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Sun., April 10, 2011

Congress’ curious budget recipe

In case you hadn’t noticed, Congress isn’t like the rest of the world. For instance:

1. Should households facing large bills work on ways to bring in less money?

2. Should legislators in Olympia and Boise cut taxes as they work on filling their respective budget holes?

3. Should Congress cut taxes as it works on solutions to the debt and deficit?

The answer to the first two questions is clear: Of course not. That’s why there are no serious efforts to cut taxes in Olympia or Boise.

But the third question has launched a national debate, because some Republicans, led by U.S. Rep. Paul Ryan, R-Wis., want to include tax cuts as part of a larger effort to rein in budget deficits and the nation’s growing debt. They aren’t just calling for the Bush-era tax cuts to be made permanent; they want to slash them even more.

This is akin to starting Bloomsday a mile behind everyone else in the hopes of finishing first.

Meanwhile, the president’s 10-year plan would eventually let the Bush tax cuts on high earners expire. But while that would yield more revenue than the Ryan plan, it would not bring in as much as the plan devised by President Barack Obama’s deficit commission. Under a formula of $1 of increased revenue for every $3 in cuts, the bipartisan panel lets all of the tax cuts expire, which would restore rates to where they were at the beginning of 2001.

By the way, that was the last time the federal budget was in good shape. Just in case that’s still the goal.

Send it back. As the head chef of the House Budget Committee, Ryan has whipped up a deficit-reducing budget resolution that addresses major budget drivers, though some key ingredients, such as Social Security and defense spending, have been omitted. Nonetheless, this dish provides ample fodder for debate, so let’s dig in.

The plan starts off with the seductive line that the budget deficit would drop from 9 percent of the total economy this year to 1.6 percent by 2021, according to friendly math done by the Heritage Foundation. As an appetizer, Ryan cuts the top personal and corporate tax rates. Then the cost of falling in love is revealed.

Ryan’s plan hits health care entitlements head-on, which is laudable because they are consuming increasingly large portions of the budget (as opposed to relatively tiny items such as earmarks, foreign aid and public radio funding). But once the details circulate, it will be interesting to see whether Americans share his appetite for destruction.

For one thing, Republicans just finished an election campaign in which they bashed the $500 billion in Medicare savings that is supposed to help finance health care reform. Now, they must leap to the other side of the barricade and fend off fearful Americans. Under Ryan’s plan, nothing would change for current Medicare clients, but starting in 2022 new enrollees would be given a chunk of money with which to purchase private health insurance.

As a Class of 2022 member, I have to ask: Will RyanCare improve what’s offered now? Probably not. If it did, he would give it to current seniors and watch his party reap the gratitude at the ballot box. It’s also unlikely because the whole point is to spend a lot less money on this onerous budget item. Looks like costs will be shifted to patients.

As for Medicaid, Ryan would save money by turning to block grants. This is right out of the late 1990s playbook, when Congress and President Bill Clinton agreed to “end welfare as we know it” by discontinuing Aid to Families with Dependent Children and replacing it with the more restrictive Temporary Assistance for Needy Families, which is run by the states. The whole point of that exercise was to reduce the number of people on welfare by, among other things, adding work requirements. And it succeeded.

But it’s hard to see what is gained by booting more people off Medicaid. Seventy percent of its expenditures go to long-term care for the elderly and the disabled. As we know from the health care debate, society does not escape the costs when more people lose coverage. I suppose states could realize savings by lowering their payments to health care providers, but Medicaid already pays less than Medicare and private insurance, which is why many doctors won’t see Medicaid patients. The only other choice is to cut patient services. Whatever the case, cost-shifting is how RyanCare saves money here, too.

While I commend Ryan for preparing such a bold dish, the resulting heartburn isn’t worth it. I suggest compassion for the most vulnerable citizens by adding back the revenue.

Smart Bombs is written by Associate Editor Gary Crooks and appears Sundays on the Opinion page. Crooks can be reached at or at (509) 459-5026.

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