Tax Analysts Blog

Why Ryan Matters

Posted on Apr 5, 2011
In a few hours House Budget Committee Chairman Paul Ryan will release his deficit reduction plan that will cut Medicare, Medicaid, and dozens of other programs. (There is tax reform but no tax increase.) Now Democrats will have to admit their only viable option for long-term deficit reduction is raising taxes. Now we can have a real debate.

The long and nasty process that led to passage of President Obama's health care reform addressed the issue of coverage but did little to address the issue of government's costs. Since Medicare and Medicaid are by far our biggest budget problems--the bill left much business unfinished. Ryan is giving us health care reform, Part II. Ryan deals with the Medicare and Medicaid problems with blindingly simple solutions: just cap the spending. In the case of Medicare, individuals get vouchers of a certain dollar amout. In the case of Medicaid, states get block grants.

The Democrats are right that these will result in signifcant reductions in the availability and significant increases in the cost of health care for the poor and the elderly. But what is their alternative?

It is fine for Republicans to refuse to raise taxes as long as they admit we must have significant cuts in entitlements. Ryan is leading the way for the Republicans. For this he deserves kudos.

It is fine for Democrats to refuse cutting entitlements as long as they admit we must have significant tax increases. Nobody is leading the Democrats. And politics requires that the President stall because he cannot even hint at a tax increase before the 2012 election.

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