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Everything you need to know about the Ryan budget

Ezra Klein's Wonkbook

March 13, 2013

Welcome to Wonkbook, Ezra Klein and Evan Soltas’s morning policy news primer. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

Wonkbook’s Number of the Day: $4.6 trillion. That’s the amount Rep. Paul Ryan wants to slice from projected spending over the next decade. Of that, $2.7 billion comes from health-care programs. Today, Wonkbook has a big roundup of the Ryan budget, so see much, much more below.

Wonkblog’s Graphs of the Day: The Ryan budget, and comparing Paul Ryan’s and Patty Murray’s budget.

Wonkbook’s Top 5 Stories: 1) A full primer on the Ryan budget; 2) is a ‘grand bargain’ even possible?; 3) gun control is wounded but moves forward; 4) what health reform looks like in practice; and 5) the case for a carbon tax.

1) Top story: Everything you need to know about the Ryan budget

The Ryan budget has arrived. Here’s everything you need to know. “On Tuesday, House Budget Committee Chairman Paul Ryan (R-Wis.) rolled out a 10-year spending plan that would revive the most controversial prescriptions from last year's GOP budget, including a partial privatization of Medicare and a repeal of the health-care law that is Obama's signature policy achievement…All told, Ryan would slice $4.6 trillion from projected spending, with more than half of those savings -- $2.7 trillion -- coming from the big health-care programs, primarily Medicaid and Obama's Affordable Care Act.” Lori Montgomery in The Washington Post.

Read: Rep. Paul Ryan’s fiscal year 2014 budget.

For your reference: Here are Ryan's previous budgets, for fiscal year 2012 and fiscal year 2013 respectively.

Ryan budget explainers: The Ryan budget in one chart, comparing Paul Ryan’s and Patty Murray’s budget proposals, and 5 important things we still don’t know about the Ryan budget. Dylan Matthews and Ezra Klein in The Washington Post.

WonkTalk: Ezra Klein and Neil Irwin give you a “101″ on the Ryan budget. The Washington Post.

What the think tanks are thinking so far: Here are the “instant” reports from the Center for American Progress, the Bipartisan Policy Center, the Committee for a Responsible Federal Budget, and the Heritage Institute. We’re likely to get more by the end of the week.

Paul Ryan punts on tax reform. “[I]n subtle ways, Ryan has watered down his own tax reform plan, making it more vague and less definitive--and concluding that it's simply not his job to lay out the specifics…What's more, Ryan's FY 2014 budget says even less about what it would take to get rates that low without losing a ton of revenue and progressivity in the tax code…This year, Ryan is even more vague about how he'd simplify the code and lower taxes without disproportionately impacting revenues or lower-income Americans.” Suzy Khimm in The Washington Post.

@ezraklein: I bet that if Romney-Ryan had won, the Republican budget this year would be much more moderate/modest.

His budget opens the door for more tax revenue. “Ryan's budget sets a revenue to GDP target of 19.1 percent by 2023. That's higher than his target last year (18.7 percent after a decade) and his target two years ago (18.3 percent), as the Urban Institute's Howard Gleckman points out.” Suzy Khimm in The Washington Post.

Another new touch: caps on defense spending. “Rep. Paul Ryan proposed a Republican budget blueprint Tuesday that included caps on defense spending, a shift for his party that could provide a point of compromise with Democrats…[I] would, for the first time, embrace caps on defense spending put in place by the 2011 Budget Control Act, an agreement forged as part of the plan to raise the debt ceiling.” Damian Paletta and Kristina Peterson in The Wall Street Journal.

He wants to extend 1990s-style tax reform to the rest of the safety net. “So what would Ryan's reforms entail, exactly? He's mainly talking about transforming Medicaid into a smaller block-grant program and adding new work requirements for food stamps…His budget proposes two major reforms on the safety-net front. First, Medicaid would be transformed into a block grant to the states, with funding tied to inflation and population growth. Second, the food stamps program would be converted into a block grant, with new work requirements for recipients.” Brad Plumer in The Washington Post.

@mattyglesias: Ryan's "after the welfare reforms of 1996, child poverty fell by double digits" is a real classic of post hoc ergo propter hoc.

