Paul Ryan described his plan to balance the federal budget as “an invitation” to President Obama and Senate Democrats. The House Budget Committee chairman had in mind the start of a negotiation. “Show us how to balance the budget,” he said. “If you don’t like the way we’re proposing to balance our budget, how do you propose to balance the budget?”
The White House and its allies should leap at the offer, putting forward something better, and more detailed, than the plan Patty Murray, the Senate Budget Committee chairman, has in the works. The opportunity is there to draw a striking contrast, starting with the notion of achieving a balanced budget in the first place. As Alice Rivlin of the Brookings Institution told the New York Times, “There’s nothing magic about exact balance. The really important thing is to keep the debt from growing faster than the economy.”
In that way, the debt steadily declines as a share of the overall economy, say, from the current 76 percent to the mid-30s before the recession hit.
Rivlin has been part of bipartisan proposals crafted by independent commissions to reduce the deficit. Each has included a mix of tax increases and spending cuts, the latter focused mainly on the large entitlement programs, those involving health care in particular. The president and Senate Democrats must get specific, for instance, recalculating the inflation factor for Social Security benefits or adding to means-testing for Medicare or using the leverage of the federal government to check higher prices in health care. Such ideas bring credibility to the call for additional revenues, even closing loopholes that allow wealthy hedge fund managers to pay at the much lower capital gains rate.
The president would heighten the differences with the plan unveiled by Ryan for his Republican colleagues. Ryan proposes reaching a balanced budget in 10 years, a departure from the 30 years in his earlier plan. He would do so while sharply reducing income tax rates, the top rate at 25 percent. He calls for covering the cost by ending tax breaks, though he fails to cite one that he would erase.
The actual savings would come in the form of spending reductions, $4.6 trillion in all. Obamacare would be repealed, Medicare recipients receiving a lump sum to purchase insurance in the private market, Medicaid becoming a block grant to states, likely translating into 40 million or so poor and middle class Americans without health insurance.
The more vulnerable would be affected in other ways, through steep reductions in such programs as Pell Grants for needy college students, food stamps and supplemental income for the aged and disabled. Ryan largely avoids detailing what he would cut, yet the direction is plain. He would take the spending that includes education, transportation, research, veterans and parks to the lowest level as a share of the economy in five decades.
There is no practical need for such slashing, especially in view of the harm to so many priorities. There also is no hint of the compromise that Ryan and other Republicans demand of the president. What the country could use is a responsible alternative, President Obama taking the lead to show the deficit can be addressed without putting the recovery and so much else at risk.