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A footnote to the above posting regarding the Ryan budget plan.
The Ryan plan does maximum damage to Republicans because of its insistence on treating entitlement reform and tax reform as two tightly associated problems, rather than two separate issues to be handled at two separate times.
Ryan’s plan cuts the top rate of personal and corporate income tax from 36% to 25% with promises of offsetting revenue raisers to be determined later.
Because Ryan’s tax cuts were specific and his promises of revenue-raising reform ultra-vague, he had no defense to the attack that his tax reform involves massive downward redistribution of the tax burden. And after all, it’s hard to imagine what tax enhancements would counteract the distributional effect of a cut in the top rate of income tax from 36% to 25%. Ending the mortgage interest deduction for mortgages of between $417,000 and $1,000,000 (a good idea!) would not do it. Ending the deductibility of state and local taxes (another good idea) would not do it. A carbon tax (good idea again) for sure would not do it. Ditto a VAT. All of those measures would be good ways to raise additional revenues while leaving the current rates in place. But as offsets to a huge upper-income tax cut, they look like a shift of the tax burden from the upper class to the more affluent parts of the middle class at the same time as the rest of the Ryan budget removes Medicare coverage from the more affluent parts of the middle class – and leaves the remainder of Medicare very probably increasingly inadequate even for poorer Americans.
The one thing that might have enhanced the attractiveness of the Ryan Medicare plan is some kind of assurance of adequacy of the future Medicare vouchers for Americans under age 55.
Remember, under the Ryan plan, not only are Medicare vouchers means-tested, but they are also scheduled to grow in value at a deliberately slow pace. Today’s 40-somethings have good reason to fear that the vouchers will prove inadequate when it comes their time to retire.
Those fears could be allayed to a certain degree if Republicans would support any of the various initiatives to weaken the pricing power of healthcare providers. Some of these initiatives are included in the Affordable Care Act, others are still kicking around the think tanks. But no. Republicans condemn almost all of them as just so many variations on the death panel theme. The result: CBO projects that by 2030 the Ryan vouchers would cover only about 30% of the cost of an insurance policy equivalent to Medicare as it now exists.
And we’re going to ask Americans to vote for that? That’s the thinking that brought us Goldwater in 1964. “You’ll eat your canned peas, goddamnit, and tell us you like them!”
So what David is saying is. It’s ok to take $6500 a year from the old folks and give it to the rich folks.
Just don’t get caught doing it thats all.
The old folks ARE the rich folks. No age demographic is wealthier than the elderly.
That’s a generalization. It is true that the richest 1% of Americans are white and old. But in the latest recession older Americans lost more economic security than any other demographic in the country, especially when you factor in the lack of time for bounce-back in their major investments which, over time, have become more and more concentrated in real estate.
Swing for the richest 1% as old people who can’t be hurt by economic radicalism, but generalizations hurt the vast majority of “old folks”.
There are no millionaire old folks anywhere near where I live. I am guessing there are only a very few in the whole of northern NYS.
Cant remember bumping into any in Texas, the Carolinas, Alabama, Louisiana, Pennsylvania, Arizona (OK McCain but I never bumped into Mr 5 houses either), Vermont, New Hampshire, Washington State, Oregon, and other states I have visited.
So they are pretty rare, certainly don’t see any in Walmart.
More Carney nonsense. 80% of seniors rely on SS payments for more than 50% of their income.
Not quite right. Go back to 1965 (and, probably, many years after that) when Medicare was introduced. Old-age poverty was an enormous, endemic problem – and the expense of medical care had a lot to do with it.
From Krugman:
The Ryan Mistake
Politico has an interesting piece about how the lemmings came to jump off the cliff — how the GOP came to stake everything on the Ryan plan. But there are a couple of points that I don’t think come clear in the story.
First, I suspect that there’s a legend in the making — one that will come to dominate the conventional wisdom if the GOP does badly next year — which goes like this: Republicans were too noble. They committed themselves to a serious, well-crafted policy plan, but were oblivious to the political realities.