Ryan budget would slash health spending, access. “The federal government would save hundreds of billions of dollars -- and millions of people would lose access to healthcare coverage -- under the spending cuts House Budget Committee Chairman Paul Ryan (R-Wis.) outlined Tuesday. Ryan would repeal the coverage expansion under President Obama’s healthcare law and make deep additional cuts to Medicaid -- cuts that far outstrip his more politically controversial cuts to Medicare…Ryan says those cuts would save the federal government roughly $2.5 trillion over the next decade. As many as 64 million people could lose access to healthcare coverage in the same time frame.” Sam Baker in The Hill.

@DeanBaker13: Ryan cut $160 billion from what he had in his budget last year for Medicaid. Why is he is much more down on the program this year?

Is the Ryan budget bad politics? “[The budget] has set off a fierce debate within his own party about whether it is smart or dumb politics…Those in the "smart" camp insist that outlining what Republican governance would look like is absolutely essential to re-vivifying a party that has struggled to win national elections in recent years…On the other side of the argument are the pure political heads who see the Ryan budget as folly -- a document that both has no chance of becoming law and will immediately becomes a shooting gallery for Democrats seeking to paint the GOP as extremists who want to destroy the social safety net.” Chris Cillizza in The Washington Post.

@robertcostaNRO: Sat down w/ Ryan today for 20 minutes. He enjoys being back in the House, but knows he faces a real uphill challenge in this environment.

Reid calls Ryan plan extreme. Obama is more diplomatic. “Senate Majority Leader Harry Reid (D-Nev.) is wasting no time speaking out against Rep. Paul Ryan's (R-Wis.) new budget. The White House, meanwhile, is offering a more toned-down response…The White House in a statement agreed that the math in Ryan's budget doesn't add up, but offered a more conciliatory tone.” Aaron Blake in The Washington Post.

Leading opinion on the Ryan budget

NEW YORK TIMES: This is the worst Ryan budget so far. And the others were horrid. “[Ryan's is] a retread of ideas that voters soundly rejected, made even worse, if possible, by sharper cuts to vital services and more dishonest tax provisions…By cutting $4.6 trillion from spending over the next decade, it would reverse the country's nascent economic growth, kill millions of real and potential jobs, and deprive those suffering the most of social assistance.” The New York Times Editorial Board.

WALL STREET JOURNAL: A Ryan reboot. “Ryan’s proposal for fiscal 2014 is still an important document, even if it has no chance of becoming law this year, because it reaches for that elusive thing in Washington--realistic solutions to the country’s problems…Over the years Mr. Ryan’s proposals have greatly expanded the policy options for rethinking government and encouraging economic growth.” The Wall Street Journal Editorial Board.

WASHINGTON POST: What’s good, bad, and unrealistic in the Ryan budget. “As such, the 91-page document is a never-going-to-become-law melange of good ideas, bad ideas and ideas too unrealistic to worry about. Let's start with the good ones, since that's the shortest list. Though there's no economic reason to fetishize a balanced budget by a particular date, we do agree with Mr. Ryan's aggressive sense that Washington needs to get the national debt as a share of gross domestic product on a downward path…Alas, at the broadest level, Mr. Ryan's budget incorporates a grand misconception, which is that the federal deficit can be set on a path to zero without additional revenue.” The Washington Post Editorial Board.

@MichaelSLinden: Preemptive public service announcement: the “right” budget isn’t half way between Ryan’s and Murray’s.

BLOOMBERG VIEW: Ryan is replaying Republican hits while time marches on. “[I]t's hard to view this latest budget as anything more than a holding pattern for a political party caught between its past and its future. Like the fiscal outlook, the nation's politics have shifted…Republicans can keep offering the same platform of spending cuts, but they seem unlikely to achieve different results.” Bloomberg View Editorial Board.

KLEIN: This is social engineering with a side of deficit reduction. “Ryan's budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan's real point throughout his career…The real justification for Ryan's budget and the choices it makes is not fear of a debt crisis but fear of government…It is Ryan's unusual ideology, and not the specific state of our finances, that justifies this budget. Ryan's view is that the federal government is strangling our community.” Ezra Klein in The Washington Post.

@noamscheiber: Interesting that Ryan’s intro to his budget includes a long riff on communitarianism, when the budget itself is a tribute to Randianism.

MILBANK: Ryan’s magical budget. “Paul Ryan's budget is an amazing and wondrous document. Not only does it balance the budget in 10 years while reducing tax rates, it also does so without any pain or suffering -- or even breaking a sweat. It achieves not just the longtime goals of policymakers but also brings about changes in human nature that have bedeviled civilization from the beginning of time…There are so many blanks in Ryan's budget that it could be a Mad Libs exercise. But this is not a game. It's black-box budgeting -- an expression of lofty aims, with binders full of magic asterisks in lieu of specific cuts to government benefits.” Dana Milbank in The Washington Post.

