Paul Ryan, unlike the president, acts like a grownup in facing the entitlement tsunami
By RICHARD ESENBERG
In his State of the Union Address, President Obama invoked great crises in American history like Bull Run and Omaha Beach. He referred to the stock market’s crash on Black Tuesday and that Bloody Sunday in 1965 when civil rights marchers were brutally beaten on the Edmund Pettus Bridge.
On all these occasions, we were tested and compelled to “answer the call of history.” The president sees a similar challenge before us today.
He’s right. But it’s not clear that he understands why.
In the coming years, both liberals and conservatives will have to face the limitations of their preferred nostrums. Government spending (or, as we are admonished to call it these days, “investment”) does not pay for itself. The state can do things that contribute to prosperity, but often does little more than move money from one pocket to another.
At the risk of losing my membership in the Vast Right Wing Conspiracy, tax cuts don’t always pay for themselves either. The famed Laffer curve represents sound economic theory, but it is…a curve. As tax rates are reduced, further reductions offer increasingly diminishing bang for the buck.
Thirty years of mostly conservative rule has-at least on the federal level-substantially improved the tax climate, with spectacular results. But it has not reduced the size of government. Nor has it stopped the entitlement tsunami that threatens to swamp us as retiring baby boomers drop out, turn on and tune in to www.socialsecurity.gov.
Like Bruce Springsteen’s “Johnny 99,” we’ve got “debts no honest man could pay.”
This may mean that being the out party is going to be a lot more fun than actually having to govern.
For a generation we have known that Social Security and Medicare are a pair of financially voracious tigers chewing their way through the front door.
Some critics blame the George W. Bush administration for failing to act, but the Obama team has continued to cower behind the couch. The president has submitted budgets with deficit projections that, according to his own Treasury secretary, are “unsustainable.”
When challenged, Secretary Timothy Geithner’s response was essentially: “Yeah, somebody’s going to have to do something about that.” For his part, the president wants to punt the problem to yet another commission.
But we have a pretty good idea of where the president wants to go. Almost certainly, he will turn Reaganism on its head. “In the present crisis,” Obama is likely to say, “government is not the problem, it is the solution to the problem.” In politics, like fashion, everything that was once “out” becomes “in” again. The president seems likely to take us back to 1979.
I was there. Not a good idea.
A contrasting view is offered by our own Congressman Paul Ryan in his “Road Map for America’s Future 2.0.” As columnist Robert Samuelson puts it, Ryan has “done something no one else in Congress or apparently the White House has done: design a specific plan to control long-term government spending and budget deficits.”
Of course, no good deed goes unpunished. Democrats have unleashed a coordinated onslaught of vitriol against Ryan. His plan must not be engaged. It must be destroyed. Critics attack the hard choices that Ryan asks us to make without suggesting what spending cuts and tax increases they would prefer.
That type of response is precisely how we got into this mess.
I am not prepared to endorse every aspect of Ryan’s plan. The complete elimination of capital gains taxes and the taxation of dividends is probably a political nonstarter and may itself have unintended and undesirable consequences.
But it is refreshing to see a politician finally deciding to act like a grownup. It is startling that this difficult conversation was decided, not by our (formerly) popular president offering “hope” and “change” and enjoying huge congressional majorities, but by a (formerly) obscure congressman from Janesville, Wisconsin.
Ryan’s plan updates Reaganism for the 21st century. It lowers marginal tax rates but recognizes that it is not possible to do so without broadening the tax base. It returns Medicare to solvency but only by introducing restrictions on benefits for upper-income folks.
Ryan would move Medicare from the fiscally unsustainable single-payer system to a market for insurance, but he recognizes that, given the nature of health care, this will require subsidies and regulated exchanges. His broader proposal for health care insurance does much the same thing.
Ryan’s roadmap has been criticized for reducing Medicare spending. But that is not a flaw; it’s the objective-and an unavoidable one. Obamacare would have done the same thing by centralized administrative fiat rather than by creating a market that would retain incentives for efficiencies and innovation.
The difference matters and will increasingly become the battleground on which Democrats and Republicans will fight. Conservatives must battle the Leviathan, but we must remember that the goal is not simply smaller government but the common good that we believe requires limited government.
Paul Ryan has made an excellent start.
Richard Esenberg, a visiting assistant professor of law at Marquette University, blogs at Shark and Shepherd.