What I hope regular readers of this blog understand by now is that the Ryan plan is, in fact, a self-serving piece of junk. It doesn’t add up — in fact, it would probably make the deficit bigger not smaller. And far from representing some kind of sacrifice of political interests in the service of the greater good, it’s a right-wing wish-list on steroids: sharp tax cuts for corporations and the rich, savage cuts in aid to the poor, and a gratuitous privatization of Medicare. And again, it’s technically incompetent along the way.
So nobility and seriousness had nothing to do with it.
But what about that political misjudgment? How could they have thought this piece of junk would fly?
What I think Politico misses is that while the ideas in the Ryan plan poll terribly with the general public, there was very good reason to expect them to poll well with the punditocracy. For a year before the plan was unveiled, Ryan was the absolute darling of Beltway insiders; any suggestion that he was in fact a flim-flam man was greeted with anger. And let’s remember that for about two days after the plan was unveiled, it was greeted rapturously, even by some alleged liberals.
So what I suspect is that Ryan and his colleagues expected to float through on a cloud of pundit love, which would allow them to bypass the public’s fundamental dislike of everything they were proposing.
Exactly why they thought this could happen despite the very similar story of Bush’s attempt to dismantle Social Security is another question.
http://krugman.blogs.nytimes.com/2011/05/24/the-ryan-mistake/
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Here is the link to the original Politico article (“GOP Ignored Ryan Plan Red Flags”) that Krugman refers to:
http://dyn.politico.com/printstory.cfm?uuid=1A8854CA-F9E9-4AA4-274BEDCD1B234DD8
Armstp, thanks for the links.
The usual GOP move is to give the poor and middle class $100 while giving the rich $50,000 (and then lying about the distribution). That’s a much easier sell, as people like getting $100.
The Ryan plan is just a straightforward redistribution from the middle class and poor to very high income earners. Much harder to obscure what’s going on.
If we Repubs are going to do something this drastic why not really address the issues once and for all with a semi-bipartisan support plan?
Why not support the debt commission solution and work off of that as a good base.
Because Republicans don’t care about policy. Under Bush Jr., Ryan voted for Medicare Part D, the invasion and occupation of Iraq, and the Bush tax policies. Now he’s a slasher. There’s no policy consistency here, just tactical imperatives. “Working with the other side to accomplish things” hasn’t been anything the GOP has had any interest in for about ten years.
“Ending the deductibility of state and local taxes (another good idea) would not do it.” And why is this a good idea? Red states that have no state income tax receive far more in federal dollars than they pay in, the Blue states have state income taxes and pay far more than they receive and David’s solution is too make this dynamic even worse? His theory is that Blue states will then cut their budgets for such useless things as education, roads, and health care and all become like that dynamo Alabama. The blue states are richer, more educated, healthier, etc. precisely because they have state governments that are responsive to the needs of the people and tax them accordingly. If you want to take away the deductibility of taxes than might I suggest then that no state receives more than 10% more from the Federal Government than it pays in, and no state receive less than 90%. In the face of that deductibility looks mighty fine.
As to Ryan, David is right
If Ryan tied the Medicare cuts with paying off the deficit he maybe would have had a shot as he could have shown a balanced budget very early on. At least Republicans could have gone with the whole “the truth hurts but it needs to be done” but coupling it with more upper class tax cuts was nuts.
Paul Ryan is the Manchurian Congressman.
Frumple, I understand your frustration as exemplified in your Red State – Blue State tax argument. However, please keep in mind that the main reason red states get so much more in federal support is because red states tend to be mainly agricultural and, thus, receive a great deal of money in agricultural subsidies. Blue states, on the other hand, tend to be more industrial and, thus, do not receive as much in subsidies. So, if you really want to even out how much federal support is given to the states, you have to end agricultural subsidies.
valkayec,
Do you have any proof of that agricultural subsidy argument?
I do not think the amount of money we are talking about here (the marginal difference between agricultural subsidies from very big agricultural states like California and New York versus say Iowa and South Carolina) is enough to account for the huge differences of dollars in versus dollars out.
May of the blue states are taking out only $0.60 per dollar put in in federal taxes versus many Red states taking out almost $2.00 of every dollar they put in.
Remember it is not the total federal agricultural subsidies that a state like Nebraska or Georgia gets, but the difference between what those states get versus what blue states like California and Illinois get.
