Ryan’s Whopper $4 Trillion

Where it will come from and what it might mean

House Budget Committee chairman Paul Ryan (R-Wis.) visited Fox News Sunday this weekend and confirmed last week’s reporting suggesting a GOP budget proposal released tomorrow would strike a blow to Medicare. The 2012 budget proposal, Ryan said, would exceed the recommendations of the president’s fiscal commission and cut $4 trillion from the federal budget over the next decade. Medicare and Medicaid would come under the scalpel—or axe or buzz saw depending on your view of things.

The Wall Street Journal summed it all up in a story with a headline likely to set Republican faces smiling today: ”GOP Aim: Cut $4 Trillion,” with a subhead reading, “Budget Plan Would Transform Medicare, Reset Budget Debate; Democrats Balk.” In the report, Naftali Bendavid launches off from Ryan’s visit to the Fox News Sunday show to lay out the proposal, which centers on entitlement reform to the two big Medis.

On Medicare:

The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program’s soaring costs. Medicare cost $396.5 billion in 2010 and is projected to rise to $502.8 billion in 2016. At that pace, spending on the program would have doubled between 2002 and 2016.

Mr. Ryan’s proposal would apply to those currently under the age of 55, and for those Americans would convert Medicare into a “premium support” system. Participants from that group would choose from an array of private insurance plans when they reach 65 and become eligible, and the government would pay about the first $15,000 in premiums. Those who are poorer or less healthy would receive bigger payments than others.

On Medicaid:

The proposal would also convert Medicaid, the health program for the poor, into a series of block grants to give states more flexibility. And it is expected to suggest significant cuts in Social Security, while proposing fewer details on how to achieve them.

The federal government expects to spend about $275 billion in 2011 on Medicaid, the program that provides medical care to the poor and disabled, up from $117.9 billion in 2000. The Congressional Budget Office projects Medicaid spending will roughly double by 2021.

And on taxes:

Conservative activists who are familiar with the Ryan plan said they expect it to call for a fundamental overhaul of the tax system, with a 25% top rate for both individuals and corporations, compared to the current 35% top rate. It is expected to raise about the same amount of money as the current system, however. Lawmakers already are considering ways to accomplish that by reducing or eliminating some deductions and other tax breaks.

The Journal’s fixation on numbers—look how much more expensive life’s going to be without a GOP plan like this!—and the complicated nature of the budget and health care debates make it easy to get lost in the weeds when trying to get a grip on what’s being proposed by Ryan and his committee. Here are some suggested places to go for clarification:

The Times clears up the difference between Ryan’s current proposal and a previous proposal which had been criticized by Democrats (our emphasis):

Recognizing the political risk of significant changes in Medicare and Medicaid, the health care program for poor Americans, Mr. Ryan emphasized that such spending would continue to rise under the Republican budget plan, just not as sharply as it would have otherwise.

He also sought to clarify that any Medicare changes, which would include requiring more affluent Americans to pay a larger share of their Medicare costs, would not amount to a voucher program — an approach that has been heavily criticized by Democrats.

Mr. Ryan said his plan was more like the Medicare prescription drug program and would allow patients to pick from a menu of insurance plans. The federal government would direct the subsidy to the plan, not to the consumer.

“It doesn’t go to the person, into the marketplace,” Mr. Ryan said. “It goes to the plan. More for the poor, more for people who get sick, and we don’t give as much money to people who are wealthy.”

And if you’re confused on how block grants will impact Medicaid money—or, if you’re like me and need a refresher on how they work—Ethan Rome at the Huffington Post has a quick explanation:

Ryan and the Republicans want to turn Medicaid into a block-grant program. In the existing system, state Medicaid programs receive federal matching funds based on the number of people in need and the costs of care in that state. But recently GOP governors have been agitating to convert those federal Medicaid billions into state block grants—lump sums set in advance and capped.

CNN reporter Jeanne Sahadi makes an important point that many others do not this morning, and warns against making direct comparisons between what Ryan is proposing and what the president has proposed:

A budget resolution and a presidential budget request, however, are very different documents, and comparing them is not as telling as those doing the comparing will claim.

For one thing, the Congressional Budget Office has already offered an independent analysis of the costs and savings included in the president’s budget, which is far more detailed than a budget resolution.

The CBO, however, will not be scoring the House budget resolution, so any costs or savings claimed by Republicans will only reflect the calculations of the House budget and tax committees.

Still, despite those differences, the previewed proposal has set the pundits off as budget negotiations continue and Friday’s shutdown deadline looms. The Huffington Post’s Rome has a post up that is pretty representative of the left’s response. The block grants he describes will be most problematic.

In most instances the Republicans will impose deep cuts to the program—fewer people will be covered and their benefits will be scaled back. As usual, this means the Republicans would balance their budgets on the backs of the people who can least afford it - the elderly, the blind, the disabled, working families and the poor - while letting corporations and the very rich off the hook. That is immoral.

Caring for the Medicaid population with capped funding under the discretionary control of Republican ideologues in state capitals will harm the health of millions, create even larger financial shortfalls in states and force cuts in other core areas, like transportation, education and law enforcement.

Matt Yglesias at Think Progress homes in on the issue of the 25 percent tax top rate. Yglesias writes:

…part of the plan here is that Ryan is going to promise currently elderly people that they’ll get all their currently promised benefits plus that he’ll undue the Medicare cuts that were part of the Affordable Care Act. The idea here is that today’s old people—a very white group that’s also hostile to gay rights, and thus sort of predisposed to like conservative politicians—will also get to benefit from an extremely generous single-payer health care system. But younger people—a less white group that’s friendly to gay rights and thus predisposed to skepticism about conservative politicians—will get to pay the high taxes to finance old people’s generous single-payer health care system, but then we won’t get to benefit from it. This is in part in order to clear headroom in the budget so as to make gigantic tax cuts for rich people affordable.

But what Hulse [the Times reporter who wrote the story to which Yglesias refers] doesn’t report on is Ryan’s thinking about tax reform. This is an important element of Ryan’s original “roadmap” plan that’s never gotten the attention it deserves. But according to a Center for Tax Justice analysis (PDF), even though Ryan features large aggregate tax cuts, ninety percent of Americans would actually pay higher taxes under his plan.

Jonathan Chait, writing on Friday about the upcoming proposal, may have summed up the precise frame in which liberals will present the Ryan plan: “Paul Ryan To Boldly Take On Big Poor.”

On the right, the reviews were more glowing, with many citing Ryan’s smart political game in tracking in a direction the president may not have anticipated. Philip Klein of the Washington Examiner writes:

When President Obama ignored the proposals of his own fiscal commission, it was an indication that he had chosen politics over leadership. That is, it was more important for him to goad Republicans into proposing entitlement reform so Democrats could attack them for it, then it was for him to try and actually address the nation’s challenges. Evidently, Ryan has decided to take the opposite approach.

Even the Post’s Ezra Klein, while signaling there was much to take issue with in Ryan’s proposal, gave Ryan credit for at least proposing to take on entitlement reform despite the potential political costs.

Tuesday will mark the second time that Ryan has come out as his party’s official Obama rebuttal—the first being his not-quite-Jindal-bad State of the Union response back in January. Then, he was upstaged by Michele Bachmann. Now, the main thing threatening to upstage him is bipartisan agreement on the Hill. It will be interesting to see if he soars on his second try as the fiscally shrewd face of the GOP and whether tomorrow’s proposal significantly alters budget debates heading into 2012.

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Joel Meares is a former CJR assistant editor. Tags: , , , , , ,