By Paolo von Schirach
August 13, 2012
WASHINGTON – When Romney picked House Budget Committee Chairman Paul Ryan as his running mate I assumed that Ryan would be attacked and in fact demonized by the Obama campaign as a dangerous extremist, totally out of the American mainstream, because of his advocacy of major federal spending reforms that would inevitably target entitlement programs so dear to the Democratic Party base. (See link above). And, sure enough, it is all happening. What I did not expect, though, is the barrage of negative pieces on Ryan (based on his reforms proposals) by opinion writers who quite frankly should know better than playing on emotions and fears.
America going broke
The way I see it, Ryan’s “radical plans” originate from a clear and hard to challenge premise. The same premise by the way used by the bipartisan “Debt Commission” led in 2010 by Democrat Erskine Bowles, (former White House Chief of Staff under Bill Clinton) and Alan Simpson, (former Republican Senator). America is going broke, and by far the major (even if not only) cause is excessive and growing spending caused by 3 big entitlement programs –Social Security, Medicare and Medicaid– designed in a different era by policy makers who could not possibly fathom how expensive they would become, given different demographics (more older people compared to the general population), and skyrocketing health care costs.
60% of total federal spending
Quite simply, these programs now absorb more than 60% of all federal spending. If you add defense (another 20%) and interest payments on the existing debt (close to 10%) already today there is almost nothing left for what experts call “non defense discretionary federal spending”: research, education, national parks, transportation, infrastructure, and so on. And all projections indicate that entitlements, if left unchanged, will soon absorb 100% of federal spending. Worse yet, Medicare (federally funded health care for seniors) alone in a few years will absorb the entire budget.
We need action
Now, given all this, if a law maker comes forward proposing radical spending reform, focusing on entitlements, is he really just “an out of control extremist”? Look, we may legitimately disagree on the solutions proposed by Paul Ryan and his associates in Congress. But no thinking person can argue that America’s predicament is not serious. The fiscal picture is dramatic and getting worse every day. Action is needed.
Right now we do not feel the pain because of the European debt crisis. As Europe is in even worse shape, US bonds look good in comparison for most investors. And so, notwithstanding our gigantic debt, the Treasury for the time being can still borrow at less than 2%. But this is just temporary good luck.
Again, regarding Ryan’s radical ideas, much has been said about his plan to transform Medicare into a voucher system. For this he has been accused of wanting to destroy Medicare for all American seniors. But this is patently untrue. And the media that repeat this charge know that the charge is false.
Whatever we want to say about Ryan’s reform plan, one thing is certain: it does not include current Medicare recipients, nor will it affect people in their 50s who are approaching retirement. Which is to say that whoever is now covered (or about to be covered) by the current Medicare system has nothing to worry about. The current system will continue to work for them as they would expect.
Media joining in the spin
But it is not so according to many commentators who once more should know better. Indeed, willfully misrepresenting Ryan’s reform plan, many have argued that putting Ryan (with his radical ideas on Medicare) on the ticket will cost Romney precious votes in Florida, given the high number of retirees relying on Medicare in that state. “But, wait a second, have we not just stipulated that current retirees and people approaching retirement would still be covered by the existing Medicare system according to Ryan’s plan?”
So why is it that commentators keep repeating that Ryan’s plan to transform Medicare of course should scare seniors, when in effect they have nothing to fear from a reform that, whatever its merit, will not affect them at all? Unfortunately the media now are not here to inform. They are in the game, taking sides.Print This Post