By the way are you sure there is relatively more agriculture in Red States versus Blue States?
I saw the break-out a couple of times of money going in versus money going out of states and it did not look like agriculture was the reason for the difference between blue and red states. There are a lot of factors like social safety net relative dollars, defense spending relative dollars, transportation, etc. In any event it does not matter. What is true is that blue states very largely subsidize red states in this country.
Armstp, you may be right; however, the data I read some while back showed that red states gain more from fed aid than blue states because red states are largely agricultural and thus receive huge amounts per capita in ag subsidies that blue states which don’t receive the same subsides per capita in comparison.
I must say I really like this site so far, non biased. after NY-26 election I looked at some fox news political site and no mention… (obviously biased), looked at washington post website no mention… (obviously biased) instead front political page, it was dems slam Obama israel policy. the left wing sites can be biased also but for the most part if the election turned out different I would assure u that it would be mentioned. all major news stations have commentators which are allowed opinions, that’s fine but report all news just not what is in line with your message.
Medicare does need to be fixed any the best Idea I got from Ryans plan was to get the wealthy people out of the system that don’t need it.
the best Idea I got from Ryans plan was to get the wealthy people out of the system that don’t need it.
It all depends on how “wealthy” is defined. Catch me up, remind me: What is the threshold for “wealthy” as defined by the Ryan plan regarding means-testing? What happens to those on the margin of the means- kicked out of the system- when something like the recent recession causes “wealth” to evaporate overnight? Who takes care of Grandpa while he’s wading through bureaucratic red tape in order to get what he’s paid for his entire life?
And here are some facts that must terrify David (and should terrify Republicans if not for the fact that they have their heads up their asses in complete denial)
from the NYT:
“I have almost always voted the party line,” said Gloria Bolender, a Republican from Clarence who is caring for her 80-year-old mother. “This is the second time in my life I’ve voted against my party.”
Pat Gillick, a Republican from East Amherst, who also cast a ballot for Ms. Hochul, said, “The privatization of Medicare scares me.”
The district, which stretches from Buffalo to Rochester, has been in Republican hands for four decades, producing influential figures like Representative Jack Kemp and siding with Carl P. Paladino, a Republican, over Andrew M. Cuomo in the governor’s race last year.”
4 decades the Republicans have held that seat and the district sided with the worst Republican gubernatorial candidate in history and they still elected a Democrat by a nice size margin.
At this point I think the best bet for the Republicans is that they don’t raise the debt ceiling and cause a worldwide Depression, and hopefully amidst the rubble of a destroyed civilization the Ryan bill won’t matter so much.
Can One Man Destroy The Republican Chances in 2012? - Page 2 - MotownSports.com Message Board // May 25, 2011 at 10:53 am
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And the GOP thinks voters will back that?
No. The GOP thinks they can rile up hate and racial resentment to cover their lie that they are not trying to do what they are trying to do. The lie will suit conservative voters just fine. And independents will think to themselves, “the GOP wouldn’t do that so they must be telling the truth.”
“Those fears could be allayed to a certain degree if Republicans would support any of the various initiatives to weaken the pricing power of healthcare providers. Some of these initiatives are included in the Affordable Care Act, others are still kicking around the think tanks. But no. Republicans condemn almost all of them as just so many variations on the death panel theme. The result: CBO projects that by 2030 the Ryan vouchers would cover only about 30% of the cost of an insurance policy equivalent to Medicare as it now exists.”
Right on, David Frum. It’s paragraphs like the one above that makes this one of the best blogs on the internet.
The funniest aspect to the whole Ryan plan story is that the GOP threw themselves on that dagger KNOWING it stood no chance in hell of passing. Talk about insular thinking. They rant about government being bad (amongst) themselves so often, they actually started to believe it!
Absolutely.
Another funny, which isn’t so much funny as it is interesting: Paul Ryan’s family (widowed mother) would have been hard-pressed to have taken care of his chronically, progressively ill grandmother (Alzheimer’s) under the Ryan plan. “Deliberately slow” growth in Medicare vouchers is fine unless you have an illness for which the care rapidly increases in intensity and expense, but I guess young Ryan has a bit of memory loss of his own.
