Aug. 16, 2012
Mitt Romney’s selection of Rep. Paul Ryan of Wisconsin as his running-mate seems likely to simultaneously raise Americans’ awareness of Washington’s long-term budget challenge and show why the current debate can’t produce a sustainable solution.
By elevating Ryan, Romney has ensured an extended argument on the centerpiece of the fiscal plan that the personable but deeply ideological House Budget Committee chairman passed through his chamber both in 2011 and 2012: Ryan’s proposal to convert Medicare into a premium-support, or voucher, system...
According to the Congressional Budget Office, Ryan’s plan would not produce a federal surplus until 2040. While converting Medicare into a premium-support system; ending the federal entitlement to Medicaid and other programs for the poor; repealing the health care law; and nearly asphyxiating all other domestic and defense spending, Ryan’s plan extends the George W. Bush tax cuts for all earners and then further reduces the top income-tax rate for the wealthiest to 25 percent, its lowest level since 1931. Ryan says he would offset that further revenue loss by curtailing tax breaks but hasn’t specified which ones. By 2050, his blueprint would shrink federal spending as a share of the economy to 16 percent, a level it last reached in 1951. That’s implausible in an aging society.
Virtually no Democrat would support converting Medicare into a premium-support system if it comes in that wrapping. “If Republicans are not going to let the Bush tax cuts for upper-income taxpayers expire, then any kind of serious entitlement reform is off the table for Democrats,” says the Bipartisan Policy Center’s Steve Bell, former Republican staff director for the Senate Budget Committee.
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Economic Policy Project