steam with Ryan's ideas.
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