The problem with the Paul Ryan plan: It's not nearly radical enough

Ryan’s plan leaves the mechanisms, rationale, and justification for ever-increasing government spending essentially unchallenged. His plan is statist to the core, promising seniors government subsidies with which to choose from a slate of government-regulated health care plans.

Ryan plan is dead in the water

At present, the Ryan plan is academic. Its combination of spending cuts, tax cuts, and devolution of administration of government programs from the federal to the state level – while a significant improvement over the fiscal insanity of recent years – is dead in the water until at least 2013.

If you doubt that, look at the recent “government shutdown” soap opera. That was the showdown between Democrats and Republicans that finally produced an official budget for fiscal year 2011 (which started last Oct. 1).

In a modest attempt to curb the flood of red ink, Republicans proposed a $60 billion spending cut – less than 2 percent of the total budget. That represented less than a 10 percent giveback of the emergency $787 billion Obama/Pelosi/Reid stimulus plan from two years ago – hardly a radical proposal now that the emergency has passed and the Fed is having to monetize today’s huge deficits.

Yet Obama made the Republicans back down and accept a $38 billion cut (some say far less, due to accounting trickery) by insisting that there would be no deal, hence a government shutdown, unless the GOP accepted an even smaller reduction of spending.

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Will Republicans buckle under voter discontent?

It will be interesting to see how long Ryan’s fellow Republicans in the House stand by his proposals. Many of them already have taken a lot of heat from citizens angry or frightened about Ryan’s proposed cuts and reforms. The big test will come next year. That is when Republicans have to face the voters. A majority of Americans may say that they favor reduced federal spending and smaller deficits, but when push comes to shove, how many will vote for a legislator who actually shrinks programs from which voters benefit?

Even if Ryan’s plan, by some miracle, were to be enacted, I doubt future Congresses will be able to adhere to it. We are stuck in a system that incentivizes politicians to increase spending and reduce taxation. In the democratic scramble for votes, politicians gain friends from spending increases and enemies from tax increases. Put yourself in their shoes. What would you do?

The root of the problem is ethical, not political

Ryan is engaged in a futile attempt to square the circle. He is trying to find a way to preserve an inherently flawed system – a democratic transfer society – whereby government somehow takes care of all of us without eventually spending itself into bankruptcy.

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