One more funny, which isn’t so much funny as it is ironic: Mr. Slash Entitlements would have been hard-pressed to afford college (and become a US Rep) without the government entitlements he collected due to his father’s death. From age 16 through college or age 22, Ryan would have received SS survivor benefits from his father’s account.
Without Medicare and SS entitlements, Paul Ryan’s life (and his mother’s and grandmother’s as well) would have been very, very different. Ah, how the young forget…
Maybe the voters aren’t “buying his plan” because it sounds like gobbledegook. And, to me, Ryan sounds like a smart-aleck and a bullshitter and for this reason I hope soon to see him become the proverbial dead chicken tied around the dog’s neck.
This morning on Morning Joe, Ryan stated that the ACA IPAB board will ration health care to seniors, calling that board a rationing panel. He further stated that the House GOP, with his plan, will end that rationing panel, put the money back into Medicare, and will save Medicare for future generations. He’s still spinning that Dems are scaring seniors while his plan will save Medicare.
Already the spin has begun to not just change the conversation from one of privatizing Medicare, but to scare seniors with “rationing” again to which, I suspect, many seniors will succumb, not knowing the raison d’etre of the board or the limits on their ability to make policy. They can, in truth, on study and make recommendations to Congress which must approve, disapprove or create new policies. Yet, Ryan and others in the GOP continue to misrepresent the ability of the IPAB to set policy rules. And as usual with political spin, he neglected to note that the money taken out of Medicare in ACA was money given – yes, a handout – to private insurers for the Medicare Advantage program, which actually costs Medicare 17% more than standard Medicare.
My greatest concern is that most Americans are busy and not able or willing to study or research the bills. They’ll accept the arguments put forward by those whom they seek to trust or from their favorite pundits. As a result, they get incorrect or misleading information. Unfortunately, our national media is woefully inept at presenting the real facts or challenging the spin. The Orwellian nature of political discourse has become the norm and no one is shouting the facts from the rooftops.
The GOP backed this “plan” because it stood no chance of being taken seriously. If instead they had created and fought for a plan that made sense, they would suddenly find themselves [GASP!] negotiating with Democrats to create a functional plan that might actually work and that ship sailed for the GOP long ago. They are now incapable of governing so conflict is the way they have to go, but all of the sane ground was claimed by Democrats during the ACA debate so the Republicans have nowhere else to go but Crazyland.
Think about a sane, conservative plan that included lower reimbursements, some level of means testing, and tort reform. The Dems would come back with stronger means testing, weaker tort reform, bargaining with drug companies, maybe better hospital regulation to reduce costly errors, and higher Medicare taxes. Maybe somebody on either side would come up with opening up the medical field a bit so that people could afford to become GPs and lower barriers to immigrant doctors and specialists. The fight would be on, but none of the things being fought over would be downright insane and guaranteed to fail. That’s the way law used to be made before the late 1990s.
Speaking of lower barriers to immigrant doctors, I have a friend from Germany who worked as a cancer researcher in the U.S. for a while. He’s brilliant, highly published, and addresses conferences worldwide. His vast advanced experience, years ahead of the vast majority of standard American oncologists, accounted for exactly nothing. To see patients in this country he would have had to retake the boards and redone his residency. So he left to be able to both do research and see patients in another country. What a f***ing waste.
I know. It is a waste of good doctors due to entry barriers put up by the AMA to protect domestic doctors from competition. My daughter was in oncology and told me kind of stories about the medical field.
It is hard to take the Ryan plan seriously. I know the GOP love it. Tax cuts today! Spending cuts tomorrow! Revenues magically rise! We really do need some grown up ideas for our budget–not more of the same adolescent fantasies we’ve had the past 30 years. It is really hard to take our debt seriously, when politicians and pundits do not.
An ideologue (Ryan) has an unfortunate confrontation with reality.
David’s analysis is spot on. The Ryan plan does not balance the budget in the short term, probably does not reduce Federal costs in the long term and shifts the Federal costs to states but requires no accountability (block grants) and definately shifts costs to Sr. in the long run who are then individually required to negotiate with oligopoly insurance companies who have banded together to hold their costs down (and keep their profits up). The Ryan plan is only about GOP philosophy of smaller gov’t, not about true cost savings.
