Real Policy And Real Prudence On The Budget

I don’t see that either Romney or Santorum are offering a fully realistic and prudent strategy for getting the budget under control.  So that’s why I’m hoping against hope for a contested convention.

I look at the Ryan budget as the rightmost plausible conservative reform agenda.  It gets the budget deficit down to a sustainable 2% of GDP.  It is revenue neutral.  It keeps federal spending at the post-WWII average of about 20% and it includes a mechanism to introduce choice and competition into the health care market.  The plan isn’t totally realistic.  It probably doesn’t include enough Medicare funding, but it is a good approximation of what a Republican agenda could look like.

Romney’s plan looked like it could be that improved, slightly more prudent, version of the Ryan budget.  Romney’s Medicare reform would have kept traditional Fee For Service Medicare in competition with private plans on a defined contribution basis.   This looked a lot like the competitive bidding plan put together by James Capretta and Thomas Miller.   The government would define a standard Medicare benefit.  Private companies and traditional Medicare would bid to see who could provide the benefit at the lowest price.  But as Yuval Levin pointed out, the problem with Romney’s plan was that it didn’t spell out what the cost growth in his Medicare plan would be.  The suggestion in Romney’s fact sheet that the defined benefit would be “at least comparable to what Medicare provides today” indicated that Romney was looking at more spending on Medicare than was proposed by Ryan.  And I was totally okay with that.

Well, I was okay with that until Romney came out with his new, giant, tax cut plan.  The Romney tax plan is going to reduce federal revenues. We don’t know how much because the Romney team is being vague about some important details, but it tough to see how a 20% across-the-board income tax cut + the repeal of the Alternative Minimum Tax + cutting corporate income taxes is going to be revenue neutral or anything close to revenue neutral.  Let’s be clear where that leaves us.  Romney’s plan is to spend more money than the Ryan budget while taking in less. 

That leaves Senator Santorum.  Give this to Rick Santorum:  He has been blunt when it comes to the budget.  He has said that the Ryan budget is too “timid”  and too gradualist.  The Ryan Budget cuts over $5 trillion out of projected federal spending over the next ten years and takes federal spending down to 20.25% of GDP by 2022.  Santorum proposes cutting total federal spending another 10% down to 18% of GDP.   Since Santorum doesn’t seem big on cutting total defense spending or reducing American foreign defense commitments, it looks like Santorum is suggesting cutting federal domestic spending by between $350-470 billion per year over the next ten years over and above the cuts in the Ryan budget. Santorum proposed moving current seniors from their Medicare plans to Ryan’s premium support plan for private insurance.  This is not a politically prudent budget plan.  I don’t even think it is wise policy.  If nominated, Santorum would be better off talking about birth control for two months rather than his budget plan. 

And yet this is all better than President Obama’s plan.  Obama would raise taxes,   cut Medicare,  and we still go broke.   As Paul Ryan says, the economy basically shuts down by 2027 if we stay on the path Obama lays out.  Obama is basically planning to lie to the public about the scale of reforms we need as a way to get through the election, and then spring huge tax increases and huge, centralized, government-imposed health care cuts next year.  Compared to that, I’ll go with what either Romney or Santorum are offering.  The problem is that it is tough to see how Santorum can be elected on the agenda he has laid out.  Romney’s plan is more electorally prudent, but it doesn’t seem to add up.  I’m not even sure that Romney has the verbal dexterity to defend his plan from the scrutiny that he will get from the liberal-leaning media.  It might not matter if gas is $4.50 a gallon, but Romney seems to be hoping that things will be bad enough that people won’t be thinking too hard about what he is saying as long as it sounds nice.

So I’m hoping for a contested convention and a Republican candidate who has a better combination of policy honesty and political prudence than the two top Republican contenders.  Yeah, I know it almost certainly isn’t going to happen.  And if it did, the challenges of policy formation and explaining huge policy changes to the public over two months would be nearly impossible.  Maybe we’re just out of luck in the short and medium-term, and the longer we wait, the worse our options get.  And yet we shouldn’t quit, and we should be ready to seize our chance whenever and however it comes.  Or as Mitch Daniels put it:

But, should the best way be blocked, while the enemy draws nearer, then someone will need to find the second best way. Or the third, because the nation’s survival requires it.

Purity in martyrdom is for suicide bombers. King Pyrrhus is remembered, but his nation disappeared. Winston Churchill set aside his lifetime loathing of Communism in order to fight World War II. Challenged as a hypocrite, he said that when the safety of Britain was at stake, his “conscience became a good girl.” We are at such a moment. I for one have no interest in standing in the wreckage of our Republic saying “I told you so” or “You should’ve done it my way.”