Monday, April 11, 2011

Quick on Paul Ryan

I've noted here two things about Paul Ryan: that his projections, produced by the Heritage foundation, seem unrealistic, and that he doesn't really seem serious to me if he wants a debt that's 10% of GDP as an eventual goal.

I want to share a few more points. First, what's most frustrating to me is that in the middle of a big annual budget fight he plops this non-sequitor of a plan about the long-term budget - essentially a tax and entitlement reform plan. People and pundits conflate the two, but they're not the same. This is plain and simple a political move, and people should not be as surprised as they are that someone "serious" like Ryan would be political. My reaction to that: grow up. Of course he's political. Everyone east of 17th St. is extremely political, and a lot of people west of it are too. So that's bothersome. But they made a deal, we got the immediate question over with, my wife can go to work, and that's done. So what to do now? Well, here I actually get more positive about Ryan: he grabbed the third rail of politics and didn't die. We have Bowles-Simpson and now the president is going to offer a plan too, which means we may actually have a real tax and entitlement reform, which we legitimately need. Social Security is less of a concern for me, but Medicare is a real problem. I'm not sure how the Ryan plan stacks up - some smart people are not convinced it is capable of controlling costs. I used to work on the Medicare issues a lot more, and may have to look at that material again before I really weigh in. My biggest fear is that Ryan and his allies are going to insist on a foolish consistency between short and long term policies. Our short term problem is anything but the debt, and in May or June when the debt ceiling debate starts I hope we don't threaten a fragile recovery by conflating the short and the long term again, like Ryan duped the pundits into doing last week.

9 comments:

  1. Obama has entirely ignored Bowles-Simpson; sort of like how Bush ignored the 9/11 Commission's findings and recommendations. I think commissions, etc., like that are basically pointless and are largely used as a means to shield a politician against criticism.

    Ryan's plan isn't serious because it does nothing about "defense" (why we continue to use that Orwellian term for our warmaking capability I dunno); of course in order to do something about "defense" we'd have to have a discussion about our role in the world.

    "My biggest fear is that Ryan and his allies are going to insist on a foolish consistency between short and long term policies."

    The response would be that they are using the short-term problem as a springboard for more long-term solutions.

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  2. Yes, but my Senator and others have not. Legislation is being crafted on the basis of Bowles Simpson right now, so I would not be so pessimistic about its relevance.

    It - with the Ryan Plan and whatever Obama comes up with (which I'm sure will incorporate elements of Bowles-Simpson even if he didn't like the whole package) will be haggled over, which is precisely as it should be.

    As for defense - I don't actually think of this as a long-term issue personally, so much as a short and medium term budget concern. Defense is not what will threaten the budget twenty years from now. Entitlements and perhaps tax policy are going to do that. I would like to see defensed address through addressing defense policy - namely ending Iraq and winding Afghanistan down at whatever pace is reasonable (I'm not the best person to say on that).

    re: "The response would be that they are using the short-term problem as a springboard for more long-term solutions."

    Well certainly that's their response, but I'm concerned that what Ryan is pushing for the short term will make the long-term harder to deal with.

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  3. "Legislation is being crafted on the basis of Bowles Simpson right now, so I would not be so pessimistic about its relevance."

    And it will go nowhere.

    Defense spending is intimately tied with domestic spending.

    The way you deal with defense policy is to make it an actual defense policy; as opposed to what we have now, with Obama (or whoever occupies the Presidency) acting as if Article I grants him the power to send U.S. military forces anywhere he wants them to go as if he were George III or a medieval monarch.

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  4. re: "And it will go nowhere."

    Well, it will be argued over and elements will be included. Hearing Warner talk about this recently, seeing the Ryan plan, and then seeing the Ryan plan push Obama to making an announcement makes me more hopeful than I have been in a long time for entitlement reform. It used to be common wisdom that you just can't touch this stuff. Now three groups (it's really the gang of six, not just Warner) are getting explicit. This is a good sign.

    I know people can be pessimistic about Congress and I understand that, but entitlements are one issue where it is quite meaningful when they simply start talking about. If just Ryan proposed a budget that is widely considered to be extreme and unhelpful, I'm not sure I would be as positive. But multiple people are speaking up with multiple approaches which means there will actually be a discussion - and actually having that discussion on an issue like this, which is so discussion-resistant, increases the likelihood of a reform.

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  5. Daniel,

    Whatever "solutions" they have to this issue will be too little and they will not fundamentally disturb the numerous stakeholders. I am not pessimistic about Congress, I am pessimistic about government in general.

    What I find of interest about this is how "the government" continues to shoot itself in the foot and undermine its own credibility. That only bodes well for us "more markets please" types.

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  6. re: "What I find of interest about this is how "the government" continues to shoot itself in the foot and undermine its own credibility. That only bodes well for us "more markets please" types."

    This is an awfully odd perspective. The early 21st century is not the 1930s, and I'm not of the opinion that Social Security and Medicare are set in stone or inviolate - but you need to have a bigger perspective when you talk about shooting in the foot.

    How are we shooting ourselves in the foot here? We're "shooting ourselves in the foot insofar as long-term projections on health costs aren't easy and budget trouble is looming down the line as a result (long-term projections on pensions are easy which is why Social Security is in good shape, even given demographic transitions). But we are not shooting ourselves in the foot insofar as the elderly get great health care in this country, and they aren't as at risk of dying in poverty as they were before Social Security and Medicare.

    So how exactly does government "shoot itself in the foot"? It's not an especially easy answer. We have budget trouble, I'll concede that. Does government "shoot itself in the foot" on the life prospects of the elderly? How are they faring relative to a polity that is restrained from providing for its elderly? What about poor children? Are they better fed and educated here? If we have "failing schools" is that "shooting ourselves in the foot" more so than a polity where children aren't offered education at all and don't receive it?

    What I find interesting is how people can criticize government on the margin (existing public schools clearly do not perform as well as existing private schools), but never inquire at all about whether this is an appropriate counter-factual on which to judge success or failure. The appropriate question isn't "are we running in to trouble keeping seniors dignified and out of poverty?" - we're almost definitely running into some trouble constantly for the reasons I talk about a lot on here about government inefficiency and market efficiency. The appropriate question is "are seniors and indeed is society as a whole, under this deeply flawed system in need of occasional reform and revamping, better off than they would be without this flawed system". People point out the flaws on the margin and remain completely oblivious to the meaningful counter-factual.

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  7. That's the thing, the flaws are not on the margin.

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  8. Sure there are flaws on the margin. The trouble is, people always talk about the flaws on the margin and generalize it inappropriately.

    "Medicare is going to cause budget trouble". This is a government failure on the margin. At the particular margin of public health insurance that we provide currently, there are real costs from government failure and that is one of them.

    That is pointed to and more generalized statements are made about government provision of health insurance, period.

    If you want to eliminate government provision of health insurance in a comprehensive way, you have to demonstrate that without Medicare the situation would be better.

    I never hear that argument. I hear philosophical arguments about it, but that's different. Anyone can formulate a philosophical case for or against.

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  9. Let's just say you have more buy in than I and leave it at that.

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