Ryan's Republican 2012 Budget Is Impressive

What the Democrats and Republicans are fighting over right now are additional cuts to the 2011 budget. Hence the shutdown threats. But the real action happens Tuesday morning, when Paul Ryan will release the Republican budget for 2012. This is going to be impressive. Not only does the budget look to cut more than $4 trillion over ten years, but it’s doing it the right way and it has the chance to permanently change the way Washington works.

Ryan, for those who don’t recall, is the guy who gave a great state of the union speech in ten minutes, whereas Obama blathered on for an hour and said nothing worth listening to. Ryan is the guy who destroyed Obama at the health care summit. Ryan is also the only Republican to issue a legitimate budget proposal before the election. All in all, Ryan is probably the smartest man in Washington. He is politically savvy, he’s policy savvy, he grasps economics and mathematics, and he’s got nerve. And now he’s got a budget.

From what we’ve heard in advance, here are some of the features of Ryan’s budget that should thrill us:

● Whereas Obama proposes freezing spending at its current insanely high levels, Ryan’s budget would return spending levels to 2008 (before the stimulus and the bailouts) and then would cut an additional $400 billion over 10 years. This results in more than $4 trillion in savings over ten years.

● Ryan is proposing a statutory cap on discretionary spending as a percentage of the economy! We don’t know the percentage yet, but Ryan said it would return the government to its “historic size.” This is infinitely better than a balanced budget amendment because this ties the government’s ability to spend to how well it makes the economy grow. If this comes to pass, the Democrats would actually be shooting themselves in the foot every time they raised taxes or imposed regulation.

● Ryan is proposing pro-growth tax changes including lowering tax rates to boost economic production. I’ve discussed this before as the best way to stimulate the economy.

● Ryan is proposing broadening the tax base so that more people pay taxes. This is a huge and important change Republicans need to make. I’ve discussed this before as well. This needs to be done to reduce the number of people who get a free ride out of the government and thus think nothing of raising taxes.

● The budget addresses the Medicare crisis by creating a “premium support system,” i.e. vouchers to get private insurance. This makes a world of sense since private insurance is providing care at about 1/3 the cost at which Medicare is providing care. This could result in HUGE savings. Moreover, Ryan is being politically savvy enough to keep everyone above 55 years of age in the current system (for now), which will head off the standard untrue charges that the Republicans are trying to toss seniors out of Medicare. He’s also talking about means testing seniors in terms of how much of the cost of the private insurance will be subsidized. These are excellent changes.

● Ryan plans to switch Medicaid to a block grant system, where the states would have the freedom to design their own plans. This isn’t CommentaramaCare, but still should lower costs by increasing freedom within the system to innovate.

Naturally, the Democrats are howling, but it's not even worth repeating what they're saying. It's the same old same old about "the rich." Yeah, whatever. If the Democrats ever return to good faith policy making, then perhaps we'll care what they think. Instead, let's focus on what Ryan is trying to achieve.

If Ryan gets this budget through, it really will change the way Washington works by essentially privatizing Medicare and statutorily limiting the growth of the budget! That's huge! It will also make tax increase less popular because more people will pay them and because the economic consequences could result in forced budget cuts. Between this and the attacks on AARP, the unions, and NPR, etc., the new Republicans really are showing that they intend to change the culture in Washington. There could be happy times ahead!