More on Ryan's Path to Prosperity

http://www.futureofcapitalism.com/2011/04/more-on-ryan-path-to-prosperity

Rep. Paul Ryan has now posted the details of his "Path to Prosperity" budget on the House Budget Committee Web site. The link is here. Highlights from the "full report":

Acute economic hardship was exploited to enact unprecedented expansions of government power.

This did not sit well with the American people. Citizens stood up and demanded that their leaders reacquaint themselves with America's founding ideals of liberty, limited government, and equality under the rule of law.

In recent years, both political parties have squandered the public's trust.The American people ended a unified Republican majority in 2006, just as they ended a unified Democratic majority last fall. Americans reject leaders who focus on the pursuit of power at the expense of principle.

Mr. Ryan proposes top individual and top corporate marginal tax rates of 25%. This is 8.7% higher than the top individual rate of 23% floated by the bipartisan deficit reduction commission co-chaired by President Clinton's chief of staff Erskine Bowles, a Democrat. But the 25% rate resonates nonetheless for reasons explained here earlier.

Mr. Ryan proposes to convert Medicaid and food stamps to block grants to the states. Block grants to the states may be better than a program run by and from Washington, but if one followed the logic all the way to its conclusion, one might start to wonder why the money needs to come to Washington first to begin with before being "granted" to the states. Why not just cut federal taxes by the amount of the programs and let the states run their own food and health care programs for the poor? There may be a good reason against such an idea, but Mr. Ryan doesn't get into it.

His plan for Medicare tilts benefits to the poor rather than the "wealthier": "The premium-support model would operate similar to the way the Medicare prescription-drug benefit program works today.The Medicare premium-support payment would be adjusted so that wealthier beneficiaries would receive a lower subsidy, the sick would receive a higher payment if their conditions worsened, and lower-income seniors would receive additional assistance to cover out-of-pocket costs." It'd be nice to have some more details about how Mr. Ryan defines "wealthier" and how much more they will have to pay than "lower-income" seniors. The plan risks punishing seniors who worked hard and saved.

His plan for Social Security has a similar tilt: "The President's Fiscal Commission recently made a positive first step by advancing solutions to ensure the solvency of Social Security. The Commission suggested a more progressive benefit structure, with benefits for higher-income workers growing more slowly than those of workers with lower incomes who are more vulnerable to economic shocks in retirement."

So while Mr. Ryan may help the "rich" by lowering top tax rates to 25%, he also takes something back by making their Social Security benefits and Medicare benefits less generous than everyone else's.

Bottom line: Mr. Ryan's plan is better than the president's and better than the status quo, and it gets into some of the substantive policy issues that a lot of politicians prefer to avoid or kick down the road. Republicans and those concerned about freedom and the expansion of government may want to look at it as a useful starting point for discussion rather than as a complete and finished solution.

by Ira Stoll  |  Apr 5, 2011 at 11:43 am Related Topics:  Health Care, Politics, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list