Last week, the interwebs were abuzz with conservatives falling over themselves to praise the “seriousness” of Rep. Paul Ryan’s “Path to Prosperity“. David Brooks, writing the morning of its release said that it would “set the standard of seriousness for anybody who wants to play in this discussion”. Philip Klein called it a “serious budget proposal for a serious time.” Even Andrew Sullivan, a conservative with whom I often disagree but almost always find to be intellectually honest, wrote that the proposal, “whatever you think of it, is serious.”
Turns out none of that was actually true. The merits of the plan were touted based on an analysis done by the Heritage Foundation (the same conservative institution that predicted in 2001 that the Bush tax cuts would spur tax revenues to new heights) that predicted Rep. Ryan’s plan would drive unemployment down to 2.8% by 2021. Wouldn’t that be phenomenal? Unfortunately, as Matt Yglesias notes, “[w]hen unemployment drops beneath 5 percent, the Federal Reserve starts raising interest rates until a recession pushes it back up. This is deemed necessary to prevent inflationary wage increases.” In response to this, Heritage re-ran their numbers and came back with a higher unemployment rate . . . without changing any of the other results. Having worked with a number of models myself, which I’m sure were less complicated and exhibited less interdependence than a “Global Insights model of the U.S. Economy”, I have a pretty hard time believing that the 1.5% increase in unemployment in the revised results had a totally negligible impact on the output of the model. Macroeconomic Advisers, a well respected macroeconomic forecaster, has a more thorough takedown here.
Yet Rep. Ryan responded to Obama’s speech on Wednesday by calling it “excessively partisan, dramatically inaccurate, and hopelessly inadequate to address our fiscal crisis”. Dramatically inaccurate? Um . . . see above. I believe there’s a saying about glass houses and stones that would apply here.
Excessively partisan? Hardly. The fact that Obama is entertaining spending cuts while our economy struggles to recover is a far cry from his policy being standard liberal fare. In fact, it’s hard to imagine a more partisan plan for dealing with a fiscal crisis than the one Rep. Ryan proposed. According to the Center for Budget and Policy Priorities (CBPP), roughly two-thirds of the cuts in the “Path to Prosperity” would be to programs designed to help low-income families. Meanwhile, it also called for lowering the top marginal tax rate to 25%, while “broadening the tax base” (in unspecified ways) to keep revenues high enough to support the (now-gutted) government. It’s hard to imagine a more standard modern Republican plan than that . . . huge cuts in government services to the poor to pay for tax cuts to the rich.
And huge cuts in government services they would be. Rep. Ryan proposed switching Medicaid to a block grant system, where the federal government would determine an amount of money to allocate to each state for Medicaid, and that allocation would grow not with need, but with inflation and population growth. Unfortunately, though Medicaid expenditures per capita were growing slower than overall health expenditures per capita and monthly premiums per capita over the last decade (4.6%, 5.9%, and 7.2%, see p. 2), this is still higher than the 3.1% you would get from inflation (2.1% in 2010) and population growth (hovering around 1% since 1960). Growth in the block grants would fall behind the growth in Medicaid costs per capita, increasing the burden on the states. Since most states have balanced budget requirements, and balancing the budget becomes harder in times of fiscal crisis when Medicaid is needed the most, this will put tremendous pressure on states to drop people from the rolls, especially since “[s]tates will no longer be shackled by federally determined program requirements and enrollment criteria” (“Path to Prosperity“, p. 39). If block grants had been in place over the last 10 years (a time marked by tax cuts for the rich . . . just like Rep. Ryan proposes in his budget), CBPP finds that states would have experienced between 20 and 30% cuts when they would have needed them most in the midst of the financial crisis. And I seem to recall hearing something about how state finances aren’t in great shape lately…
But this is where we’ve come to. Someone comes out with a budget plan that has a lot of numbers and backup from a conservative think tank (even one who has proven to be completely wrong in the past), a budget plan full of the most standard conservative policies that one could imagine, and they are lauded as “courageous” and “serious.” Obama comes out with a plan that requires a little bit of sacrifice from those who have seen their incomes skyrocket over the past decade and he’s called “partisan” and (in Rep. Ryan’s own words) “unserious”.