U.S. Representative Paul Ryan, named
yesterday as Mitt Romney’s running mate, is perhaps his party’s
most zealous advocate of slashing the government’s growing debt.
As chairman of the House budget committee, he’s called for
major cuts in Medicare, Medicaid, food stamps and scores of
other politically sensitive programs. At the same time, he wants
to overhaul the tax code, including slicing taxes on the wealthy
-- one reason why his plan cuts the deficit while falling short
of balancing the budget anytime soon.
It’s a proposal that has transformed the public debate over
what to do about the government’s trillion-dollar deficits, and
one now at the center of the presidential campaign.
“Politicians from both parties have made empty promises,
which will soon become broken promises with painful consequences
if we fail to act,” Ryan, 42, said yesterday in Norfolk,
Virginia, as Romney introduced him as his vice presidential
candidate. “We might have been able to get away with that
before, but not now. We’re in a different and dangerous moment.
We’re running out of time.”
Democrats have lined up against Ryan’s plan and so far he’s
mostly eschewed the compromises that might produce a grand
bargain to curb the debt. As a member of President Barack Obama’s bipartisan debt-reduction committee, he voted against a
proposal by the panel’s chairmen, Democrat Erskine Bowles and
Republican Alan Simpson, in part because it would raise taxes.
Revamping Medicare
The centerpiece of the so-called Ryan plan is the overhaul
of Medicare, the health-insurance program covering 50 million
elderly Americans whose cost is projected to swamp the federal
budget. Ryan wants to replace the traditional system with a plan
to give seniors a fixed amount of money to buy private coverage.
The theory is that competition among health insurers for their
business will bring down spiraling costs.
The Wisconsin lawmaker originally called for phasing out
the Medicare program in favor of the vouchers, though this year,
in a bid to win bipartisan support, he softened the plan by
offering seniors a choice between the two.
Either way, Democrats say it won’t work, predicting that
seniors will be left to either shoulder bigger bills or forgo
care -- or both. The proposal “would end Medicare as we know it
by turning it into a voucher system, shifting thousands of
dollars in health-care costs to seniors,” Jim Messina, Obama’s
campaign manager, said after the vice presidential announcement.
Democrats say a board of experts, created in the
administration’s health-care overhaul, should decide how to
wring savings from the program.
Tax Cuts
While Obama calls for raising taxes on higher-income
earners, Ryan would do just the opposite, dropping the top
income-tax rate to 25 percent from next year’s 39.6 percent,
arguing that will give higher-income Americans more incentive to
earn and invest. It’s part of a proposed tax overhaul that would
collapse the number of brackets to two from the current six,
with the other rate set at 10 percent.
Ryan would finance that by eliminating individual tax
breaks, though he has declined to spell out which ones. The math
would dictate major cuts in popular tax expenditures such as
those allowing homeowners to write off their mortgage interest
and companies to offer health insurance.
Because he takes a hard line against tax increases, shields
the Pentagon from significant cuts and would only slowly phase
in his Medicare plan -- it wouldn’t begin until 2023 -- Ryan has
called for cuts in food stamps, Medicaid and other programs for
low-income Americans to reduce the deficit.
Slowing Medicaid Growth
Where Obama’s health-care law will open Medicaid to some 17
million more Americans in coming years, Ryan goes in the reverse
direction. His budget calls for a one-third reduction in the
program, which provided care last year at various times to
almost 70 million low-income children, pregnant women and
seniors.
He’s also proposed cutting off food stamps to almost 2
million Americans to avoid scheduled cuts in defense spending
next year. While the administration has expanded funding for
Pell grants for college tuition, Ryan has sought reductions,
suggesting those recent increases have only prompted colleges to
raise fees.
He says those cuts will empower the poor, describing the
federal safety net as a “hammock that lulls able-bodied people
into lives of complacency and dependency.”
Democrats disagree, and Ryan ran into criticism from some
fellow Roman Catholics this year when he said his proposed cuts
were inspired by the church’s teachings.