PETHOKOUKIS: Unleash Paul Ryan! “The plan lowers the top tax rate to 25%, which, like an Obamacare repeal, ain't going to happen. The reduction -- the path to which remains unspecified -- also will require fiscal gymnastics so as to a) not lose revenue and b) not raise taxes on the middle-class. Tax reform is an opportunity for the GOP to show it is the party of parents and kids, not just the party of heroic entrepreneurs and CEOs. Better to have a higher individual rate and dramatically reduce the current tax code's bias against investment capital and human capital.” Jim Pethokoukis in AEI.

COHN: Just like last year. “It looks almost exactly like his old budget proposal…That tells us a lot about Ryan's priorities--and how little interest he and his allies have in moderating their views, even though the public rejected them last year…[T]he real focus of Ryan's new budget proposal, like his previous one, is to dramatically reduce spending.” Jonathan Cohn in The New Republic.

PORTER: Not much evidence that Ryan tax cuts would help. “The proposition that low tax rates produce higher economic growth has been a central plank of the Republican platform since I was a teenager…Problem is, there is little evidence that tax cutting has worked as advertised…[T]here's no clear evidence that lower tax burdens have helped the United States grow faster than other advanced industrial nations with higher tax rates and much heavier tax burdens…While high taxes do have an effect on variables that affect growth, many other factors are much more significant and overshadow whatever taxes do.” Eduardo Porter in The New York Times.

WOLFERS AND STEVENSON: Paul Ryan, the inflation nutter. “Ryan's views on the economy are premised on his forecast that the country is headed for a central-bank induced monetary disaster. This sort of fear-mongering sells well among gold bugs, doomsday preppers and other Tea Party types. But it rests on very shaky ground. So shaky, in fact, that either Ryan is being dishonest or he's placed himself on the Spam-hoarding radical fringe, far outside any standard approach to monetary economics.” Justin Wolfers and Betsey Stevenson in Bloomberg.

Music recommendations interlude: A very special “New York State of Mind,” Billy Joel.

Top op-eds

FELDSTEIN: Cap tax deductions. “Reducing those subsidies, then, is really cutting government spending. The resulting deficit reductions show up on the revenue side of the budget, but the economic effect is to cut government spending…Congress should cap the reduction in tax liabilities that taxpayers can gain from using these special features of the tax code. The tax benefits should be limited to a percentage of the individual's total income. I favor a cap of 2 percent of adjusted gross income.” Martin Feldstein in The Washington Post.

COHEN: A pre-school program conservatives can love. “Anyone involved in such efforts should consider an atypical “pre-preschool” program called Reach Out and Read, which may be the most effective literacy program in the nation. Started 24 years ago by two doctors at Boston City Hospital, the program now touches four million low-income children a year at a cost of $10 per child…According to a 2001 study in the journal Pediatrics, children of preschool age who participate in Reach Out and Read are typically three to six months ahead of their peers in vocabulary, language development and pre-reading skills.” Steve Cohen in The Wall Street Journal.

ORSZAG: Tests do reveal teacher quality. “Two important pieces of research rebut both of these concerns, suggesting there are significant benefits to be gained from more aggressive use of value-added and other measures to evaluate teachers…The Gates team — Tom Kane of Harvard University, Daniel McCaffrey and Trey Miller of the Rand Corp., and Douglas Staiger of Dartmouth College – found, as non-randomized studies had also found, that value-added measures were predictive of student achievement.” Peter R. Orzag in Bloomberg.

BLINDER: Worry less about the Fed. “The fundamental case for extreme monetary ease has hardly changed. Mr. Bernanke and the FOMC majority believe deeply in the Fed’s dual mandate, to keep both inflation and unemployment low. They know they are succeeding on the first but failing on the second…[T]he Fed should reduce the interest rate it pays on the roughly $1.7 trillion of banks’ excess reserves.” Alan S. Blinder in The Wall Street Journal.

