The “insufficient detail” critique of the Ryan budget

The “insufficient detail” critique of the Ryan budget

President Obama’s former budget director, Dr. Peter Orszag, attacked the Ryan budget in the Washington Post. I’ll respond here to his primary critique.

Dr. Orszag argues that the Ryan budget is not a serious fiscal proposal.

In part because of his winning personality, Ryan … has convinced many in Washington that his budget blueprint is a serious proposal for solving our long-term fiscal problems. Unfortunately, it’s not. Let’s dig into the asterisks of Ryan’s plan and unearth the fine print.

Dr. Orszag’s principal critique is that the Ryan budget is short on details. He argues that the Ryan Medicaid block grant, tax reform, and nondefense discretionary spending cuts, are “capping and punting—limiting spending to a certain level but providing no specifics on how to achieve that number.” Later he argues that the lack of legislative detail creates business uncertainty.

The irony is that while in office neither Dr. Orszag nor his boss, President Obama, proposed any long-term fiscal reforms. Even after enacting the Affordable Care Act, which was purported to significantly address our long-term fiscal problems, the Obama Administration’s own numbers show that we’re still headed toward fiscal collapse.

Paul Ryan is chairman of the House Budget Committee. His day job is to develop and pass through the House a budget resolution, to reach a compromise with his Senate counterpart, and then to pass the compromise budget resolution through the House. For the two years he has chaired the committee Mr. Ryan has done his job, passing House budget resolutions in both years. He has been unable to finish his task because the Senate Democratic majority has not done its budget work the last two years. You can’t negotiate with something that doesn’t exist.

A budget resolution is like a blueprint for a new house. A blueprint specifies the size of the house, how many floors there will be, the sizes of each room, and where the walls will go. A blueprint does not specify where the couch will go in the living room or what color it will be.

While studying the draft blueprint, you and your spouse may not yet agree on the position, style, or even type of furniture to put in each room. Reaching such agreement may be quite difficult, and it may depend on how the rooms look once they are actually built. But to approve the blueprint you don’t need to reach agreement on the furniture details at such an early stage. All you need is to agree that the sizes and shapes of the rooms on the blueprint can accommodate the various detail options you are considering.

In the same way, the Congressional budget process separates debate on the topline numbers of fiscal policy from the legislative details of how those numbers will be implemented. Budget Committee Chairman Ryan’s job is:

  1. to set overall fiscal goals for the federal government: total government spending, total taxes, and the deficits and debt that result;
  2. to divide that spending up into about 10 categories (actually it’s divided by committee jurisdiction);
  3. to set legislative processes that will ensure that subsequent legislation complies with Ryan’s numbers; and
  4. to get a majority of the House to vote for all of the above.

After this budget resolution (“blueprint”) has been approved, then legislative action shifts away from Chairman Ryan and the Budget Committee and to the various committees responsible for writing legislation. The House Agriculture Committee develops a farm bill. That committee decides the details of how farm policy will be changed, subject to the numeric limits established in Ryan’s budget resolution. The two committees responsible for Medicare write legislation changing Medicare, which is again required to conform with the numbers in the budget resolution. The Ways & Means Committee writes tax reform legislation, subject to the revenue requirements in the Ryan plan.

To do his job, Chairman Ryan is not required to release any reform plans. He just has to produce a table of numbers, and if he does offer any details on how he thinks Medicare or Medicaid or farm subsidies or taxes should be reformed, those details are not binding on anyone. They are merely his suggestions to the committees responsible for writing the legislative details.

Why, then, might a Budget Committee Chairman publicly propose a broad outline of Medicare or Medicaid reform, or a pro-growth tax reform plan, if they are not binding? For two reasons:

  • To build support among House Members whose votes he needs for his numbers by showing them sample reform plans consistent with his numbers; and
  • To influence the legislative debate that comes later.

When Chairman Ryan approaches you, a House Member, and asks for your support for his budget resolution, you might express concern about the amount his budget “cuts” Medicare spending.  Mr. Ryan can then show you a plan he has developed that meets his spending targets and assuages your concerns on the details. If you vote for his budget resolution you are not, formally, voting for the particular Medicare or tax reform plan that Mr. Ryan assumed. You are only voting for the numbers, the spending and tax levels, that would result from such a plan. And if you don’t like the details of how Mr. Ryan might implement any proposed reform, you have plenty of opportunities to withhold your support for the actual legislation when it is later developed by other committees.

