Resurrecting the Ryan budget

While the Romney camp is sure to argue their candidate's fiscal policy is of his own making, his new running mate Paul Ryan’s more comprehensive and controversial plans will likely be a major campaign issue.

Already, the Romney campaign insists that voters should pay no attention to Paul Ryan’s fiscal agenda. It is the Romney-Ryan tax and budget plan, they say, not the Ryan-Romney plan.

Good luck with that.

Both Democrats and conservative Republicans will spend the next three months arguing otherwise. And like them or not, Ryan’s more comprehensive—and far more controversial—plans are likely to garner most of the attention.

After all, big ideas seem to make Romney nervous. Thus he ducks the pesky details. But Ryan charges ahead. He loves his ideas, and he wants to tell people why they should too.

Ryan has been nothing if not a fountain of policy: Social Security private accounts in 2004, his Roadmap for America’s Future in 2008, and his ambitious budgets in 2011 and 2012.

But, for Ryan, these ideas are about more than economics. They define the very relationship between people and their government. In my lifetime, only three presidential candidates—Bill Clinton, Barry Goldwater, and Adlai Stevenson—and one vp candidate—Jack Kemp–were as passionate about ideas as Ryan. (Of course, Goldwater, Stevenson, and Kemp all lost, while Clinton, the passionate centrist, won).

Ryan isn’t about winning political points, or power for its own sake. For him, controlling the levers of government is an opportunity to remake government.

In 2009, I interviewed Ryan at a Tax Policy Center forum. He was there to talk about tax reform, but he cast fiscal policy in much broader terms:

“We ought to have a safety net to help people who truly cannot help themselves…but [we]don’t want to turn it into a system in which people become dependent on the state, become complacent, substitute fear and dependency on benefits [for] liberty.…”

That’s why Ryan’s hot-button  tax and spending agenda  sometimes makes Republicans so uncomfortable.  They are looking win elections. He wants to change the world and isn’t shy about saying how.

In his wonderful New Yorker  biographical sketch, Ryan Lizza asked Paul Ryan about the difference between those who merely criticize and those who also offer alternatives:

 ”If you’re going to criticize, then you should propose…I think you’re obligated to do that,” he said. “People like me who are reform-minded ignore the people who say, ‘Just criticize and don’t do anything and let’s win by default.’ That’s ridiculous.”

For Ryan, it isn’t about deficits. It’s about low taxes and small government. Indeed, his fiscal plan cuts taxes so deeply that even with substantial spending reductions, he wouldn’t balance the budget until at least mid-century.

Over the past few years, Ryan has scaled back his tax reform. His original Roadmap would have collapsed today’s six tax rates to just 2 (10 percent and 23 percent), abolished all taxes on capital gains and dividends, replaced the refundable tax credits that provide the basic safety net for low-income working families with a bigger standard deduction, and dumped the corporate income tax for a consumption tax.

The most recent House budget, however, was more mainstream GOP fare. It would cut the top individual rate to 25 percent (Romney would cut it to 28 percent), tax investment income at no more than 15 percent (like Romney), and keep the corporate income tax but lower the top rate to 25 percent (as would Romney).

The Tax Policy Center estimates the revenue elements of the House budget would add about $4.5 trillion to the deficit over 10 years, and raise only about 15.5 percent of GDP in revenues.

Ryan would offset some of this by cutting back tax deductions, credits, and exclusions. Like Romney, Ryan won’t say exactly how. But unlike the man at the top of the ticket, I get the sense Ryan can’t wait to do so. In our 2009 interview, he spoke with great enthusiasm about how he’d defeat the lobbyists who protect these tax breaks.

In ’09, Ryan said he’d replace the tax exclusion for employer-sponsored health insurance with a refundable tax credit. GOP presidential nominee John McCain backed that idea in 2008, but Romney has, so far, been unwilling to go there.

Even more controversy will come on the spending side, where Ryan has consistently proposed deep cuts in government programs: He’d slash Medicaid by $800 billion over 10 years, shift Medicare from a guaranteed insurance program to one where seniors get a government subsidy to buy their own coverage, and chop all other spending from about 13 percent of Gross Domestic Product to about 4 percent. Here, again, Romney has been far less specific.

Like it or not, Romney now owns Ryan’s agenda. In a different world, Obama would present his own serious alternative deficit reduction plan, not just attack Ryan’s. If he did so, we might have the kind of fiscal debate so many of us hope for. But in the real world, Ryan’s ideas will be red meat.