Paul Ryan's 2012 Budget: Good, Bad AND Ugly?

Originally published on April 13, 2011 10:09 pm

Even in a week dominated by news about this year's federal budget, Republican House Budget Committee Chairman Paul Ryan still managed to cause a stir with his budget proposal for next year.

His proposed 2012 budget been called everything from brave to draconian for its willingness to discuss entitlement cuts and, well, its willingness to discuss entitlement cuts.

Reason.com editor Nick Gillespie has added up what he calls the good, bad and ugly of Ryan's plan, and tells NPR's Linda Wertheimer the congressman has set the tone for next year's budget debate.

The Good, According To Gillespie

For starters, Gillespie says, Ryan's plan tackles entitlement spending by proposing block grants for Medicaid. That would essentially give states a yearly allowance to spend on health care for the poor.

"The idea is that state governments and the local agencies that hand out Medicaid will be more responsive to the people who are there — as well as more responsible, because they know they're on the hook if, in fact, they run out of money or they start giving people really bad care," Gillespie says.

Gillespie also calls Ryan's proposal for lowering the corporate tax rate from 35 to 25 percent a good thing, but says Ryan lacks specifics on tax reform beyond that number.

Plus, the Ryan plan spends less money over the next 10 years than President Obama's budget. Gillespie says that restraint at least acknowledges significant spending increases over the last 10 years.

"He says, 'Let's slow it down a little. But he doesn't slow it down far enough, and he doesn't slow it down fast enough."

What Gillespie Sees As Bad

There's one place Ryan wouldn't make cuts, and that's defense.

"Even with the expected wind-down of the wars in Iraq and Afghanistan," Gillespie says, "he actually increases defense spending over the next 10 years."

That increase, Gillespie says, would lock in what were already significant increases in defense spending over the past decade.

He also says Ryan's plan contains a few empty boasts, such as a claim to lower unemployment to 2.8 percent by 2021 — a rate not seen since the World War II. Those claims were based on numbers from the Heritage Foundation, a conservative think tank, and Gillespie says Ryan has since backtracked on those statistics.

"Most peoples' budget proposals are filled with these kind of bizarre fantasies," he says. "Nobody's buying them, so I don't know why people keep trying to sell them."

And This, Gillespie Says, Is Ugly

There are budget elements that Gillespie says Ryan just punts on. He offers no specifics on Social Security reform, for example.

In the end, Ryan's proposal actually increases spending 30 percent over the next decade, Gillespie says.

"That is not austerity, and it doesn't bring us near a balanced budget," he says. And the plan doesn't offer a balanced budget until 2063, which Gillespie calls "tantamount to giving up."

But then, "budgets are aspirational," Gillespie says. "They're political documents," and not always realistic. At the very least, he says, Ryan's plan may set the scope of the conversation about spending cuts.

"Ryan's spending plan should at best represent the ceiling of what is considered worthy of discussion," Gillespie says.

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LINDA WERTHEIMER, Host:

Welcome.

NICK GILLESPIE: Thanks very much. And I should point out that my favorite character in "The Good, the Bad and the Ugly" was the Lee Van Cleef character, but I'm struggling to remember if he was the bad or the ugly.

(SOUNDBITE OF LAUGHTER)

WERTHEIMER: Well, let's go back to Mr. Ryan and start with what you call the good about Mr. Ryan's plan.

GILLESPIE: And whether you believe in a big government or a small government, you need a government that can pay its bills.

WERTHEIMER: Medicaid in his budget is block-granted.

GILLESPIE: Yes.

WERTHEIMER: Does that - and I gather you think that's a good thing.

GILLESPIE: Basically, what the idea is, is that state governments, and then the local agencies that hand out Medicaid, will be more responsive to the people who are there, as well as more responsible, because they know they're on the hook if, in fact, they run out of money, or they start giving people really bad care.

WERTHEIMER: So shall we move on to the bad?

GILLESPIE: Yeah. Sure.

WERTHEIMER: Let's start, as you say that Ryan ought to, talk about defense investment.

GILLESPIE: Over the course of the next decade, even with the expected wind- down of wars, hopefully, anyway, in Iraq and Afghanistan, he actually increases defense spending over the next 10 years. That's ludicrous because, among other things, he's locking in about 100 percent increase between 2000 and now in defense spending.

WERTHEIMER: So if that's bad - it does sound bad - what's ugly?

GILLESPIE: Most people's budget proposals are filled with these kinds of bizarre fantasies that - nobody's buying them. So I don't know why people keep trying to sell them.

WERTHEIMER: Well, now, that is one of the things that I think would be something that might be ugly about the Ryan plan, and that is it doesn't appear to be at all likely to go anywhere.

GILLESPIE: And Ryan's budget at least acknowledges that and says, let's slow it down a little bit. He doesn't slow it down far enough, and he doesn't slow it down fast enough, and he doesn't because he won't actually open up every object to the budget knife, including defense and including entitlements in the way that they need to be.

WERTHEIMER: Thanks very much.

GILLESPIE: You bet. Transcript provided by NPR, Copyright NPR.