Lawmaker Balks
Some Republican lawmakers, such as Montana Representative
Dennis Rehberg, who is running in a close Senate race, have
distanced themselves from Ryan’s plans. “I simply refuse to
gamble with something as important as Medicare,” Rehberg said
this year after a House vote endorsing the proposal.
Romney has backed the House plan, and long before he was
chosen to be on the ticket, Ryan said they had coordinated their
proposals.
“We’ve talked to him and his staff about this over the
last couple of months and come to a mutual understanding about
how we think we can preempt a debt crisis,” Ryan said in a July
11 interview with Bloomberg News. “Our policies are pretty
remarkably similar.”
Unanswered Questions
Still, Ryan’s deficit-reduction proposal leaves some
questions unanswered. It steers clear of offering ideas on how
to shore up Social Security, though its disability insurance
program is headed for insolvency in just four years. His plan is
fuzzy on many of the specific programs that would have to be cut
to bring down the deficit. Some Republican lawmakers say Ryan’s
budget takes too long to cut the debt, noting it would not
produce a single balanced budget until 2040.
The publicly held debt of $11.1 trillion is 73 percent of
the nation’s gross domestic product, up from 40 percent just
four years ago. That’s the highest level since the World War II
era, and is expected to continue spiraling upwards as the baby-
boom generation marches into retirement.
Though Ryan has focused on economic matters, he has sided
with his party on social issues as well, opposing abortion
rights and gay marriage.
“I’m as pro-life as a person gets,” he told the Weekly
Standard in 2010. He also supports amending the Constitution to
ban same-sex marriage. Still, he has supported legislation by
Massachusetts Democratic Representative Barney Frank prohibiting
discrimination against gays in the workplace.
Some Blemishes
While Democrats will target the Romney-Ryan ticket’s
economic blueprint, some Republicans are likely to find what
they would consider blemishes in Ryan’s record, too.
He supported the 2008 government bailout of Wall Street,
loathed by anti-spending Tea Party activists, as well as the
rescue of the automobile industry. He backed the creation of the
Medicare prescription-drug benefit, which had been the biggest
entitlement expansion in decades until Obama pushed through his
health-care overhaul. Though the drug benefit is now expected to
cost less than initially projected, the price tag is still
estimated to top $350 billion.
He also supports so-called Davis-Bacon rules requiring the
government to pay workers on construction projects locally
“prevailing wages.” That’s a priority for unions, because it
raises workers’ pay, and anathema to many Republicans because it
increases the cost of building highways and other infrastructure
projects.
Clear Choice
Yet Ryan’s views on the budget will be the main topic of
conversation, and Democrats signaled they are eager for the
debate.
“Romney now owns the Republican Ryan budget,” House
Minority Leader Nancy Pelosi of California said in a statement.
“As Democrats, we will always preserve Medicare, strengthen the
middle class and work to re-ignite the American dream” and
“the choice Americans are facing could not be more clear.”
Nonpartisan deficit hawks hailed Romney’s pick because they
said it would force presidential and congressional candidates to
debate the unpopular budget choices politicians typically avoid.
“This is going to make the campaign far more focused on
the deficit and debt than it may have otherwise been, and that
is a tremendously important thing,” said Maya MacGuineas, head
of the Washington-based Committee for a Responsible Federal
Budget. “Whatever you think about his proposed entitlement
reforms, he has them -- and that’s a really important first
step.”
To contact the reporter on this story:
Brian Faler in Washington at
bfaler@bloomberg.net
To contact the editor responsible for this story:
Jeanne Cummings at
jcummings21@bloomberg.net
Aug. 11 (Bloomberg) -- Republican presidential candidate Mitt Romney announces his selection of U.S. Representative Paul Ryan of Wisconsin as his running mate.
Ryan, chairman of the House Budget Committee, also speaks at a campaign appearance in Norfolk, Virginia. (Source: Bloomberg)