Washington vs. Paul Ryan
What happens when a politician is more honest than his critics.
The immune system of the modern body politic is nothing if not resilient, and this summer all of its antibodies seem to be trained on heretofore little known Congressman Paul Ryan. That makes this a particularly instructive moment, because the attacks on the Wisconsin Republican show how deeply his radical honesty is subverting Washington's flim-flam—to borrow a phrase.
"The flim-flam man" is what Paul Krugman called Mr. Ryan in a New York Times column last week that set a spleen-to-substance record even for him. Amid drive-by attacks on the Congressman's ethics and integrity, Mr. Krugman savaged Mr. Ryan's "roadmap"—his detailed, long-range proposal to equalize taxes and the size of government—as "a fraud that makes no useful contribution to the debate over America's fiscal future."
This might be dismissed as a familiar primal scream, except it perfectly echoes the Democratic Party's emerging election strategy. The bills for decades of unsustainable social commitments are now coming due, especially Medicare, even as Democrats have created a vast new liability in ObamaCare. Mr. Ryan has one of the few credible plans for rationalizing the federal fisc, and his critics are so vicious because his candor exposes Washington's illusions about the entitlement state while offering a genuine alternative. Democrats hope that demagoguing his proposals will allow them to hang on to their majorities this fall.
Thus Peter Orszag, until last week the White House budget director, devoted much of his farewell lecture at the Brookings Institution to Mr. Ryan's plan "to replace Medicare as we know it." Having presided over record deficits of $1.4 trillion in 2009—or 9.9% of GDP—and an expected $1.5 trillion in 2010, Mr. Orszag no doubt finds it easier to change the subject than defend his own record and agenda.
Meanwhile, the Democratic Senatorial Campaign Committee recently attacked "NINE REPUBLICAN SENATE CANDIDATES WHO WANT TO END MEDICARE AS WE KNOW IT." Most of the "facts" in this missive consist of lukewarm-to-friendly comments these heretics had at one time or another made about Mr. Ryan.
The main liberal policy objection, to the extent a serious one exists, is that the roadmap would "cut working folks loose so they've got to fend for themselves," as President Obama described the supposed Republican economic philosophy at a Chicago fundraiser last week.
Mr. Ryan wants to remodel Medicare by giving seniors a modified voucher to buy private insurance. Mr. Orszag, et al., concede that the roadmap would make the entitlement permanently solvent, as confirmed in an analysis by their icon the Congressional Budget Office, but they claim that the amount of the voucher would not keep pace with rising health-care costs.
This is an odd complaint for an economist like Mr. Orszag, given that more market discipline and consumer choice in health care would drive down costs as it does in all other dynamic sectors of the economy. To take one example, recent research by Michael Chernew of Harvard shows that a one percentage point increase in seniors insured by Medicare Advantage HMOs—the Ryan-like program that offers private options—reduces traditional fee-for-service Medicare spending by 0.9%, despite its price controls.
In other words, cost-conscious competition changes how doctors and hospitals provide care to all patients. A larger transition to market-based medicine could turn out to be as smooth as the private-sector shift to 401(k)s from defined-benefit pensions, and a similar reform was even suggested in 1999 by Bill Clinton's Medicare commission, which was led by Louisiana Democrat John Breaux.
This model is a threat to the ideology of those like Mr. Krugman who believe that government can and should decide how all patients are treated. But technocratic central planning won't reform the system, as its sad 45-year history in Medicare shows, and nothing is more likely to finish off Medicare "as we know it" than to continue the current trajectory as it swallows the federal fisc and crowds out all other priorities.
In that sense, Mr. Ryan is really presenting Washington with a philosophical choice between the status quo of an ever-larger and ever-more indebted government and a plan to pay for the promises we've made while still preserving free markets and economic growth. The firehose of invective pointed at Mr. Ryan is in part an attempt to scare voters and in part an effort to prevent voters from understanding that there is in fact a choice.
Mr. Ryan's roadmap is much broader than health care and ambitious enough that it would require a Presidential-level debate to have any chance of passing. We'd need to inspect the details before endorsing them ourselves. But its immediate virtue is that it gives leaders in both parties heartburn because it applies the fiscal honesty that everyone claims to favor. Taxpayers need someone like Mr. Ryan to expose the emperor's naked budget.