Sunday, April 10, 2011

What passes these days for courage...

I have been trying to do some research before commenting on the the Ryan - and it is presumed, Republican - plan for deficit reduction.  It's a big document and many details are still murky, but I think the overall thrust is clear: it serves the Republican constituency pretty well. At least the current voters.
So the Ryan plan isn't really serious, but is it courageous and uplifting? Only if slashing services for low-income Americans and denying Medicare to tens of millions of older people is somehow brave and inspirational -- and only if courage is defined by doling out still more tax cuts to the country's wealthiest families (like the construction magnates in the Ryan family).
Greenstein calculates that at least two-thirds of the cuts proposed by Ryan would have to come from programs for people with low and moderate incomes, including food stamps, Pell grants, housing and Medicaid. Meanwhile, he would literally ask nothing from the rich or corporate special interests, except perhaps to cash their enormous tax refund checks with a smile. Moreover, he would exempt one group from his scheme to abolish Medicare, which just happens to be the voters now over 55 years old who are the most reliable Republicans.
What might be truly courageous for a Republican politician, of course, would be to urge sacrifice from his party's rich contributors as well as from the poor and the middle class. That would be the start of serious budgeting, too. [More]
However, given that it is really a political document, and that I recognize it is an opening shot, I think we may have taken a [small] step: we gotta rein in spending on health care for old people.

Even though Ryan gives me a pass (neener, neener), a better solution is to spread the pain. I should be expected to pay a whole lot more for Medicare, but I should be able to get insurance, too. And if you read carefully, the differences between Ryan and ACA aren't so clear. In fact, the likely compromise becomes obvious.
To make an individual insurance market possible, you need to get everybody – or, at least, a reasonable cross-section of everybody – into the risk pool together. That’s what the mandate and the regulated exchanges were supposed to do. And other changes, such as the tax on “lavish” employee benefits, provided a further incentive to move more and more of the insured out of employer-provided insurance and into the new individual-insurance market.
What was left out was Medicare beneficiaries. Serious cost controls were contemplated for Medicare, but they were going to be imposed by the insurer, in this case, the government. One problem with this is that since consumer choice would not be driving the cost controls, it might well be that these would be sub-optimal from a consumer point of view. But another problem is that consumers would know exactly who to blame for any cost controls they didn’t like, and how to get them to change their ways. If every cost control is a political decision, every cost control carries political risk, and therefore is less likely to be made. If, on the other hand, the cost controls are imposed by private insurers, there is a layer of politically plausible deniability insulating politicians from the specific decisions made.
Leaving the specific details aside, Ryan’s and Obama’s health care initiatives are complementary, not competitive with each other. Without a functioning individual insurance market, you can’t voucherize Medicare. And without pushing most individuals into the individual insurance market, that individual market won’t really be the giant risk pool you need to drive the health care system in a more efficient direction. Obama’s plan nudged beneficiaries of private, employer-sponsored insurance into the national pool. Ryan’s proposal shoves the beneficiaries of government-provided insurance into that same pool. [More]
There is simply no getting around an insurance mandate or some other mechanism to nudge (OK, force) all to buy insurance.

More anon.


Anonymous said...

Have you used the NYT budget tool? If so, where do you come out at?

John Phipps said...


There are a number of similar interactive tools. I posted one a few months ago and used it.

If I have time, I'll check the NYT one.

Dean Weichmann said...

You have probably already read this stuff but I think Krugman is the best opinion out there on macroeconomics. He has been highly critical of Ryan.

Specifically Ryan;

"People like me don’t say that the Ryan plan is too radical; we say that it’s a fraud. The spending cuts are largely fake, either because they’re just magic asterisks or because they wouldn’t survive politically; the revenue estimates are fake, because they combine huge tax cuts with vague assurances that extra revenue will be found by closing loopholes. There’s no there there — except for big tax cuts for the rich and pain for the poor."

Anonymous said...

I'm with you Dean, The Pelosy/Reed plan is working just fine. Spend-borrow-spend-borrow-spend TAX those RICH *#$@*(anyone who has more than me) spend-borrow-spend.
I don't need a budget. Do you? Just go to the bank with out a plan. That's what they do. And critisize anyone who tries to do otherwise.
And start by taxing those RICH FARMERS. They got more loopholes that Warren Buffet.