Isabel Sawhill on Paul Ryan’s Budget Plan: Voodoo Economics Back in Full Gear

I met Brookings’ Isabel Sawhill one time at a conference and she chided me for being insufficiently interested in cutting Social Security and Medicare spending. So I thought she might be into Paul Ryan’s budget ideas, at least perhaps in a Jacob Weisberg contrarian kind of way. But not so much:

How should the President and other progressives respond? For starters, progressives should be unabashed in labeling the Ryan plan for what it is: an ideological manifesto for a Tea-Party-dominated Republican Party.

Here’s what the progressive rebuttal should be in a nutshell: 1) point out that voodoo economics is back in full gear; 2) start talking about tax reform and its potential to produce a fairer, simpler, and more pro-growth system that has the added advantage of plugging a big hole in the budget; 3) instead of worrying about protections for the elderly, many of whom are quite affluent, remind people that, whether young or old, wealthy Americans have made out like bandits in recent decades and that it’s time to do something for working families of modest means; 4) rethink America’s defense posture and whether we can continue to be the world’s policeman, and 5) be open to some reforms to Medicare and Medicaid but only if they’re combined with additional revenues and a more streamlined military.

Personally, I would try to seize the bull of wealthy retirees by the horns. Let them keep all their Social Security benefits (it’s better to give people money than health care) but add a deductible of X% of income to Medicare Part A, for some modest value of X while slightly reducing Part A copayments. That would have little to no impact on low income seniors, but a large impact on higher income ones. You could implement it more-or-less right away, it would preserve the sustainability of the system, and we could see what its impact is over time and continually re-evaluate. One of the big fallacies of the current construction of the issue, I think, is the idea that we need to write down on a piece of paper a single unequivocal “solution” rather rapidly implementing a handful ideas that might prove promising.