A Liberal Economist Praises the Ryan Plan
I once called an older version of Paul Ryan’s budget plan “voodoo economics.” But you have to admire him. He has just released a new plan that slashes the deficit from 8 percent of GDP to around 1 percent by the end of the decade while simultaneously keeping revenues at 18 percent of GDP over the decade, very close to their historical average…
I expected to be horrified by what I read. I am not in favor of cutting programs for the poor, especially in a plan that reduces taxes for the wealthy and leaves Social Security virtually untouched. Instead, I found myself at least intrigued with the arguments that I found in this section of the plan. They are thoughtful, well-articulated, and worthy of further debate.
One argument is that federal subsidies for safety net programs encourage states to spend more than they otherwise would. Another argument is that federal dollars come with federal prescriptions and paperwork that stifle state innovation and efficiency. A third argument is that these programs undermine efforts by civic or faith-based groups to play a stronger role. A fourth argument is that some of these subsidies (for example, Pell grants) simply bid up prices (for college tuition). A fifth argument is that we have too many overlapping and complex programs with similar purposes (job training being a great example). A sixth argument is that assistance should be made conditional on personal responsibility—for example, being engaged in work or job training if you are receiving government assistance. This model of conditional assistance was a key element in the largely successful 1996 welfare reform law and could be expanded to other programs. Finally, the plan emphasizes the importance of upward mobility—a goal which I think many can embrace.
More by Isabel Sawhill at The Health Care Blog.
Isabel Sawhill makes some good points. I have always believed that one’s ideology isn’t as important as the idea that incentives matter! If you understand that fact, it becomes easier to create sensible policy regardless of your political perspective.
Isabel Sawhill is from the Brookings Institution. I may not always agree with their centrist assumptions, but their scholars tend to be capable and use sound methodology.
Still, she thinks it isn’t a serious deficit reduction plan — but that isn’t point. Going forward, spending must be cut if the nongovernment part of the economy is to grow.
I like Paul Ryan — he is one of the Members of Congress with a true understanding of policy.
Nice plan, but it may be some years before enough people in Congress take his proposals seriously enough for something like it to pass.
You guys really think we can cut discretionary spending to 3 3/4% of GDP? How do you do this when the GOP candidates have vowed to keep defense spending at 4%. Make the math work here please.
Steve
@Steve
The math doesn’t work, which is why it’s hard to take Ryan seriously when he preaches deficit reduction yet refuses to touch any of the Republican Party’s sacred cows.