SOLTAS: Balance the budget? We can run deficits forever. “The U.S. federal government doesn’t actually need to balance its budget. Ever. Really. We could run a budget deficit every year for the next century. We’d be just fine. How do we know? Well, for one thing, we’ve basically always done that. Between 1929 and 2013, the average federal budget deficit as a percentage of gross domestic product has been 3.1 percent. Over those 84 years, we’ve run 70 budget deficits and 14 budget surpluses…We could run a budget deficit forever and even shrink the relative federal debt burden. All we need to do is keep the long-run budget deficit smaller as a percentage of GDP than the long-run rate of GDP growth.” Evan Soltas in Bloomberg.

IRWIN: The age of the moving millionaires. “You can tell a lot by a country by how it deals with a new world of a plutocratic elite for whom national boundaries are but arbitrary lines on a map. And you can tell a lot about individual members of that elite by how they choose to deal with a world in which countries compete for their affections with low taxes.” Neil Irwin in The Washington Post.

DEUTCH AND STEINFELD: ‘Made in America’ goals make little sense in an age of multinational supply chains. ”The problem with this concept is that much of today’s manufacturing, including emerging clean-energy technologies, isn’t restricted by a single nation’s borders. Rather, the manufacture of key energy technology products depends on an interdependent supply chain whose many components often reach final assembly in a location different from the point of sale or headquarters of the manufacturer.” John Deutch and Edward Steinfeld in The Wall Street Journal.

Science projects interlude: A garden hose and a sine wave.

2) Is a grand bargain even possible?

Is Obama serious when he says he wants a grand bargain? “Starting Tuesday, Obama will shuttle between basement House meeting rooms and ornate Senate parlors, giving Republicans and Democrats a rare opportunity over three days to press him directly on how far he's willing to go on taxes and entitlements to complete a comprehensive deal -- a major piece of unfinished business from his first term. The shuttle diplomacy is a new tactic for the president, who kept his distance from Congress for most of his presidency.” Jake Sherman and Carrie Budoff Brown in Politico.

…Despite the outreach, he’s planning to let Congress lead on deficit talks. “President Barack Obama is beginning to carve out his role in upcoming talks on the deficit: He'll let Congress take the lead. Obama plans to take direction from Congress -- and right now, the preferred path of influential lawmakers is to follow the regular budget process, which means any deal must wend its way through committees and onto the floor in both chambers. The tactic is a risky one for the president.” Manu Raju and Carrie Budoff Brown in Politico.

…Is this a political Sun Tzu strategy? “President Obama has embarked on the most intense effort of his administration to improve his notoriously poor relations with Congress, but he is doing so while wielding a political club behind his back, seeking peace while preparing for war…The outreach-with-an-edge, captured by two very different events on a single day, is an extension of Obama's emerging strategy.” Scott Wilson and Tom Hamburger in The Washington Post.

The rift between right and left is gaping wide. “Senate Democrats and House Republicans on Tuesday outlined vastly divergent approaches to shoring up the government's finances, a reminder of how far apart they remain on fiscal policy even as both sides insist publicly that a bipartisan compromise is possible…[I]n many ways, the two parties seemed to be working in parallel universes…Senior administration officials said the Ryan budget underscored the hurdles the White House would confront if it hoped to reach an overarching budget deal with House Republicans. If Republicans demonstrate that absolutism in negotiations, a senior official said, there is no chance for an agreement.” Jeremy W. Peters and Jonathan Weisman in The New York Times.

…And disputes over the budget are philosophical as much as they are political. “The question of whether to balance the budget and when is a new staging ground in the long-running fiscal fight between Republicans and the White House. Mr. Ryan, whose previous budget proposals did not bring spending below revenue for decades, vowed this time to do so by 2023, in part to satisfy the demands of the more conservative members of the Republican Caucus. Democratic proposals -- both the Senate Democratic plan to be released on Wednesday and the White House budget coming next month -- are both expected to narrow the deficit substantially without balancing the budget or running a surplus.” Annie Lowrey in The New York Times.

President Obama pushes Democrats to accept changes to entitlement programs in exchange for tax revenue. “He warned that Democrats need to embrace at least some changes to unsustainable entitlement programs in order to achieve their long-term priorities…Obama added that Republicans must first agree to more revenue hikes before the White House would concede on changes to entitlement programs, senators attending the luncheon said. Obama seemed to be opening the door a crack toward a way forward: if the White House is seen as willing to put entitlements on the table, some Republicans may reconsider their staunch opposition to new revenue.” Ginger Gibson in Politico.

