Ryan unveils a serious budget proposal for a serious time 

For months, while most of Washington was focused on this year’s budget
fight and the prospect of a government shutdown, Budget Committee
chairman Rep. Paul Ryan’s office was working quietly on a Republican
plan to address the nation’s long-term fiscal crisis.

Though Ryan had already offered ambitious entitlement reform proposals
of his own, it wasn’t clear whether he’d be a lot less bold when he
actually had to put together a budget with Republicans in the
majority. One school of thought was that there was no reason for
Republicans to propose major changes to the nation’s entitlements that
would hand Democrats an easy target when those proposals have no
chance of becoming law given Democratic control of the Senate and
White House.

This morning, Ryan has revealed his budget for 2012 and beyond, and
I’m happy to report that it acknowledges the magnitude of the moment.
It is a serious proposal to put our nation on a path to some semblance
of fiscal solvency.

Ryan’s plan would cut spending by $5.8 trillion relative to what it
would otherwise be under current projections by the Congressional
Budget Office, and by $6.2 trillion compared to what Obama proposed in
his budget. To put that in context, in the past week, Republicans and
Democrats have been at war over whether to cut spending by $33 billion
or $61 billion. Ryan’s proposal would reduce it by about 100 times
that higher number.

Were we to adopt Obama’s budget, according to CBO projections, we’d
still be running a deficit of $1.2 trillion in 2021 alone. But under
Ryan’s plan, that year’s deficit would be $344 billion.

In total, over the next decade, Ryan’s spending cuts would translate
into $1.6 trillion in deficit reduction relative to the CBO baseline
and $4.4 trillion relative to Obama’s budget.

So how does Ryan achieve these numbers? To start with, it isn’t with
tax hikes. In fact, revenues would actually decline significantly
under his plan, something that we’ll no doubt be hearing more of among
liberal critics.

Instead, Ryan focuses primarily on the spending side of the ledger.

Specifically, Ryan’s proposal would:

-- Repeal the national health care law in its entirety.

-- Change Medicare for those 55 and younger to give them the ability
to choose among different types of health care plans that would be
subsidized by the government. The value of the subsidies would vary so
that poorer and sicker beneficiaries would receive more than richer
and wealthier ones.

-- Reform Medicaid so that it is block-granted to the states, putting
it on a predictable fiscal course and giving governors’ more
flexibility.

--Take Defense Secretary Robert Gates’ suggestions of $178 billion in
cuts to the Pentagon budget, but use $100 billion of that to reinvest
in other, higher priority, defense programs.

--Reduce domestic (non-entitlement spending) back to below 2008 levels,
and then freeze that for five years, and cap the overall budget at a
level below 20 percent of the economy, its historic average.

--Simplify the corporate and individual tax code, ending deductions
and loopholes while lowering the corporate tax and the top individual
tax bracket to 25 percent.

Though Ryan cites a Heritage Foundation study finding that his reforms
would boost the economy, his fiscal projections are based on more
conservative CBO estimates of economic growth. By contrast, when Obama
released his budget, it relied on rosy White House economic
projections.

To be sure, Ryan doesn’t get all of the way there. While his plan
mentions Social Security, it does not make specific proposals to fix
it. The budget does not include comprehensive health care reform,
something that will ultimately be required to fully deal with the
long-term fiscal challenges. And when all is said and done, the
national debt would still be $16 trillion by 2021 under Ryan’s plan.

What this reminds us is that the fiscal crisis facing this nation is
so severe, that even with major reforms that are typically seen as
outside the boundary of what’s politically possible, we still have a
long way to go. This isn’t a problem that’s going to be resolved in a
single budget document. It will take a concerted effort over the
coming years and decades. Yet that long and arduous process has got to
start somewhere. And this budget is not just a baby step, but a giant
leap, in the right direction.

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Staff Report

Staff Report

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A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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