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Government, Politics & Issues

Ryan's budget plan a lightning rod for praise, criticism in GOP campaign

This article first appeared in the St. Louis Beacon, Aug. 15, 2012 - WASHINGTON -- When the Simpson-Bowles commission was finishing its plan to reduce the federal deficit, some members -- including U.S. Sen. Dick Durbin, D-Ill. -- bit the bullet and voted in favor of a compromise that included provisions they didn't like.

But U.S. Rep. Paul Ryan, R-Wis., voted against the plan -- in what backers say was a principled stand and critics allege was the key vote that, in effect, scuttled any chance that Congress would approve Simpson-Bowles late in 2010.

One of Ryan's main reasons for opposing the Simpson-Bowles effort -- and also a major difference between it and his U.S. House-approved "Path to Prosperity" -- is that he felt that Simpson-Bowles wouldn't go far enough in revamping the hugely expensive Medicare system. Two other key differences are that Ryan refuses to raise taxes and would block major cuts to the nation's military.

Medicare, long considered one of the "third rails" of politics -- touch it at your peril -- is emerging as a big issue in the campaign by Ryan and presumed GOP presidential nominee Mitt Romney to unseat President Barack Obama. But the Romney-Ryan opposition to any tax hikes or significant Pentagon cuts -- two steps that Simpson-Bowles concluded were essential to a realistic deficit plan -- will also come into play.

"By choosing Paul Ryan, Republicans send the strongest possible message that we will deal with debt and spending and create jobs," said U.S. Senator Roy Blunt, R-Mo., who knows Ryan well from his years in the GOP House leadership.

But if the Ryan-led House Budget Committee's "Path to Prosperity" becomes the prime lightning rod for the energized GOP presidential campaign, the Republican candidates need to brace for some Democratic thunderbolts aimed at Ryan's Medicare stance, his votes for Bush-era tax cuts, Pentagon costs and bailouts that drove up the deficit, and his apparent refusal to compromise on a deficit-reduction plan.

In a joint appearance with Ryan on NBC's "Meet the Press" on May 20, Durbin -- who has been involved in the bipartisan Gang of Six effort in the Senate to reach a deficit deal -- criticized the Wisconsin congressman and other House GOP members of the commission for not compromising and for refusing to back the Simpson-Bowles plan. Ryan led the opposition when the plan was roundly defeated by the House this spring.

"If we're going to compromise and give the American people an answer instead of a political speech or a sound bite," said Durbin, "we've got to get back to the same basic Bowles-Simpson principles that Paul Ryan and, unfortunately, the three House Republicans, refused to vote for."

Following are summaries of the Ryan and Simpson-Bowles plans, along with critiques from Democratic and GOP members of Congress.

Ryan's plan targets entitlement programs

Few serious analysts of the federal budget deficit would argue with the proposition that future costs of Medicare need to be controlled. The question is how to do that in a way that still provides adequate medical care and peace of mind for the elderly.

Ryan's plan would overhaul the federal government's entitlement programs, which now account for about 40 percent of the budget. For people now under 55, the plan would revamp Medicare in a way that the government, rather than paying directly for health care for seniors, would give them a set sum of money and let them shop around for a private health insurance plan.

Democratic critics label that as a "voucher" system; Ryan prefers to call it a "premium support" system. Last year, he and Sen. Ron Wyden, D-Ore., adjusted the original Ryan plan's Medicare approach to add an option in which the elderly could remain in the Medicare program but pay more for such coverage if it is costlier than private plans.

"That to me is the best way to deal with costs and save this program. Competition does work," Ryan told the Modern Healthcare website this month. He said Medicare could move in two main directions: toward his premium support approach, which he argued "keeps the patient-doctor relationship intact"; or toward government-directed price controls as dictated by an Independent Payment Advisory Board.

Something like that latter approach -- as Ryan, Romney and other Republicans are hammering at this week -- is the way that the Affordable Care Act is trying to limit future cost increases of Medicare without changing the basic program. Romney said Tuesday that the ACA has "taken $716 billion out of the Medicare trust fund [and] used it to pay for Obamacare,"

His use of the past tense is a stretch, but it is true that the Congressional Budget Office has estimated that the ACA would slow the anticipated costs of Medicare over ten years by about that sum, so that funds could be used elsewhere. It aims to do so by reducing federal subsidies for seniors to add private Medicare "Advantage" plans and, separately, name an Independent Payment Advisory Board that would be charged with curbing the growth of future Medicare payments to health-care providers without hurting the quality of care.

Former U.S. Sen. Jim Talent, now a senior adviser to Romney, told reporters in St. Louis County this week that "it’s unprecedented to use Medicare as a cash cow to pay for something else.” Signaling the GOP's approach to the issue, Talent warned seniors that "if you let them get away with that, you can say goodbye to Medicare, because they’ll keep dipping in and dipping in and dipping in.”

Another backer of the Ryan budget approach, and one of Ryan's supporters on the House Budget Committee, is U.S. Rep. Todd Akin, R-Wildwood. He describes the Wisconsin lawmaker as "a true problem solver" who "has a great understanding of our current economic situation and has had the courage to lead with real solutions."

Like Ryan, Akin defends the proposed changes to Medicare as a way of saving the program in the long run, rather than representing an assault on Medicare.

