Paul Ryan’s Spending Plan

Posted by Chris Edwards

House Budget Committee chairman Paul Ryan (R-WI) has introduced his annual budget blueprint. The plan will likely pass the House but won’t become law this year.
However, the plan signals the direction that House Republicans want to go in budget battles with the Democrats this year, and it also shows the likely thrust of policy under a possible Republican president next year.


Here are a few highlights:

• Total federal outlays would fall from $3,624 billion this year to $3,530 billion next year. Those figures are $24 billion less than under President Obama’s budget this year and $187 billion next year.
• Of the $187 billion savings compared to Obama next year, $38 billion would come from discretionary programs, $146 billion from so-called entitlements, and $3 billion from interest costs.
• Ryan’s proposed spending in 2022 of $4,888 billion would be a modest 13 percent less than Obama’s proposed spending that year. That’s a useful statistic to remember when you read the inevitable stories about how Ryan would slash, burn, and pillage the government safety net.
• Indeed, Ryan’s proposed increase in federal spending from $3,624 billion this year to $4,888 by 2022 represents fairly robust annual average growth of three percent.
• As a share of GDP, the Ryan budget would trim outlays from 23.4 percent this year to 19.8 percent by 2022. That reduction would simply get spending back to around the normal historical level. And note that spending would still be higher than the 18.2 percent achieved in the last two years under President Clinton.
• Ryan would repeal the 2010 health care law and reform Medicare by transitioning to a consumer-choice model. Those changes are expected to reduce annual outlays in 2022 by $258 billion.
• Perhaps a more important proposal is the block-granting of Medicaid and other entitlement programs such as food stamps. Those Ryan reforms would save $313 billion annually by 2022.
• Converting entitlements to block grants would allow the federal government to clamp down on federal costs while giving the states strong incentives to improve program efficiency.
• The Ryan budget does not propose Social Security reform. Paul Ryan favors major reforms to this program, but he apparently thinks that reforming health care and other entitlements is a higher priority right now.
• Aside from a few obvious targets—such as high-speed rail and the 2010 health care law—the Ryan budget shies away from abolishing specific programs, agencies, and departments.
• Too often the Ryan budget proposes to fix broken programs when the proper reform would be elimination. Ryan proposes to “consolidate” federal job-training programs, for example, but these programs have a history of failure over the last five decades. Furthermore, job training is not a proper federal role within the U.S. constitutional structure.

In sum, Ryan’s proposals would make modest reforms to the giant federal welfare state. By Washington standards the Ryan plan is bold, and Paul Ryan certainly deserves his reputation as the sharpest and most energetic budget reformer on Capitol Hill.
However, there is too much happy talk in the Ryan plan about how failed big-government programs can be made to work better, and not enough focus on terminating activities that are properly state, local, and private in nature.
P.S. I think my budget-cutting plan is a better one