Notes on the Ryan Budget
Ludicrous and Cruel
The Ryan Journey
The best thing about the long-term budget proposal from Paul Ryan, the Republican chairman of the House Budget Committee, is that it forces Americans to confront the implications of their choices. If voters want taxes that amount to roughly 18 percent of G.D.P., then they are going to have to accept a government that looks roughly like what Ryan is describing.
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we can’t let the oldsters get off scot-free. As my colleague David Leonhardt reported in The Times, two 56-years-olds with average earnings will pay about $140,000 in dedicated Medicare taxes over their lifetimes. They will receive about $430,000 in benefits. This is an immoral imposition on future generations. The Ryan budget wouldn’t touch this generation, but a bipartisan budget deal should ask middle-class and affluent boomers to make a sacrifice for their country. Slow the growth in health care benefits now and dedicate that money to paying down the debt and investing in the young.
Third, we still need a calm discussion about controlling health care costs. Just about every expert agrees with the following proposition: We can’t afford to have Medicare pay for every new procedure that medical technologists devise. The president’s health reform plan relies on a centralized board of technocrats to restrict choices. The Ryan plan relies on a premium support model that would allow individuals to exercise greater control over what sorts of procedures they would not be covered for. As the economist Tyler Cowen writes on his Marginal Revolution blog, we probably need a mixed system that takes advantage of both the technocratic and individual rationing models.
Ryan has moved us off Unreality Island. He is forcing Americans to confront the implications of their choices. With a few straightforward changes, his budget could be transformed into a politically plausible center-right package that would produce a fiscally sustainable welfare state while addressing the country’s structural economic problems. I suspect the process Ryan has started will take us back toward the moderate framework the Simpson-Bowles deficit commission proposed a year ago.Generational Divide Colors Debate Over Medicare’s Future
Yet there is at least one big way in which the plan isn’t daring at all. It asks for a whole lot of sacrifice from everyone under the age of 55 and little from everyone 55 and over. Representative Paul Ryan, the Wisconsin Republican who wrote the plan, calls the budget deficit an “existential threat” to the United States. Then he absolves more than one-third of all adults from responsibility in dealing with that threat.
This decision doesn’t make him unique in Washington. There is nearly a bipartisan consensus that any cuts to Medicare and Social Security should spare the baby boomers and the elderly. And, certainly, retirees or people on the verge of retirement shouldn’t have their benefits changed radically. But the consensus, like Mr. Ryan’s plan, goes too far.
The reason is partly political. Older people vote in larger numbers than younger adults. Children, of course, can’t vote at all. But beyond politics, Washington’s age bias depends on a basic misunderstanding of the budget — namely, that older people have already paid for their Medicare benefits.
They haven’t. For most Americans, Medicare resembles a giant welfare program. They receive far more in government benefits than they ever pay in taxes and premiums. The gap for a typical household runs to several hundreds of thousands of dollars.
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Two married 66-year-olds with roughly average earnings over their lives will end up paying about $110,000 in dedicated Medicare taxes through the payroll tax, including the portion their employers pay. They can expect to receive about $340,000 in benefits. Two average-earning 56-year-olds will pay about $140,000 and get back about $430,000 in benefits.
Why? By law, Medicare taxes cover mainly hospital bills, not doctors’ bills or the cost of drugs. These costs instead must be covered by the general government revenue, but there isn’t enough of that revenue. Instead, the government is running deficits — which is to say, it’s borrowing money from individuals and foreign governments and promising that future taxpayers will pay it back.
Who are these future taxpayers who will kindly cover Medicare’s shortfall? The same ones who, under the Ryan plan, won’t have Medicare for themselves.Doyle McManus: The choice between low taxes vs. Medicare benefits
This Is The Most Laughable Aspect Of Paul Ryan's Budget Plan
Kudos To Paul Ryan And The GOP For Acknowledging Our Budget Mess -- Shame On The Democrats For Just Stuffing Their Heads In The Sand
Democrats Are Appalled By Paul Ryan's Budget Plan -- So Where's Their Plan?
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