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Respected Republican Answers the Question: “But how will you save all that money?”

[digg-reddit-me]Ezra Klein calls Obama’s budget proposal released yesterday the second most interesting budget proposal released on Monday. The most interesting belongs to Rep. Paul Ryan:

Ryan’s budget — and the details of its CBO score — is also an object lesson in why so few politicians are willing to answer the question “but how will you save all that money?”

As you all know by now, the long-term budget deficit is largely driven by health-care costs. To move us to surpluses, Ryan’s budget proposes reforms that are nothing short of violent. Medicare is privatized. Seniors get a voucher to buy private insurance, and the voucher’s growth is farslower than the expected growth of health-care costs. Medicaid is also privatized. The employer tax exclusion is fully eliminated, replaced by a tax credit that grows more slowly than medical costs. And beyond health care, Social Security gets guaranteed, private accounts that CBO says will actually cost more than the present arrangement, further underscoring how ancillary the program is to our budget problem.

An important note to understanding how Ryan’s budget saves money: It’s not through privatization, though everything does get privatized. It’s through firm, federal cost controls. The privatization itself actually costs money.

I’m a bit unclear on what these firm, federal cost controls are – and I don’t mean this as an attack on Rep. Ryan.

What we need is more representatives like Ryan who are willing to stick their neck out so – at least if we are to ever deal with our fiscal issues responsibly.

2 replies on “Respected Republican Answers the Question: “But how will you save all that money?””

I’ve been harping on this issue for a while. It’s not just politicians who need to spell out how they would balance the budget; ordinary political activists should have to do so as well. So many “fiscally conservative” people don’t actually support fiscally conservative policies. They will scream in outrage every time a new budget comes in that predicts a multi-hundred-billion dollar deficit, but when anyone talks about reducing military spending or raising taxes, they will be similarly outraged. With so many numbers involved, I can understand why its difficult for most people to figure out whether their beliefs about the deficit are internally consistent. But I think most people are just in denial- they don’t want to know how big the problems are, so they don’t try to find out. They want to believe that if they just “cut waste”, “ended the wars”, “privatized social security”, etc. that we would have a balanced budget, so that’s what the politicians tell them.

And besides the massive practical difficulties we face in eliminating the current ~$700 billion/year structural deficit, there are the even-more massive political difficulties that you’ve touched on before. Neither party has indicated a serious willingness to eliminate the deficit. Even Obama’s health care reform bill- the most serious deficit reduction measure we’ve had in decades- had to be wrapped in another giant entitlement, with huge potential long-term liabilities. Everybody has their own little preferred solution, and nobody is interested in the work it will take to reach any kind of consensus solution, much less a solution proportional to the current shortfall.

And if all that weren’t enough, there is the third massive difficulty- even if we were to by some miracle eliminate the current $700 billion structural deficit, and our economy comes around to eliminate the other ~$800 billion in deficit, there are still the massive increases in entitlement spending that will lead to a $1 trillion increase in the annual deficit by 2020. Most people don’t realize that even radical changes to our entitlement programs would at most succeed in reducing future increases in the deficit, not actually reducing the deficit we currently have.

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