Up Front

Chairman Ryan’s FY 2013 Budget Proposal: All by Itself

Bill Frenzel

The week Rep. Paul Ryan, Chairman of the House Budget Committee, announced his budget for FY 2013. It was passed by his Committee yesterday, and is expected to be passed by the House soon. Because of his position and reputation, each time Cong. Ryan lays out a new budget, it gets plenty of attention.

The FY ’13 version is this year’s iteration of the old “Ryan Road Map.” Like the FY ’12 model, it was designed to reduce the deficit crisis and stabilize the debt ratio somewhere near 60% in ten years.

The Bowles-Simpson Commission was the only other budget plan that aimed at those goals. It was later embraced by the Senate “Gang of Six,” but it never reached bill form. So far, the Ryan proposals are the only ones that come from the Congress and are intended for a vote and enactment.

The Ryan budget’s prime, and unique, virtue is that it makes the difficult decisions needed to put the country on a fiscally sustainable path. One of its major changes is that it slows the Medicare spending growth path by changing Medicare to a premium support program with limited annual growth. Critics hate this feature. This “Ryan-Wyden” approach may not be your first choice to fix Medicare, but it is one way to get the job done.

Taxes are another controversial part of the Ryan plan. It calls for a two-rate (10% and 25%) individual system and a 25% corporate rate. Both are to be achieved by removing or altering tax preferences, but, unfortunately the preferences are unspecified. Tax reform is a crucial part of the fiscal puzzle, but, the Ryan plan remains under cover. What can’t be seen, cannot be evaluated.

Much of the attention, from policymakers and outsiders, is highly critical. The Ryan budget is faulted: (1) for its Medicare changes; (2) for relying wholly on spending reductions to solve the fiscal problem without any additional tax revenue; (3) for lowering the agreed-upon ceiling on domestic discretionary spending; and (4) for allegedly (we won’t know until we see it) reducing taxes on relatively affluent people.

These, and other, criticisms are all worthy of discussion. No plan is perfect. But critics are always taken more seriously when the critics have tabled plans of their own. If the Ryan Plan is flawed, with what is it to be compared? If the goal is stabilizing the debt in 10 years and lowering the deficit, there are only two plans: Bowles-Simpson, and Ryan.

The current Ryan budget is obviously not going to be satisfactory to House and Senate Democrats, nor to the president. However, the president’s 2013 budget is not competitive. It does not reach the goal. Despite substantial tax increases, too many “investments” spoil the debt ratio.

The Senate, as usual, plans on no vote and no budget. Three consecutive years of navel-contemplation would hardly seem to qualify the Senate Majority as a credible budget critic. If it wishes to play, it first probably ought to ante up. Nobody believes it will.

Barring an unlikely election result in November, the Ryan budget isn’t going to be the final fiscal compromise that rights the Ship of State. It is, however, a legitimate bid, to which, in my judgment, there has been no real counter-offer. There may be one coming from Budget Committee Democrats, but it has not been sighted yet.

Budget arrangements are best negotiated quietly in the dark of night, and then voted on in the harsh glare of sunlight. Those parties who have not produced budgets should not be compelled to do so, but their cases would carry far heavier weight if they did. Comparing something with nothing is evidence of a weak hand. And a simple defense of the status quo in a time of crisis displays a basic lack of understanding.

Yes, like all budget plans, the Ryan FY ’13 budget is flawed. It is not the means by which I expect to see the fiscal crisis resolved. But it is one way to do the job, and it looks better every day that is unchallenged by a comprehensive plan from its critics.

For now, it stands alone, a tribute to the talents of its creator, and to the courage of its supporters who also see it as the single solution to the debt/deficit problem. What the world needs now are more budgeteers who understand the fiscal crisis has to be met now and are willing to table a plan to solve it. If there are any, let them step forward.

Author

More