By Paolo von Schirach
August 16, 2012
WASHINGTON – If you listen to Obama and his surrogates, by picking Paul Ryan as his running mate Romney has finally revealed his true, ultra conservative colors. The Romney-Ryan ticket is bent on destroying the welfare state, while striving to give an even more generous tax treatment to the already super wealthy. Seen from the left, Ryan’s fiscal reform plans are simply the expression of his extreme ideological prejudices. As a right winger, he is against social spending as a matter of course; and that’s why he is bent on destroying the safety nets that help the poor and those who struggle. A Marxist would call Ryan a true “class enemy”.
David Stockman on Paul Ryan
Well, if you look at the same Ryan agenda from the persepective of a former radical Republican who long ago abandoned his ideological biases in favor of realism, Ryan is just another politician promising some things that are mathematically impossible, while he is mistaken in others and biased elsewhere. This is what I got by reading a The New York Times op-ed piece by David Stockman, (Paul Ryan’s Fairy-Tale Budget Plan, August 13, 2012).
David Stockman was a fiery budget cutter when he became Ronald Reagan’s first Office of Management and Budget Director in 1981. But then he changed his views. There was no way that the welfare state would be radically transformed –Stockman conceded, (after he had left office). Americans wanted it. The issue was (and still is today) how to pay for it. Well, today Stockman attacks Ryan’s fiscal reform proposals not because they are too radical, but because they are badly construed, mistaken and plain wrong.
Ryan’s agenda: fairy-tale, pie in the sky
On defense spending Ryan is a victim of neo-conservative ideology that pushes for defense spending beyond any possible realistic need. We could do well, with much, much less, argues Stockman, as there are not that many threats around — not even Iran counts as one. Not a word about the shifting balance of power in Asia.
On entitlement spending Ryan is not serious, argues Stockman, as his Medicare reform would kick in only in ten years. (At least he is not buying into the Democrats narrative that describe Ryan as literally pushing grandma off the cliff). Medicaid (federal health subsidies for the poor) reform is a joke, continues Stockman, because transforming it into a block grant to the states but with substantially reduced outlays, means in truth killing the program.
Besides, Ryan would cut disproportionately “non defense discretionary spending, the real fun stuff that politicians want to dole out: infrastructure projects, R&D spending, medical research, national parks and so on.
Just another politician
In conclusion, according to Stockman, Ryan is just another politician telling you stuff that will never happen the way he designed it because his construct is totally flawed, ideologically biased in some key areas and on the whole an impossibility.
Stockman identifies other targets and other priorities in his piece. I have to say that his writing is interesting; and certainly he knows a thing or two about fiscal issues. Still, is he too harsh? I do not know. On Medicare reform, I would add that it would be very difficult to fix the federal component of health care spending without a comprehensive look at totally out of control US medical costs, private and public. (More on this in a separate piece).
Ryan put serious fiscal reform on the table
Still, while I can agree that Ryan may be wrong on a number of the solutions he proposes, as a politician he has the merit of having placed the issue of out of control federal spending on the table in a way that President Obama has not dared to even attempt in almost four years in office. Unless he is a complete fool, our President knows well that if we do not reform entitlement spending, the key driver of rising deficits and debt, this country is headed towards bankruptcy. If we just tinker at the edges, then we may avoid bankruptcy; becoming instead a tired, super indebted European social-democracy, with no drive and no real money. This being the case, it would be prudent to start serious reforms aimed at ”bending the federal spending curve” sooner rather than later.
Obama calculated that reform is too risky
But Obama has calculated that any serious debate on fiscal reform would be very unpopular among his key Democratic supporters –as such a debate would have to include programs and benefits cuts. And for this simple reason Obama has avoided any serious discussion.
To the extent that he has debated the matter, it was always as a quid pro quo: “I will concede welfare cuts, as long as the Republicans give me some tax increases for the well to do that I can bring home as spoils”. So, fiscal reform was not justified on its policy merit; but only as a political strategy. “If it makes me look good I’ll consider it. If not, I will not. Let the country get worse in the meantime. In any event, my estimate is that it will not go bankrupt while I am in office.”
Republican “no new taxes” intransigence is not at all helpful in this debate. I fully agree with that. Any serious fiscal reform plan would have to include some new revenue. That said, Medicare cannot be fixed with new revenue alone. The entire program needs to be reconfigured, so that it is not simply the underwriting of excessive health care spending determined by doctors who know very well that the Government will pay most of their bills, whatever they are.
Fiscal reform should be a key priority
In the end, the choice is between President Obama who does not want to offend his constituents and who is calculating that, as we are not yet in a Greece-like emergency, there is no need to take strong actions; and the Romney-Ryan ticket that wants action today, while we retain some flexibility. The Republicans, possibly ill advised on many issues, (as David Stockman argues), at least are saying that serious fiscal reform plans should be put on the table and debated today, with the hope of some constructive action.
Whereas a re-elected President Obama will do little or nothing to seriously attack excessive spending , this way kicking the proverbial can down the road, Europe-style, leaving a much worse situation to his successor.
As Greece and Spain teach us, there is a point of fiscal deterioration beyond which reforms become pointless. Or we can still escape a Greek fate, becoming instead like Japan: a super indebted, chronically weak society that can still survive decently but not do much more. Is this what we want in America?