Ryan Budget Offers Serious Solutions

David Williams

April 5, 2011

House Budget Committee Chairman Paul Ryan (R-Wisc.) released his much anticipated fiscal year (FY) 2012 budget.  There hasn’t been this much buzz surrounding a release since the last Harry Potter book.  Unlike Harry Potter, Rep. Ryan’s budget is reality, not fantasy based, as it looks at the country’s underlying budgetary problems and offers solutions.

Ryan’s budget should be a wakeup call to members of Congress and all Americans.  It contains $6 trillion in spending cuts over the next ten years and it takes on the tough task of entitlement spending.  According to Cato’s Chris Edwards in National Review Online, “As a first step toward budget sanity, Ryan proposes further cuts to discretionary spending beyond those currently being debated. However, his main focus is on transforming the so-called entitlements. He would transition Medicare from the current Soviet-style system to one based on consumer choice. Instead of a system based on payments to health-care providers, new retirees would receive a ‘premium support’ payment to buy a private insurance plan of their own choosing.”

Even though Ryan’s budget addresses discretionary spending, the courage to address entitlement spending is what separates this budget from any other attempt to cut spending.  The Congressional Budget Office estimates that by FY 2016, entitlement spending will consume 68 percent of all spending, up from 60 percent in FY 2010. 

After defunding Obamacare, which will save $1.4 trillion, Ryan’s budget will accomplish savings by fundamentally changing the way two major entitlements (Medicare and Medicaid) are structured. 

First, Medicare would be turned into a voucher style program where seniors could use the vouchers to buy insurance in the private market. Vouchers would not be implemented for current beneficiaries, only future retirees.  This would go into effect in 2022.

Second, Medicaid would be transformed into a block grant program.  According to Chris Edwards, “For Medicaid, food stamps, and other federal-state aid programs, the Ryan plan embraces block grants. The states would receive a fixed pot of money, but be given more flexibility on program design. That would end incentives for states to over-expand their programs with “free” federal dollars. Block granting was the successful approach of welfare reform in 1996, and it should be warmly received by today’s large group of conservative governors.

Not surprisingly, there has been griping and bellyaching from the political left as they worry about which of their programs will be axed.  There is no denying that if this budget is passed (and it should be) there will be some adjustments for people across the country.  Getting our fiscal house in order is more important than protecting bloated and wasteful programs as the country struggles to regain its economic footing. 

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