Wednesday, August 15, 2012

Paul Ryan and The Budget

Given that Paul Ryan has been chosen as the Republican Vice Presidential Nominee and there is much talk about his budget plan, I thought it would be fitting to re-post an excerpt from my article Budget Madness, which was written in May of 2011, about Paul Ryan's budget. (Please note, the endnotes have been re-numbered.)

Currently, Congressman Paul Ryan (R-WI) has proposed his own personal budget reduction plan which hurts not only the poor, but also the elderly. Yet the Republican-controlled House has approved the bill.

Ryan's plan hurts the poor because the savings "all come from cuts, and at least two-thirds of them come from programs serving the poor. The wealthy, meanwhile, would see their taxes lowered, and the Defense Department would escape unscathed." [1] Ryan's plan hurts those who can least afford it in this current recession. It is quite ironic that the poor are being targeted in this recession because they could quite easily turn to crime if the government leaves them with no assistance as they try and get back on their feet.

The plan also hurts the elderly because in the long-term, the amount that they will be forced to cover will increase their medical payments. Ryan's plan is to "[replace] Medicare with vouchers with which older folks can use to buy private health insurance." It sounds good, yet the vouchers "are linked to the CPI, not to the inflation rate of healthcare expenses (and private insurance costs)." [2] Thus as time goes on, the elderly will be forced to cover more of their insurance plans because the vouchers will cover less and less.

Ryan's plan isn't as good as either the Gramm-Rudmann-Hollings bill or the PAYGO plan. In the GRH bill, the bill created annual targets until the deficit was eliminated and the cuts came mainly from social programs, yet they came from a variety of social programs and it could be amended (with enough support) to include defense spending. Ryan's program looks more like a war on the poor. It also differs from PAYGO in that PAYGO, while it was tough to get items to be budget neutral for nine years, it truly worked for budget neutrality. PAYGO acted as an equalizer rather trying to balance out the budget solely through cuts.

Ryan's budget proposal will not be successful because the economics are completely wrong. By privatizing Medicare, as was stated before, Medicare will become more expensive. "[T]he bipartisan Congressional Budget Office calculates that overall health care spending will go up as Medicare recipients are forced to buy private insurance, since private insurance has far higher administrative expenses than Medicare." [3] Besides that, the tax cuts are solely for the wealthy. If Ryan's plan goes through they will experience a $125,000 tax cut (on average) while cuts will be made "not only to Medicare and Medicaid, but also to infrastructure spending and funds for Pell Grants for college tuition—both areas that are crucial to the nation's long term economic performance. " [4] The main problem with Ryan's plan is that it masquerades as a legitimate budget balancing plan, yet in reality is nothing but an effort to aid those who already quite well-off.


1: Ezra Klein, "Why Rep. Paul Ryan's budget plan is so flawed," Washington Post, April 11, 2011 (
2: Henry Blodget, "Here's How Paul Ryan's Budget Plan Screws Old People," Business Insider, April 8, 2011 (
3: Jeff Madrick, "Budget Fallacies: Why The Ryan Plan Won't Work," New York Review of Books, April 19, 2011 (
4: Ibid

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