For months, Washington has talked with growing alarm about the storm clouds of debt gathering over America’s fiscal horizon. Last fall, a bipartisan commission offered its plan for solving the debt crisis. But its recommendations went nowhere, and the talk has gone on ad nauseam. Nobody with any real authority, including President Obama, despite his own exhortations about the urgent need for action, has offered a comprehensive plan to tackle our-long term debt.
That changed today, with the ambitious–though some might say radical, others politically suicidal–new budget proposal from Republican Congressman Paul Ryan, Chairman of the House Budget Committee. Ryan’s budget plan is the first real legislative bid in what will be an epic political battle over the country’s long-term fiscal future. Ryan proposes cutting $5.8 trillion from the federal budget over the next 10 years. The plan includes major overhauls of Medicare and Medicaid, a broad reform of the tax code, and reductions in domestic spending (including a modest $78 billion trim to defense spending over 10 years).
At at a press conference unveiling his plan this morning, Ryan said he was on a “moral imperative” to avert a possible “economic collapse.” And he presented himself as a heroic truth-teller in a city of moral cowards. “For too long, Washington has not been honest with the American people,” Ryan said.
The question is how honest the coming debate over the debt crisis will be. Democrats are already counterattacking Ryan’s plan as less an act of budgetary efficiency than a heartless assault on seniors and the poor that largely spares the well-off. Even the tax reforms in Ryan’s plan are revenue neutral, they note, asking nothing more of big business or the wealthy. And though he peddles the idea of honest talk and tough medicine, Ryan sidesteps the politically-fraught topic of Social Security, even though he agrees it is a long-term driver of debt.
The coming debate will also be, in large measure, a re-litigation of Barack Obama’s health care plan. The Congressional Budget Office estimates that Obama’s plan will save $130 billion over 10 years [Update: estimates have varied; I have modified this number since posting]. If that forecast is accurate, then Obama has already taken a major step towards slashing the national debt. But Ryan simply doesn’t buy that figure, and claims that repealing health care will save $1.5 trillion. That’s a $1.63 trillion dispute–one that won’t easily be reconciled, and one not likely to give us a surplus of the honesty Ryan has called for. [Update: The difference may be larger: In January the CBO estimated that repealing health care would cost $230 billion.]
If it goes anywhere at all, Ryan’s plan will first change dramatically. Democrats want no part of it–and the same goes even for many Republicans who may sympathize with the plan’s goals but worry it outpaces the public’s true appetite for deficit-cutting. But Democrats can’t afford to ignore Ryan’s plan completely; they, too, have substantive worries about the debt. And, as President Obama’s own rhetoric demonstrates, they know the public wants some action on this front. So Ryan has, in effect, fired a starting gun today for the great debt battle. Let’s see whether Washington can deliver America an honest and constructive fight.