The Ryan Budget as Antithesis

President Obama has moved on from constitutional history (his warning that a Court decision to overturn a statute would be unprecedented) to American history more broadly. His remarks focused on the Ryan budget:

“Disguised as [a] deficit reduction plan, it’s really an attempt to impose a radical vision on our country. It’s nothing but thinly-veiled Social Darwinism. It’s antithetical to our entire history as a land of opportunity and upward mobility for everyone who’s willing to work for it — a place where prosperity doesn’t trickle down from the top, but grows outward from the heart of the middle class. And by gutting the very things we need to grow an economy that’s built to last — education and training; research and development — it’s a prescription for decline.”

We have discussed the Ryan budget on this blog in passing. For the upcoming year, Ryan proposes $3.6 trillion in spending and revenues of $2.4 trillion, for a deficit of $1.2 trillion. This is in sharp contrast to the Obama proposal, which would place spending at $3.8 billion, with revenues of $2.5 trillion, for a deficit of $1.3 trillion.

Is Ryan’s budget a “thinly veiled Social Darwinism?” It is, only if Social Darwinism can be cast as a decision to retain spending above 20 percent GDP.  It has been a while since I read Spencer and Sumner, but I don’t recall either making the case for spending in this range (or any range, for that matter).

Is Ryan’s budget “antithetical to our entire history,” as the President claimed? Once again, we have some empirical problems.

Ryan hopes to achieve federal spending reductions to 20 percent GDP by 2015. By way of comparison, average spending during the George W. Bush presidency was 19.6 percent GDP. During the Clinton presidency, average spending was 19.8 percent GDP.

If Ryan’s goal of reducing government spending to 20 percent GDP is radical, the empirical record seems to argue otherwise.

But perhaps we have not reached far enough back in time. Of course, the President’s remarks focused on “our entire history.” We could go back to 1968, the peak of Johnson’s Great Society and the war in Vietnam when government spent 20.5 percent of GDP. If we go earlier, the record might suggest that Ryan’s budget is radical, but not in the way  suggested by Mr. Obama. In recent weeks, the President has sought to channel Franklin D. Roosevelt. During the domestic phase of the New Deal, government spending peaked at 10.5 percent GDP (1935), approximately one-half of the level of spending proposed by Ryan. And let us not forget that 10.5 percent was a radical departure from the Hoover administration (3.4 percent GDP in 1930). The historical timeline of spending can be easily verified by the Office of Management and Budget (see OMB historical table 1.2).

I find it fascinating that a “conservative” proposal to reduce spending to slightly above the average of the Clinton-Bush years, approximately to the level attained during the peak of the Great Society and Vietnam War (1968) can be framed as an exercise in Social Darwinism.

Imagine what would happen if Ryan wanted to spend like FDR?

Of course, the President may have meant to covey a somewhat more complicated argument regarding the role of social policy and tax expenditures in shaping after-tax income–an important argument that needs to be made and given some serious scrutiny. But the breathless turn to hyperbole and the broadly brushed generalizations don’t do much to further serious debate, even if they provide quick talking points.

8 thoughts on “The Ryan Budget as Antithesis

  1. Can I assume your suggestion that the Ryan proposal “is in sharp contrast to the Obama proposal,” is sarcasm, is there is barely a dime’s worth of difference in the revenue and expenditure numbers?

  2. Good point Roger. The left’s leading wonk argues that there is a lot of similarity between the two: http://www.washingtonpost.com/blogs/ezra-klein/post/wonkbook-where-ryans-and-obamas-budgets-mostly-agree/2012/04/04/gIQA5SayuS_blog.html

    “Neither man’s budget makes any changes to Social Security. Both budgets are content to find their savings elsewhere. Another: Both men have proposed capping Medicare’s rate of growth at GDP+.5% (that is to say, Medicare’s budget could grow by however fast the economy grew, plus half a percentage point. So if the economy grew by 3%, Medicare’s budget could increase by 3.5%). They would hold Medicare to that growth rate in different ways, but, over the past year, they have actually converged on how much spending is appropriate in Medicare. ”

    The difference?

    “Ryan’s budget increases defense spending, cuts taxes on the rich, and pays for all that — and for his deficit reduction — with deep cuts to programs for the poor and to the basic services the federal government carries out. The Center on Budget and Policy Priorities estimates that 62 percent of Ryan’s cuts are to programs for the poor.”

    “Obama’s budget, meanwhile, features large tax increases on the rich, some cuts to the defense budget, some cuts to government services, and relatively few cuts to programs for the poor. Consequently, his budget has somewhat less deficit reduction than Ryan does over the next 10 years.”

    So the divide between the two parties is how to reform Medicare, how much to spend on defense, how much to tax the rich, and how much (not if) to cut other discretionary spending.

    I see a space here for a libertarian candidate like Gary Johnson to try to put together an “Option C” approach: take Obama’s defense cuts (if not build on them) to close the deficit even more than Ryan and look at libertarian-friendly ways to raise revenue (Congressman Jared Polis during the debt ceiling debate recommended ending the War on Drugs, legalized online gambling, and auctioning off immigration visas).

  3. In order to put the Republican Plan in perspective we must understand that Ryan started this process last year with a serious plan to curb Medicare. He learned that he cannot do this. This means that anyone serious about reductions has to look at Medicaid which supports the poor. The irony here is that the poor must suffer as long as we leave middle class entitlement under Medicare along. The Democrats need to face the reality that any serious budget effort aimed at deficit reduction must confront the reality that Medicare is unsustainable over the long run and regressive in its functioning. If we can cut back on Medicare we can avoid harming the poor and favoring the well to do.

    1. I don’t think we can call Ryan’s proposal last year a serious plan to curb Medicare. Republicans would like to think that replacing Medicare with vouchers down the road (you know, off in the future when current politicians don’t have to deal with it) will control Medicare spending because the future Congress, with those future politicians, will abide by the spending limits that Paul Ryan has come up with now.

      Democrats rightly argue that if the plan pushes more health care costs back onto senior citizens, there will be political pressure to increase the vouchers. And why not? We have a cost of living adjustment for Social Security, but when that formula produced no increase in benefits during the start of the Great Recession Congress cut a new $250 check anyway. And while you can blame that on the stimulus pushed by Democrats, what about the Medicare Part D prescription drug plan? Do you think the future Republicans will never, ever consider increasing the vouchers in the short term (just this once!) for political gain?

      On the other side, Democrats believe they have tackled Medicare spending. It was the health care law they pushed for that cost them the 2010 midterm elections and is now before the Supreme Court. They support new and innovative ways to handle the administration of the program and the provision of services. Or “death panels” as their opponents sometimes call it.

      Both parties believe they have a serious plan to tackle Medicare. Both, arguably, are unproven and may not work. And both are political wedge issues, useful for their opponents trying to defeat them.

      So we’re doomed?

      1. It is hard for me to see how the Democrats believe that they have fixed Medicare with the few modest changes that they included in the Affordable Care Act. They certainly did not accomplish much with the Independent Panel which has almost no authority to deal with the core problem of too many seniors being promised far more than the system is going to able to deliver. It seems to be that the Democrats are fixing their political problem by doing nothing to offend their middle class constituents. This will not and cannot fix Medicare. Only firm spending limits enforced by a Congress empowered by a public who stands for fiscal realism holds any hope of taming the beast that could devour the government.

  4. Given the reality of the current Congressional budget process and the demonstrated unwillingness of our representatives to do anything of substance about the biggest contributors to the deficit, i.e.; entitlements and defense, I see both Ryan’s proposal and Obama’s response as naked partisan political positioning. Each knows his recommended approach has no hope of being adopted.

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