Already a Bloomberg.com user?
Sign in with the same account.
Imagine that the children in your house will one day be in Congress. If you have teenagers, this could happen in as few as seven years. Now imagine telling your children right now exactly what they are to do when they arrive on Capitol Hill and trusting that they will do it, faithfully, as you have instructed them.
This is what the Paul Ryan budget does. It works because it assumes that future Congresses, out of reverence for Old Man Ryan—who back in 2012 was a likable, bow-hunting fiscal policy wonk who got tapped for vice president on the Republican ticket—will dutifully keep spending at 19.9 percent of GDP. This is a useful test for any spending plan: You can safely ignore any provisions that won’t kick in until your children are in Congress.
The Republicans in the House have been standing behind Ryan’s fiscal plan, the Path to Prosperity, for two years now. It’s been a useful political object, the kind of bold, difference-defining set of ideas that committee chairmen have both the luxury and the obligation to produce for party leadership. But if Ryan finds himself next January helping the White House write its budget, he will find his ideas being judged by the standards of the presidency. Unlike congressmen, presidents have to get things passed, or they don’t get reelected.
Ryan believes that the U.S. has a spending problem. His plan would fix it in part by turning Medicare into what he calls “premium support,” a means-tested subsidy to help retirees pay for private health plans. This will happen in 2022, when your 18-year-old will have just been reelected to her second term in the House. He would also over the next 10 years reduce the overall federal contribution to Medicaid, turning it into block grants for the states to administer as they see fit. These are bold plans that will in fact save money. So bold that despite having been passed by the House, they’ve never been passed by the Senate or signed into law by the president. You can chalk this up to Democratic intransigence, but it’s still true that these ideas have been tested by today’s representative democracy and found wanting.
The single largest reduction in spending in his plan will come from nondefense discretionary programs, what we tend to think of as “the government”—roads, national parks, and salaries for employees in the Justice Department. Ryan’s Path to Prosperity includes a table that compares his proposed spending in this category to the Congressional Budget Office’s assumptions under current law for the next decade. Next year, Ryan’s plan would save $117 billion over current assumptions. By 2021, when your 18-year-old will be angling for a better committee assignment, that will grow to $246 billion.
The plan offers some specifics on how Ryan would do this. He would ban earmarks, reduce subsidies to farmers, cut the size of the federal auto fleet, cut waste identified by the Government Accountability Office in the Highway Trust Fund, and slow federal hiring to reach a 10 percent reduction in staff by 2014. As Ryan’s plan points out, some of these ideas came out of the President’s Commission on Fiscal Responsibility run by Alan Simpson and Erskine Bowles. Ryan served on that commission and, like almost all current members of Congress who served with him, declined to sign the commission’s final document or send it to Capitol Hill for debate. That is, he is borrowing the authority of a bipartisan debt-reduction effort whose ultimate conclusions he declined to endorse.
This is where the Path to Prosperity ultimately falls short in offering a realistic way to reduce the deficit. By “realistic,” read: one that will pass in this Congress, the one we’re stuck with in 2012—or, for that matter, the one we’re likely to end up with in January 2013.
This is the difference between a “path” and a budget. A path is just a list of things you’d like to do in the future. A budget is all the things you’ve agreed to do right now. Ryan lays out a list of ways to change the way Washington spends, but they all amount to plans to plan in the future. Congress will be required to carry out across-the-board spending cuts if it fails to find spending cuts. Caps on the total size of government will be enforced by sequester. This approach has already failed. There is no sequester Congress can’t slip out of, no spending cut it can’t forestall. You can’t force a future Congress to do anything, because all it takes to unwind your beautiful resolution is another act of Congress.
A World Bank policy research paper issued in March looked at 90 countries that have gone through a sovereign default. The paper found that countries with weak institutions, polarized government, and powerful interest groups are more likely to default. We know, ultimately, that debt causes default. What causes debt, however, is not too much spending or too little revenue. It’s an inability to make decisions.
The parties in Congress can’t get it together right here and right now to buck interest groups and their own partisan bases to pass a budget that will reduce the deficit. Ryan spent several months in a room with the Democrats on the Simpson Bowles Commission, agreeing on painful compromises. And then he walked away from them. His Path to Prosperity isn’t going to fix that problem. He can hope that your 18-year-old will do better in the future. She could hardly do worse. But leaving her a set of instructions is not a budget. It’s not even a plan, really. It’s just a path.