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August 29, 2010

Paul Ryan's 'Roadmap' Would Rein in Spending

By

As the Badgers prepare for battle in Camp Randall this fall, a fellow Wisconsinite endures another sort of skirmish.

U.S. Rep. Paul Ryan's "Roadmap for America's Future" has received ceaseless attacks from the left. The latest comes from New York Times columnist Paul Krugman, in a piece entitled "The Flimflam Man."The Roadmap would address the nation's unsustainable fiscal outlook. Without change, spending on Medicare, Medicaid and Social Security threatens to decimate the federal budget. Projections show these programs would consume the entire budget by 2050.

The Roadmap would put entitlement spending on a sustainable path, while simplifying the tax code and transforming health care to empower patients.

But Krugman writes the bill is "the audacity of dopes. Mr. Ryan isn't offering fresh food for thought; He's serving up leftovers from the 1990s, drenched in flimflam sauce." What exactly does he find so unpalatable?

For starters, Krugman berates Ryan's deficit reduction claims. He points to analysis by the Tax Policy Center, which said the Roadmap would increase the deficit, compared with current law, by 2020.

But the U.S. Treasury Department also analyzed the plan and concluded it would fulfill its purpose. Ryan, R-Wis., naturally believes the Treasury's analysis is more accurate than TPC's. "The Tax Policy Center analysis covers a 10-year period," he notes, "but the Roadmap is a long-term plan with spending and revenue projections covering 75 years."

Even if TPC is right, Ryan observes, the Roadmap's tax rates could easily be tweaked to get the deficit under control.

Krugman also rips Ryan's proposal for Medicare reform: "After 2020, the main alleged saving would come... by dismantling Medicare as we know it, and instead giving seniors vouchers and telling them to buy their own insurance."

To this, The Wall Street Journal accurately countered, "nothing is more likely to finish off Medicare ‘as we know it' than to continue the current trajectory."

The Roadmap converts Medicare, which provides health services to the elderly and disabled, from an unsustainable program to a defined-contribution system. Seniors would get premium support to choose among Medicare-certified plans and be encouraged to seek coverage with the most benefits at the best price.

A similarly successful system is the Federal Employee Health Benefits Program, in which the government offers federal employees a contribution to purchase insurance. Unlike Medicare, FEHBP is maintained through light regulation, intended mostly to maintain fiscal solvency and consumer protections.

Walton Francis, an esteemed health care economist, wrote "the FEHBP has outperformed original Medicare in every dimension of its performance. It has better benefits, better service, catastrophic limits on what enrollees must pay, and far better premium cost control."

The real issue in the Roadmap debate is whether to pursue a bottom-up, free-market approach or a top-down, big government approach to control costs. The latter has been tried and always led to ineffective price controls if not rationing. When compared with that proven failure, the Roadmap seems like a no-brainer.

Nix, a Racine native and UW-Madison graduate, is a research assistant at The Heritage Foundation.

First appeared in The Wisconsin State Journal

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