Friday, August 06, 2010

Krugman's Paul Ryan takedown

Highlights include "charlatan ... The Ryan plan is a fraud that makes no useful contribution to the debate over America’s fiscal future."

The short version that is clearly correct: It is utterly impossible to propose an even remotely credible plan for restoring long-term fiscal sustainability that involves massive tax cuts, as Ryan's plan does. All the more so if one leaves the spending cuts (as Ryan does) unspecified.

There really is no ground for debate about this - the plan is a fraud for these very simple and clear reasons.

But I would be less sweeping than Krugman in dismissing the entire thing, for one reason that Krugman finesses a bit at the end of the column.

The Ryan plan actually does have one stated idea that potentially would have a significantly positive effect on the long-term fiscal picture. This is to turn Medicare into a voucher plan starting in 2020, and to control the program's currently projected fiscal growth path by capping the vouchers.

Krugman is right that this is politically unlikely to be permitted (other than perhaps in the brink-of-default scenario). But it's less fictional than the unspecified spending cuts, in that voucherizing is a step towards making slower Medicare growth at least administratively more feasible.

The point that I regard as finessing by Krugman is the following: he disagrees with capped voucherization as a policy matter, noting that it would mean that seniors with lesser independent means would be denied future healthcare that, under current policy scenarios, they would get. (By the way, given the march of technology, the denial would mean that seniors were getting worse care, relative to what was contemporaneously technologically available, than seniors today - they might still be getting better care in absolute terms due to medical advances.)

But to disagree with it as a policy matter, when it might actually address long-term sustainability, is different from his critique of the rest of the Ryan plan, which is not just that he disagrees with it (although he does) but that it is a fraud. We should also keep in mind the point that currently projected healthcare growth is bound to slow one way or another, as it's unsustainable. So comparing Ryan's plan to current policy in this regard is not entirely fair, since if growth isn't slowed his way it will have to be done some other way.

Bottom-line message to the media: plans to address fiscal sustainability that include large tax cuts are frauds. They should be mocked or ignored, not treated as Serious & Courageous Bigthink. But we do need to debate how healthcare spending growth will be made to slow. National healthcare (which Krugman favors) offers one possible path. Vouchers in lieu of all the big pillars under current policy - not just Medicare, but also Medicaid and uncapped exclusions for employer-provided health insurance - are another. That's a debate we should have (which is not to say we can, given the utter debasement of political discourse over the last few years). But at least Ryan puts a little bit of it on the table, albeit only 10 years down the road.


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