Great Zakaria piece on Ryan budget proposal
Saturday, April 9, 2011 at 11:22AM 
This column by Zakaria expresses exactly what I was trying to get at when I tweeted earlier in the week that Dems were too reflexively dismissing the proposal as evil.
The great opening:
It was fateful that Paul Ryan released his budget plan the same week Barack Obama launched his re-election campaign — because we will now see what matters most to Obama.
The President has talked passionately and consistently about the need to tackle the country's problems, act like grownups, do the hard things and win the future. But he has also skipped every opportunity to say how he'd tackle the gigantic problem of entitlements. Ryan's plan is deeply flawed, but it is courageous. It should prompt the President to say, in effect, "You're right about the problem. You're wrong about the solution. And here's how I would accomplish the same goal by more humane and responsible means." That would be the beginning of a great national conversation.
He then goes into the problems with Ryan's proposal, which are significant, but listen up to the larger logic:
So why do I applaud the Ryan plan? Because it is a serious effort to tackle entitlement programs, even though any discussion of cuts in these programs — which are inevitable and unavoidable — could be political suicide. If Democrats don't like his budget ideas, they should propose their own — presumably without tax cuts and with stronger protections for Medicare and Medicaid and deeper reductions in defense spending. But they, too, must face up to the fiscal reality. The Government Accountability Office concludes that America faces a "fiscal gap" of $99.4 trillion over the next 75 years, which would mean we would have to increase taxes by 50% or reduce spending by 35% simply to stop accumulating more debt. Medicare, Medicaid and Social Security will together make up 50% of the federal budget by 2021.
Zakaria ends by saying Obama can do the obvious thing and just gin up the attack ads, or he can actually lead.
I go back and forth on the man. I don't like the caretaker vibe he gives off at times, but then I like his rightsizing of the job at certain moments - like the way he handled Libya in the end (a negotiating process I did not enjoy, and yet, I had to admire the outcome).
But the budget thing, because of the commitments he's made, defines his presidency by far. Iraq and Afghanistan were, quite frankly, already on a trajectory before he showed up. You can say the financial/fiscal crises were too, but I liked the choices he made there. It's just that those choices pushed us all down the path toward some tough decisions we had long put off and felt we could still put off. Now those decisions seem definitive concerning our future leadership of this world. We can continue to feed this global narrative of our decline, or we can seek to arrest it.
Reader Comments (7)
to me James Fallows's is far greater:
"I mentioned earlier that if asked to choose an adjective to describe the budget plan presented by Rep. Paul Ryan, I would suggest "partisan" or "gimmicky," as opposed to "serious" or "brave.""
http://www.theatlantic.com/politics/archive/2011/04/the-brave-and-serious-mr-ryan/237008/
"...right about the problem" = medicare, medicaid & social security & "...wrong about the solution" = may mean reducing payout in these three areas ALONE has an achilles heel = our low taxes for the VERY rich. I believe if this was included with medicare,medicaid & social security reductions we would be able to pass restoration budgets. This would be a major challenge for BOTH Republicans & Democrats but best for America.
My knee jerk reaction leads to more politics with little end results. Democrats will denounce Ryan's budget for it's brutal cuts to Medicare/cade, and the extension of tax cuts. It will be a great tool to win votes next year, instead of using this proposal as a springboard to a more open national conversation.
As usual I don't see anyone with the guts to take a political risk before 2012. I hope I'm wrong.
You have to give Ryan some credit for putting a plan out there. The recommendations of the Simpson Bowles commission seem to have been filed away by the President so anything to keep the nations crumbling finances in the spotlight is a plus for me. On a side note, I recently watched the documentary movie Inside Job about the 2008 financial crisis. If you are worried about any detrimental effects means testing and extra taxes will have on the wealthy, this movie will most likely make you do some reevaluating. I think $250,000 is too low, hits too many blue collar small business owners but over $1,000,000, I think there is a case.
I think that this is a conversation worth having, and Ryan's budget is a starting point (even if that is all it is). Obama has also started the ball rolling with the debt commission that he organized, and is only now starting to refer to its recommendations. Regarding higher taxes on the very rich, I personally doubt that this will make much difference. The VERY rich will find ways of finding loopholes in tax laws (which are already very convoluted). An alternative is to move towards a value added tax (VAT), which most of Europe has, which taxes economic activity rather than income per se, and is hard to avoid. (Charles Krauthammer (WAPO) decried this as Obama's stealth agenda, but it's main fault according to Charles is that it tends to resiliently provide revenue and is hard to stop once in place. This would put him in the "shrink it until we can drown it in the bathtub" school of government finance.)
Health care is the biggest problem. Costs need to be brought down. Politically, a single-payer system may be hard to introduce to the US, but I think mandatory insurance will become essential in some form or other to handle the free-rider problem. (Everybody thinks they won't lying in a cancer ward for months and months until it happens, so why buy insurance for it?) With today's flexible job market (something the right will want to keep), I think it is essential that we move beyond the work-based health insurance we have at the moment.
No matter how you slice the budget, it is still a spending problem. Hauser's law is still unspoken, and frankly, goes in Paul Ryan's favor. The only way we can sustain the current social net is implement European style taxes, which, as Zakaria points out, includes a VAT. I also agree that the tax code should be greatly simplified, especially deductions. I would go so far as abolishing the wrongly named "corporate income tax" and simply up capital gains for higher earners. Only people can pay taxes!
The effect of European style taxes is higher taxes on consumption, and gas at double the price. The income taxes are on par with European norms, in fact, about 60% of the "average worker" pays more in Europe. No one talks about these tax changes because it is a no go.
This is not some ideological quip, but you simply cannot "soak the rich" by any means, it has failed wherever it was tried.
Defense is a no go until NATO picks up the tab for their subsidy.
Of course Ryan's proposal is on the short side of a solution. That is how negotiations work. You start at the ends and work your way to a reasonable middle ground. But you certainly don't start off advocating for all of the elements your counter party desires. That is simply dumb, and Ryan is not dumb. The question is whether the Republicans will negotiate to a fair middle ground, but then the same must be said for the Democrats. And if passage of the Affordable Care act is any indication, the D's are the ones who need some lessons in bi-partisan negotiations as that was the most massive legislation ever passed on a pure, 100%, party line vote. In fact the only bi-partisan aspect in its voting history was the nay vote in the House where ~16% of the Ds voted against it along with all of the Rs.
In summary I concur with Zakaria and Krauthhammer, as I too hope that this leads to an adult discussion and real action to impose fiscal restraint instead of degenerating into just another contest in demagoguery.