Ryan’s budget: It’s not about Medicare cuts

Original Link: http://www.washingtonpost.com/blogs/ezra-klein/post/ryans-budget-its-not-about-medicare-cuts/2011/08/25/gIQAmZNtRS_blog.html

By Ezra Klein


(Data: CBO; Graph: Ezra Klein) From reading the coverage, I get the sense that people think Ryan’s budget works something like this: It lowers taxes, cuts the deficit and pays for all that by cutting deep into Medicare. That’s wrong.

Perhaps the simplest way to understand what’s going on in Paul Ryan’s budget, and whether it’s plausible, is to look at page 13 of the Congressional Budget Office’s summary of the Ryan plan (pdf). That’s where the CBO lists Ryan’s assumptions about how future budgets would differ under his proposal and under an alternative, high-deficit scenario. That lets us see where, exactly, Ryan’s presumed savings are. And they’re not, for the most part, in Medicare.

In 2030, spending on Medicare is .75 percent of GDP lower than in the alternative fiscal scenario. In fact, Ryan and the Obama administration have proposed the same rate of growth for Medicare: GDP + 0.5 percent.

It’s Medicaid and other health spending, which includes the Affordable Care Act, where Ryan really brings down the hammer: That category falls by 1.25 percent of GDP. So Ryan’s cuts to health care for the poor are almost twice the size of his cuts to health care for the old.

And then there’s the “everything else” category, which includes defense spending, infrastructure, education and training, farm subsidies, income supports, veteran’s benefits, retraining, basic research, the federal workforce and much, much more. And this category of spending falls by 2.5 percent of GDP.

That’s a lot of numbers. But it’s also clarifying. The big cut here isn’t to health care for old people, though that gets the headlines. It’s to health care for poorer Americans. The biggest category of cuts is “everything else,” which shrinks to implausibly low levels, and Ryan, to my knowledge, has never detailed, even in broad strokes, how he gets it that low. But since he’s opposed to further defense cuts — he in fact raises spending on defense in the next 10 years — it seems inevitable that the non-defense side of “everything else” would have to shrink considerably, and that means cutting quite a bit from income supports and veterans’ benefits and infrastructure.

Then there’s the whole question of where Ryan gets the $6.2 trillion he’ll need to fill the hole in his tax plan.

So if you take Ryan at his word, and you assume his policies will work exactly as he hopes, what you get is a plan that lowers taxes and lowers the deficits mostly by cutting health-care subsidies and income supports for the poor, and only then by cutting Medicare.