But the senator whom Akin is trying to unseat in November -- U.S. Sen. Claire McCaskill, D-Mo. -- doesn't buy that explanation. In her initial Tweet after Romney announced Ryan as his running mate, McCaskill summed up the Democratic response to Ryan's Medicare plan by linking it to Akin's position: "The part of the Ryan-Akin budget I hate the most? Cutting Medicare and then giving those cuts to the mega wealthy. Wrong."

Last month, in comments to journalists in Sedalia, McCaskill accused Republicans of mischaracterizing what the Affordable Care Act would do to Medicare: "... they're putting all these lies out there about [the ACA] to distract people from what they want to do, which is ironic since they want to privatize Medicare. What they want the seniors to do is have to wrestle with insurance companies."

While the cutbacks in entitlement spending -- not only Medicare, but also Medicaid and food stamps -- are a big part of Ryan's plan, he also proposes to avoid raising any taxes, even on the ultra-rich.  Instead, he would revise the federal tax code in a way that would eliminate many loopholes so that overall tax rates could be reduced. That approach would tend to benefit companies and the wealthy, depending on which loopholes are eliminated.

Ryan's plan would also cut spending on most other federal programs and agencies, with the exception of the Pentagon, where reductions would be limited to those already proposed by the Defense Department. In sum, Ryan says the plan would:

  • Cut about $6 trillion in government spending over the next decade compared to the current-policy baseline.
  • Eliminate "hundreds of duplicative programs," and cut non-defense expenditures to below the levels of 2008.
  • Eventually decrease government spending to below 20 percent of the economy, versus the current 23 percent or higher.

But the ranking Democrat on Ryan's budget panel, U.S. Rep. Chris Van Hollen, D-Md., criticizes Ryan for his unwillingness to compromise and his dependence on GOP dogma in fashioning the Ryan budget.
“The Republican budget makes a very clear choice – tax breaks for millionaires and special interests, paid for by ending the Medicare guarantee, increasing the tax burden on middle-income families, and slashing investments in national priorities," Van Hollen said during the House debate on the Ryan plan.

"It’s more of the same, presenting a false choice for our nation that leaves working Americans and future generations behind."

A summary of Ryan's "Path to Prosperity" is here

The Budget Committee's Democrats' critique of the Ryan plan here

Simpson-Bowles plan includes defense cuts, tax hikes

While they share many similarities, the Ryan plan and the Simpson-Bowles plan -- which is now undergoing a revival as the "fiscal armageddon" of expiring Bush-era tax cuts looms at year's end -- touch on different third rails in approaching deficit reduction.

If Medicare and other entitlement programs are political taboos for Democratic politicians, tax hikes and deep defense cuts traditionally have been GOP "untouchables."

The National Commission on Fiscal Responsibility and Reform -- commonly known for the names of its co-chairs, former GOP Wyoming Senator Alan Simpson and former Democratic White House staff chief Erskine Bowles -- opted to take on those third rails when it issued its "Moment of Truth" deficit-reduction plan in December 2010. 

With a bipartisan membership of 18 that included conservatives like Ryan and liberals like Durbin, the commission wasn't really expected to produce a deficit-reduction plan that could be approved by Congress. And its final proposal "harpooned every whale in the ocean," as Simpson said, by proposing cuts in defense, in various entitlements and in tax loopholes.

Details included cutting the federal workforce by 10 percent, closing a third of all overseas military bases, hiking the gasoline tax, eliminating or restricting numerous tax deductions (including limits on the home mortgage interest deduction), and modifying Social Security to raise the payroll tax and the retirement age.

But the reason Ryan said he voted against the Simpson-Bowles plan is that it did not go far enough to control Medicare costs. The Simpson plan would have maintained the ACA's approach to cost controls and stepped up the authority of the Independent Payment Advisory Board to limit payments to some health care providers. But it stopped short of suggesting a Medicare voucher approach.

"It ignored health care," Ryan told CNN this spring, when the House defeated a Simpson-Bowles-type plan and adopted his budget. "The driver of our debt are these health-care entitlements and Simpson-Bowles is basically silent on those things."

A bipartisan majority of 11 of the 18 commission members -- including Durbin and conservative Sen. Tom Coburn, R-Okla. -- voted to endorse Simpson-Bowles, but there was enough opposition by Ryan and others to keep it from achieving a supermajority that would have guaranteed a vote in Congress.

A Democratic staffer who worked on Simpson-Bowles told the Beacon that Ryan "was the last vote necessary to make Bowles-Simpson a reality, but he voted no because the commission refused to completely eliminate the coverage guarantees to seniors" -- a step which would have "ended Medicare and Medicaid as we know it."

In an interview last year, Simpson told the Beacon that too many Republicans have been hung up on their refusal to budge on any tax increases as part of a deficit-reduction package, even if such changes would be coupled with a fundamental reform of the tax code.

He accused Grover Norquist -- president of Americans for Tax Reform, a taxpayer advocacy group that seeks to avoid tax hikes and has backed the Ryan plan -- with handcuffing many Republicans by withdrawing political support unless they sign pledges to oppose any tax increases.

Simpson also took Democrats to task for failing to endorse any changes in entitlement programs such as Medicare, Medicaid and Social Security out of fear of the 30 million member American Association of Retired Persons (AARP).

"If everybody [in Congress] is terrified of the AARP and Grover Norquist, this country hasn't got a chance," Simpson said. "That's the reality -- let's get serious."

The Simpson-Bowles report is here.

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