Austerity Watch (4/1/11) – Have The Republicans Gone Too Far?

Odds are better that House Speaker John Boehner would sooner dance the cha-cha with Democratic leader Nancy Pelosi in the middle of the Capitol.  Republicans know it.  Democrats know it.   Yet, that’s exactly what Rep. Paul Ryan (R-Wis.) is planning to do.  He clearly wants to draw a metaphorical line in the sand.

Give Ryan credit for thinking big in his budget for next year.  As the Wall Street Journal notes, the House Budget Committee chairman wants to end Medicare as it has existed for decades.  Republicans argue that they have little choice because the giant government program’s costs are expected to soar from cost $396.5 billion in 2010 to $502.8 billion in 2016.  It remains unclear how this what will happen to the 48 million people served by Medicare with the voucher system Ryan envisions.

“Mr. Ryan’s proposal would apply to those currently under the age of 55, and for those Americans would convert Medicare into a `premium support’ system,” the paper says. “Participants from that group would choose from an array of private insurance plans when they reach 65 and become eligible, and the government would pay about the first $15,000 in premiums. Those who are poorer or less healthy would receive bigger payments than others.”

In comments to the press,  Ryan — echoing the famous line about the Vietnam — said Congress needs to fix Medicare to save it.  “The president has punted,” he says. “We have not followed suit.”

Of course, the AARP is likely to raise a fit about any changes to the program.   Republicans, though, are fitting back against the powerful seniors lobby, which played a key role in getting Congress to pass Health Republicans.  Yet again, people are raising questions about whether AARP abuses its tax-exempt status to push insurance products.  The group has always denied these claims in the past and continues to do so.

Entitlement reform in Washington is like the weather — everybody talks about it but people feel helpless to do anything about it.   Though Ryan’s budget savings figure seems shocking, there is plenty of precedent for it.  President  Obama’s Fiscal Commission proposed sweeping spending cuts that would $200 billion by 2015.  Ratings agencies have grown increasingly critical of Washington’s inability to cut the deficit.  Last year, S&P warned that the US’s AAA rating was in danger.

The timing of Ryan’s proposal comes as Democrats and Republicans seek to avoid a government shutdown.   Actually, the two sides probably need to work out their differences sooner than that to give the legislative wheels enough time to turn.  The Democrats say the two sides have agreed on $33 billion in cuts for the current fiscal year.  Republicans deny that a deal is close.

Beneath all the political posturing lies a danger that neither side is ready to acknowledge off austerity fatigue.   People and politicians are ready to support cuts in government spending when times are bad.   The case gets tougher to make as the stock market continues to soar and unemployment continues to improve.  Who in their right mind would support massive spending cuts that could derail the gains that have been made?

–Jonathan Berr