Another
stellar posting, Madame, that leaves little for me to contribute. Heed her words well, readers!
Just
as I said I would examine Ferguson’s article, and did, I said I would also look
at “the Ryan Plan,” and I have. My
analysis follows:
First,
there are problems because he—or rather, his office—submitted to the
Congressional Budget Office for analysis a plan that was focused primarily on
Medicare and Medicaid. Yet he and his
office later “augmented” it (conveniently AFTER the CBO had submitted its
analysis) with parts about other areas.
That
Ryan didn’t know the specifics of his own plan when asked a softball question
about it from Britt Hume of Fox News shows that he didn’t really design it—his staff
or some think tank did. Still, it’s not
like he shouldn’t have been up on the basics, especially as those basics are
easy to find, especially when the CBO did all the hard work for him.
In
summary, his plan shifts costs to individuals (for Medicare) and the states
(for Medicaid), with some initial help (but effectively decreasing help) from
the federal government to do so. While
the method may be disputed, one can agree with Ryan at the imperative of attempting
to control the fiscal monster of Medicare (and to an extent, Medicaid) spending. The elderly consume the vast lion’s share of
health costs. The reason is similar to
cars: the older a car is, the more its maintenance and repair and parts
replacement costs go up. That Americans
have taken particularly poor care of their health only makes things
dramatically fiscally worse, and adding an unpaid for prescription drug benefit
has only intensified that (the reader can assess who benefitted from that). That the great baby boom wave is becoming
elderly further sends costs off the scale.
Medicare
is “funded” by 1.45% tax on workers, matched by a 1.45% contribution from their
employers, plus a small premium on the actual recipients (taken out of Social
Security benefits). It’s all not anywhere
nearly enough. Present deficits run in
the hundreds of billions of dollars annually.
Unlike
Social Security, which is at most only moderately underfunded, Medicare is
already dramatically underfunded, and Medicaid has no separate revenue stream
at all. One part of Ryan’s proposal—the only
thing real about his “Plan”—is a shock to a system that doesn’t want to face
certain realities. One of those
realities is that you can’t have both guns and grandma’s bread and butter.
Democrats
don’t face it squarely. Republicans address
it deceptively. It’s nauseating to
watch. At least the Affordable Care Act
(ACA) does slow the growth of the monster, although one can sympathize with the
many providers who get the short end of the stick from the restrictions of
costs (although on another angle, generally, the insurance companies don’t need
our sympathy for how the ACA restricts what they can charge, given their
colossal profits). For all his MANY
faults, Barack Obama deserves credit for trying to do something, although the
result was far less than what was needed.
The Ryan
proposal makes no changes in Social Security.
On
to some relevant specifics of the plan:
Age
for Medicare goes up to 67. Voucher
payments become what one gets, instead of direct payment for care received. Critics are correct that this means the present
simplified system will become complex, and a burden to the elderly, especially
when they must shop in the marketplace to get insurance that they hope their
voucher will cover. If they have past
history or pre-existing conditions, this could prove problematic. It would prove impossible if ACA is
repealed. Furthermore, effective control
goes to the insurance companies; heretofore, not the best idea, but in
fairness, there’s also been a lot of waste and fraud in Medicare too.
Seniors
would pay more for health care, regardless.
Premium assistance from the government would not keep up.
Higher
income folks receive would receive less in voucher amounts. Not a bad idea that.
Medicaid
becomes block grants.
The
Ryan Plan has some hidden provisions.
For instance, the present health insurance mandate would be repealed, as
would the tax credits for small employers that offer health insurance. This is indirect partial dissolution of ACA.
Medical
savings accounts are established in 2022 for poverty level citizens.
Ryan’s
proposal does give more certainty about Medicare and Medicaid payments, which
could balloon wildly under the present system.
Up to this point, one could have policy differences, and things could be
discussed reasonably. From here,
however, the Ryan “Plan” is no plan at all—it is worse than smoke and
mirrors. It’s fantastical, delusional,
deceptive.
Discretionary
spending, both defense and non-defense, are projected to go down, but no measures
are proposed. Revenues are projected to
go up, with also no measures proposed.
This is magical thinking of the worst order. I agree with Paul Krugman. Most of this is not a plan. It is a political game. More manipulation.
Both
mandatory and discretionary government spending are just assumed by the Plan to
decline to half their present GDP levels by 2022. Revenues had a similar sort of projection,
from 15 percent of GDP to 19 percent of GDP by 2028. CBO had an often repeated phrase in their
analysis for this kind of utter fantasy:
“No proposals were specified that would generate that path.”
Most
of the so-called deficit shrinking of the Ryan Plan comes from some magical
reduction in defense and domestic spending, which together are supposed to (by
magic!) shrink to 3.5 percent of GDP.
Defense right now hovers around 4 percent of GDP just by itself. And as you’ll see below, this becomes even
more absurdly deceptive when Ryan calls for at least initially INCREASING
Defense spending.
Any
deficit shrinking even under this magic depends on what assumptions are made,
and what scenarios. For the first 15
years or so, the proposals actually increase the size of the deficit. Projected reversals of this come from
assertions (not even assumptions) untied to any reality, plus unspecified “broadening
of the base.” Surpluses, small ones at
first, don’t start showing up until 2040—several generations in American
politics. How convenient. And it’s all fantasy anyway. The government is underfunded by the 2001 and
2003 tax cuts first and foremost, yet those are not addressed in any fashion.
AFTER
the CBO did the analysis, the Ryan camp added provisions for cutting taxes on
corporations and the wealthy, and also provisions to INCREASE Defense. Ryan also has drastic cuts in spending for
infrastructure and education, not to mention the safety net of medical care and
food assistance for poor and for children.
How deceptive. These added
provisions make an already fantastical mirage become one with a Trojan
Horse. It’s almost like it’s designed to
deflect first, confuse second, then award plutocrats and defense contractors,
and finally make the government pathetically weak. It comes across as a Randian long-range plot
to collapse government fiscally and force the country to accept a system with
nearly no government at all.
Some
samples of what the CBO said of how things could and/or would progress: A
growing portion of people’s savings would go to purchase government debt rather
than toward investments in productive capital goods such as factories and
computers; that “crowding out” of investment would lead to lower output and
incomes than would otherwise be the case.
Ferguson
in his article I reviewed last week says that Paul Ryan is “truly sincere”
about addressing the fiscal crisis the country is in. The reader can look at what I have detailed
above and see if they agree with that.
Ferguson
says, incredibly, that there is “literally no one in Washington who understands
the challenges of fiscal reform better” than Paul Ryan. If that’s the case, it’s time to bid sayonara
to America’s days as a Great Power.
Ferguson
does not acknowledge—appears not to know, although that seems impossible—who really
has power in this country. For whatever
reasons, he keeps couching things in terms of only Democrats or Republicans.


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