Today, Rep. Paul Ryan (R-WI, my Congresscritter) released a plan to deal with the looming financial crisis that is facing the federal government, “A Roadmap for America’s Future. Yesterday, I highlighted a Congressional Budget Office report on the long-term future of the federal government’s finances. To recap yesterday’s analysis; doing either nothing or attempting to match the required spending increases with tax increases was found by the CBO to be unsustainable.
They also did an analysis of a third scenario; the not-yet-released Roadmap. I chose not to discuss that at that time because the details of the plan weren’t out yesterday, and because the CBO limited its analysis to the overall numbers. The CBO found that the then-not-specific spending targets requested by Ryan and the minority on the House Budget Committee is ultimately sustainable, with debt as a percentage of GDP briefly peaking above 100% around 2040 and falling back to a slightly-more-manageable number as deficit spending is replaced by surpluses, and economic growth continuing at a pace not possible otherwise.
On to some of the specifics:
- “Discretionary” spending as a percentage of GDP is steadily cut from unspecified programs from 9.8% currently to 3.1% by 2082. This one is going to be the hardest to do, but it is absolutely vital to make the numbers work. I’m a bit troubled that there are no specifics mentioned, especially since eliminating pork, which is one of Ryan’s causes, won’t nearly be enough.
- Privatizing Medicare, with the government providing the amount spent per enrollee (with upward adjustments for inflation, health-care inflation and risk factors, and a downward adjustment for income) to purchase private insurance.
- Creating a tax credit for those not in Medicare to purchase health insurance, which would be portable and multi-state.
- Privatizing Social Security.
- Introduce a simplified income tax, with but 2 rates, a large personal deduction, and other than the health insurance deduction noted above, no other deductions.
- Replace the corporate income tax with a “business consumption tax” (i.e. VAT). I’m not exactly sold on this, though Ryan notes that unlike the income tax, it can be removed from exports and added to imports.
There’s a lot more than I’ve included here. It truly is a sweeping proposal.
