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!”