One of the real problems with the Ryan plan is the outcome will be politicians on both sides will NEVER have an honest conversation about needing to restrain the costs of medicare. Because their opponents will use it against them. Death panels, killing grandma, you name it will be used against anyone who thinks we should talk rationally about means testing, restraining costs (rationing!), etc. That’s tragic because this is part of the conversation that needs to happen.
The Ryan plan’s long term political effect is to make it much harder to balance the budget. LFC above has it right. You could start with Eriskine/Bowles or Rivlin/Deminici and actually have a path to balanced budget. The GOP has catagorically rejected anything that includes revenue increase (even if it includes lowering the tax rate). The GOP would rather make sure no one wins rather than compromise.
You got it about right. And the rest of us lose to the political gamesmanship.
The problem isn’t that the two ideas are associated rather than being tackled separately . . . the problem is that both ideas are unpopular.
Medicare:
People like health insurance. People want health insurance. A lot of people can’t afford health insurance.
If The Plan was to replace Medicare with private insurance, fine. Sounds alot like redistributing my taxes to private corporations to get rich off of, but fine. But as you said, the vouchers won’t cover the premiums. That means they provide either minimal replacement value at best (if I can afford to make up the difference) or absolutely no replacement value at worst (if I can’t). This isn’t taking one thing people want and replacing it with another — its taking something people want and not replacing it at all.
This idea would be a stinker all by itself . . . no need to blame the tax issue on its unpopularity.
Taxes:
The whole drive for the reduction of the tax rate is (allegedly) to combat the debt and deficit. But as you again said, there is no explanation of how that’s going to happen (at least Ryan was being honest).
“We need to cut the deficit! Let’s reduce the tax rate on rich people!”
” . . . but that’s going to increase the deficit by raising less money. How do we make up the money we need to cut the deficit?”
“I have no idea. But lets increase the deficit first by getting rich people richer, then I’ll worry about the rest.”
Again, the idea as it stands is a stinker all by itself.
Either idea, separately or combined, might have merit . . . IF they actually had the slightest chance of accomplishing their stated goals. But by putting the ideas forward in their currently half-baked form, the GOP gives the clear and inescapable impression that their primary goals are getting money to the rich and taking people’s healthcare away. You don’t need to go to a think tank for analysis of why that’s not bringing in the votes.
The problem with Ryan’s plan for Medicare is seniors are small C conservative. They generally don’t want too many choices that make them have to make more decisions as they get older. They also tend to get more risk averse. They generally would want to lock into a guaranteed heath program, even a substandard one. than to have nothing guaranteed and risk their retirement nest egg to pay for the high potential risks of maladies of old age.
More Americans will likely be forced choose to go back to the level of treatment before Medicare started paying for so much.
Fewer hip replacements, and bypasses after age 65. More will choose secret suicide instead of destroying the retirement nest egg for their spouse or the college fund for their grandchildren.
What is clear is the increase of level of care paid for by the US government is pushing us closer to a Greece type of instability: a basket case of inefficiency that will drive capital away.
Americans don’t realize: a rising percentage of Americans are pets of the government- generating less productivity over their lifetimes than what gets spent on them. Seniors fool themselves that they are not taking handouts far in excess of what they paid in. It used to be a very small portion of the economy primarily because American labor was more productive than the sum of foreign labor and importation/transportation costs.
Americans will need to become more frugal. With more spending on productivity and less on indulgence: just like China does.
The difference is the Chinese political system does not allow the entitlement mentality to overwhelm government costs like is happening in Greece, California and the US generally.
So the bottom 80% would think “hey, more tax cuts for the rich and corporations. What a great idea. They’ve been penalized by onerous taxes too long.” Once that was out of the way the same dimbulbs would think “hey, now that the wealthy and corporations are taken care of, lets rid ourselves of our public health care so the suffering insurance companies get their fair share”.
David Frum, witless provider of cartoon content for Tom Tomorrw. Or Tom Toles.