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Editorial

The GOP plan for the federal deficit

The goal of slashing the federal deficit is admirable. But a more even-handed approach is needed.

April 06, 2011

Rep. Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee, has proposed the most ambitious tax-and-spending plan that Capitol Hill has seen in years. His budget proposal for fiscal 2012 doesn't merely seek to pare the enormous federal deficit and bring the national debt under control, which it would do much more aggressively than the plan President Obama offered in February. It also tries to give much of the federal government a Republican makeover. That makes it more effective as a political document than as a road map to a fiscally sustainable future.

Unlike Obama, who has yet to offer any serious proposal to bring the budget into balance and stop the national debt from reaching a dangerously high level, Ryan offered a budget plan Tuesday that would pare spending by about $6 trillion over the next decade, and by enough to eliminate the deficit within 30 years. For that he deserves credit. The problem, though, is that his plan shifts the country's biggest fiscal problems onto other parties rather than solving them.

The overriding factor in the country's long-term fiscal mess is the growth in healthcare costs — in particular, in the Medicare and Medicaid programs. Ryan devotes much of the budget document to denouncing last year's healthcare reform law, focusing on its costly new insurance subsidies but ignoring the improvements it is expected to bring to efficiency and quality. And instead of coming up with better ways to slow healthcare inflation and expand access to care, Ryan's budget would gradually reduce the amount of the bill for Medicaid and Medicare that the federal government pays — by punting the cost problems in Medicaid to states and in Medicare to the elderly.

On the plus side, Ryan's proposal borrows some of the good ideas put forth in recent months by independent commissions that have studied the deficit. Unfortunately, it rejects one of the central tenets of those plans: that spending cuts can't solve the problem alone, but must be accompanied by some increase in tax revenue. For instance, although Ryan rightly calls for the tax code to be simplified and for corporate welfare to be trimmed, he also seeks to reduce rates sharply. His proposal claims that this wouldn't hurt the deficit-cutting efforts because the changes would result in so much economic growth and new employment that they would more than pay for themselves. But the George W. Bush administration made the same argument about its tax cuts, and study after study has shown that the opposite proved to be true in the long run.

The many policy prescriptions in the proposal amount to nonbinding recommendations; the only parts of a budget resolution that are enforceable are the targets it sets for spending and revenue over the coming decade. Those require the assent of the Democratic-controlled Senate. Lawmakers should embrace Ryan's deficit-cutting goal, but they should take a more even-handed approach to getting there.

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