Chairman Ryan has, for example, supported two different versions of long-term Medicare reform. In 2011 he proposed eventually moving all new beneficiaries into a premium support system. In 2012 he teamed up with Democratic Senator Ron Wyden to propose a variant in which traditional fee-for-service Medicare would remain as an option for future beneficiaries. The numbers in the Ryan budget plan are consistent with either version of Medicare reform, and support of the Ryan budget plan allows the Congress to negotiate later on which version of reform makes most sense. Or it would, had the Senate Democratic majority done its work and passed a Senate budget resolution instead of punting again this year.

There is therefore nothing “unserious” about specifying only a broad outline for spending or tax reforms as part of a budget resolution. In fact, it’s standard practice for the legislative process.

On some of the specifics attacked by Dr. Orszag:

  • Medicare premium support plans like Ryan/Wyden date back to the late 90s. The first of significance was proposed by Senator John Breaux (D) and Rep. Bill Thomas (R) in 1998.
  • A Medicaid block grant was passed by a Republican Congress in 1995 and vetoed by President Clinton.
  • The Ryan budget proposes revenue neutral tax reform. To find such a plan, visit DC and swing a cat. You’ll hit two or three.

Dr. Orszag is therefore attacking Mr. Ryan for doing his job as House Budget Committee chairman.  Dr. Orszag argues that Mr. Ryan is being disingenuous by providing insufficient detail on his policy proposals, when it is Dr. Orszag who is taking advantage of general ignorance of the budget process by suggesting that a budget resolution should offer the detail of implementing legislation. As a former director of CBO and OMB, he knows this.

This is a common ploy in fiscal politics. If your opponent proposes policy details, attack the most unpopular of those details. If he does not, attack his credibility for not providing sufficient detail. The only way to avoid this political trap is to avoid proposing any long-term fiscal policy solution and hope no one notices, as President Obama has done so far.

Dr. Orszag also conflates different types of criticisms of the Ryan budget:

  • policy critique: “I oppose policy X in the Ryan budget;”
  • legislative critique: “I don’t think policy X in the Ryan budget can get the votes it needs to become law;” or “If it is enacted, policy X will cause too much policy pain and eventually will be repealed;” and
  • budget credibility critique: “If all policy assumptions in the Ryan budget were implemented as proposed, the numbers still don’t add up.”

Dr. Orszag opposes Mr. Ryan’s proposals for Medicare reform, Medicaid reform, tax reform, and discretionary spending. That’s fine, he’s entitled to his policy opinion.

Dr. Orszag also predicts that Members of Congress would, now or later, fail to support the amount of policy change needed to hit Ryan’s long-term spending and revenue targets. That’s a political/legislative prediction, and to judge it we also need to ask “Compared to what?” In isolation he is correct that it is quite difficult to get Members to vote for painful spending cuts and/or tax increases. But when you’re on your fourth year of trillion+ dollar deficits and the future looks even worse, that’s what leadership requires – making painful and unpopular policy choices. And when the path you’re on leads to a downgrade of the U.S. credit rating or, at some point, complete fiscal collapse, policy changes that were previously out-of-bounds will look less unattractive.

Dr. Orszag then morphs his policy critiques and legislative critiques into an attack on the credibility of Mr. Ryan and his budget plan, deeming it an “unserious” proposal. There is, however, a huge difference between “I don’t like the policies you propose” and “Your numbers don’t add up, your proposals are not serious.” Yes, the Ryan budget would require significant policy changes from our current path. But since our current fiscal path is headed toward disaster, that’s a good thing.

The Ryan budget is a serious fiscal policy roadmap. It proposes the detail required for its intended legislative purpose, and it offers a roadmap for future reforms. And until President Obama and a Democratic-majority Senate propose an alternative long-term path or are replaced, the Ryan plan is literally the only long-term game in town.

(photo credit: Roger Barone/Talk Radio News Service)

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