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Reaganomics? Meet 'Ryan-omics'

Posted: April 14, 2011 1:06 p.m.
Updated: April 15, 2011 5:00 a.m.

What would America look like if the Tea Party movement ran it? You can get a good glimpse in Republican Rep. Paul Ryan's budget-balancing plan. Now, I wonder, will Democrats come up with a better plan? Or will they simply wait for Republicans to destroy themselves?

Ryan's plan unfortunately pushes the pain toward those who can least afford it -- or, to put it another way, those who are least likely to vote Republican.

Ryan must be a good student of President Ronald Reagan's feel-good approach to economic issues. The Grand Old Party's proposed budget would enact the essence of Reaganomics as a new "Ryan-omics" for America's new century. Reagan's economic philosophy was described well by comedian Mort Sahl: If you're drowning 15 feet from shore, the government will toss you a ten-foot rope -- and expect you to be grateful that they're meeting you halfway.

The Center on Budget and Policy Priorities, a liberal Washington think tank, found Ryan's budget plan would get about two-thirds of its more than $4 trillion in budget cuts over 10 years "from programs that serve people of limited means." Those programs include Medicare, Medicaid, Pell Grants, food stamps and others that serve the poor, elderly, disabled and low-income students.

Yet, in even more of a reverse Robin Hood move, the budget plan offers new tax breaks to corporations and higher-income taxpayers. Although income taxes would be stripped of numerous current deductions, top rates for individuals and businesses would be cut to 25 percent from 35 percent under the Ryan proposal.

Ryan also proposes repealing key elements of the Dodd-Frank financial regulatory reform law, even though that gift to Wall Streeters has curiously little to do with budget balancing.

And what new taxes does the Ryan budget call for to cover these revenue losses? Surely you jest. New revenue sources are conspicuous in their absence from this budget. Like Reagan, he expects tax cuts to bring enough new growth and revenue to cover costs. Yet, the nonpartisan Congressional Budget Office, among other analysts, has called that economic scenario too rosy for belief.

Ryan-omics reduces the costs of Medicaid, the health care plan for the poor and disabled, by converting funding to block grants to the states, based on their low-income population. That would give flexibility to the governors to decide how they want to use the money, Ryan emphasizes. But it also is likely to force states to reduce care or eligibility, especially when economic times are tough.

And remember: Medicaid is not just a "welfare" program for poor families. At least half of state Medicaid spending covers long-term care for the elderly and disabled. Still, a lot of Americans don't appreciate how much government is helping their families, until the help is gone.

Social Security? Ryan doesn't touch it, which is wise. Despite all the anxieties aroused by the right's pronouncements of Social Security as "bankrupt," the nation's retirement program is projected to be solvent until 2037. Beyond that, a simple solution like lifting the current income caps on those who pay for Social Security will continue that solvency.

The biggest challenge is Medicare, the program whose rising costs present the biggest challenge. Starting in 2022, new Medicare beneficiaries will be enrolled under Ryan's plan in "the same kind of health-care program that members of Congress enjoy," he says. That would be a choice between a wide range of private health insurance plans with government paying part of it -- but not all of it.

Ryan apparently takes seriously the polls that show many Americans saying, "I want the same insurance that Congress has." But will they prefer it to what seniors have now? I think not.

Will people protest now? President Bush was surprised to find seniors roundly rejecting his more modest Social Security suggestions, which would not have affected current recipients either. Ryan's Medicare plan may well be similarly blocked.

In short, there's a lot to argue about in Ryan's deficit-reducing budget, so much that sensible centrists, as well as liberals, probably won't let it pass in its current form. Democrats will be tempted to watch Republicans sink in a backlash of angry seniors and others who are upset by the drastic unfairness of Ryan's plans. But for the good of the nation's fiscal health, Democrats need to come back with some deficit-reduction ideas of their own.

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