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Ponnuru: Ryan’s budget a step back for GOP

Some of Paul Ryan’s biggest fans are disappointed in his latest budget.

Take New York Times columnist Ross Douthat. He credits Ryan, the Republican House Budget Committee chairman, for trying to give Medicare recipients the power and the incentive to make health spending more efficient and getting his party to take up this reform. He also credits Ryan for revising his Medicare plan between 2011 and 2012 to respond to the smartest criticisms. But Douthat says the 2013 version of the budget is “a step backward” – and I’m inclined to agree.

My own list of the pros and cons is slightly different from Douthat’s. I would have preferred Republicans rein in the growth of Social Security, especially for people with high lifetime earnings. That way younger and poorer Americans would bear less of the burden of budgetary restraint.

For the same reason, the budget should find savings from Medicare faster. Ryan’s 2011 plan would have created a competitive structure only for people younger than 55. Now that he’s advancing a version of Medicare reform with fewer risks for seniors, that slow phase-in makes less sense. And the plan should raise co-pays, especially for the affluent, which would also lighten the burden on younger people.

A budget that reduced spending on those older than 55 would make it possible to bring the government’s longterm debt to a manageable level while allowing for a higher (and more realistic) level of Medicaid spending than the Ryan budget includes.

House Republicans should have been bolder on health care, too. Their budget envisions the repeal of President Barack Obama’s health care law, but outlines no replacement for it, which is odd for a document that purports to provide a Republican vision for the future of the welfare state.

The Ryan budget keeps the level of revenue that resulted from the tax increases that came at the start of the year, but it aims to raise that revenue with a new tax code that has a top rate of 25 percent. A 25-percent rate would mean a big tax cut for the highest earners in the country: Someone who makes $1 million a year isn’t going to have enough tax breaks to make up for a 14.6 percentage-point reduction in rates. The middle class would have to pay higher average tax rates to make the numbers work. A similar plan seems to have been a serious political liability for Mitt Romney in last fall’s presidential election.

And it is a little strange for Republicans to leave the recent tax increases in place. Some House Republicans voted to limit the tax increases that were taking place, and some voted against any deal to register their opposition to any increase. None of them favored the new taxes. So why aren’t they calling for a rollback? Because it’s a dead issue? It’s no deader than the promise to repeal the health care law, a promise they renewed.

Or is it because it helps them reach their new goal of balancing the budget in 10 years? Just a few months ago, though, Republicans didn’t think higher taxes for a smaller deficit was a good trade.

Whatever their reasons, the 10-year deadline is the real innovation in the 2013 budget. Yet there’s no particular reason to think eliminating the fiscal shortfall in 10 years is an urgent goal. The country isn’t going to look appreciably different if it takes 15 years, or if we shrink deficits to a modest size and keep running them.

I suspect that Ryan himself shares some of these regrets about his budget. He has sponsored legislation to reform Social Security and health care in the past, but he did so on his own and not in the name of House Republicans. He has always been more interested in structural reform of the federal government than in ending deficits.

Another thing I suspect Ryan appreciates is that different budget choices would have come at a political cost. Hitting zero in 10 years was a way to get House conservatives to accept a budget strategy that didn’t involve a debt ceiling showdown in February. A lot of conservatives would have complained if he had abandoned the 25 percent tax rate, too.

Democrats would certainly have said the Republicans had become “even more extreme” if they had limited spending on those older than 55, and House Republicans – including some of the conservatives who say Ryan is being too soft – would have gotten very nervous about public opinion.

Still, the risks would have been worth taking. The choices that Ryan made have kept Republicans unified but also reinforced the impression they are too attuned to the interests of the rich and more concerned with their own obsessions than what the public wants. House Republicans are in danger of becoming like the House Democrats of the early 1980s: secure and comfortable in their power base, and not oriented toward achieving a governing majority.

• Ramesh Ponnuru is a Bloomberg View columnist, a visiting fellow at the American Enterprise Institute and a senior editor at National Review.

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