…He met with Senate Democrats yesterday. “During the 90-minute exchange, Obama also heard objections from more liberal senators regarding potential cuts to entitlement programs as part of a bipartisan compromise on taxes and spending, according to senators in attendance…In that vein, Harkin said that he and other liberals, including Sen. Bernie Sanders (I-Vt.), warned Obama not to cede ground on entitlement program spending, saying they hoped that the president would work to protect Social Security and Medicare, as part of a larger bipartisan bargain on tax and spending issues.” Ed O’Keefe and Paul Kane in The Washington Post.

Obama’s budget proposal arrival date set for April 8. “Carney said the proposal would be a "balanced approach" with a mix of new revenue and spending cuts, but that that does not mean it would balance the budget. He said it would be "a useful and valuable contribution to" bipartisan negotiations. By law, the president is supposed to submit his budget request to Congress on the first Monday in February, kicking off the legislative process.” Rachel Weiner in The Washington Post.

…It won’t aim for a balanced budget. ”"My goal is not to chase a balanced budget just for the sake of balance. My goal is how do we grow the economy, put people back to work, and if we do that we are going to be bringing in more revenue," Obama told George Stephanopoulos.” Rachel Weiner in The Washington Post.

Adorable animals interlude: This cat can goal-keep like nobody’s business. Paging the NHL?

3) Gun control is wounded but moves forward

Senate Judiciary Committee approves two gun-control measures. “The 18-member committee referred the background check bill to the full Senate on a party-line vote of 10 to 8 and later passed the school security measure 14 to 4. Scheduling conflicts with other committee hearings postponed until Thursday a showdown on the most controversial proposal under consideration, a ban on hundreds of military-style assault weapons and high-capacity ammunition clips…The background check bill, sponsored by Sen. Charles E. Schumer (D-N.Y.), lacks bipartisan support and is considered a placeholder as the lawmaker negotiates with moderate Republicans and Democrats on an alternative measure that would exempt firearm transfers between relatives and possibly close friends.” Ed O’Keefe and Scott Clement in The Washington Post.

As Newtown fades, so does political support for modest gun-control measures like background checks. “The bill Schumer (D-N.Y.) put before the committee was only a placeholder, similar to one he proposed in the last Congress, as he works to find common ground with Republicans who have backed away from the proposal in recent weeks…Schumer negotiated for weeks with Sens. Tom Coburn (R-Okla.), Mark Kirk (R-Ill.), Joe Manchin (D-W.Va.) and Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) in hopes of reaching a bipartisan deal, but ultimately had to move ahead without a Republican partner.” Jonathan Easley in The Hill.

NRA announces opposition to bill to disarm felons. “The National Rifle Association (NRA) this week rejected a Democratic proposal designed to remove guns from felons and other people barred from owning them. Introduced last month by California Reps. Mike Thompson (D) and Jackie Speier (D), the bill would help fund state programs aimed at disarming those who buy guns legally, but are later disqualified from ownership because they’ve committed a serious crime or been deemed mentally ill.” Mike Lillis in The Hill.

There really is a Tumblr for everything interlude: antgifs.tumblr.com.

4) What health reform actually looks like

Here’s what health reform looks like. “"Tell us about yourself," implores the first page of the Obama administration's application for the uninsured to obtain coverage. The 15-page form asks about age, race, income and employer-based health insurance, according to a draft of the application obtained by the Associated Press. The online version has 21 steps, the outlet said.” Megan R. Wilson in The Hill.

Photos: The coverage forms. The Associated Press.

Meanwhile in Mississippi, legislation aims to ban attempts like Bloomberg’s soda rules. “In a move to prevent such regulations from taking hold elsewhere, Mississippi legislators have passed an "anti-Bloomberg bill" that bars counties from passing and enacting laws that require calorie counts to be posted or caps the size of beverages or foods. You can read it here.” Sarah Kliff in The Washington Post.

…And in Arizona, Jan Brewer introduces bill to expand Medicaid. ”Ms. Brewer twice used the word "conservative" to describe Arizona's Medicaid program, a managed-care system whose cost per patient is $680 less than the national average, and the bill she was endorsing, which would extend Medicaid coverage to anyone who made up to 133 percent of the federal poverty line…[T]he proposal puts Ms. Brewer, an aggressive opponent of President Obama's policies, in a position of advocating one of the central pillars of his health care law.” Fernanda Santos in The New York Times.

The link you’re going to send to everyone right now interlude: How to choose the right seat at the restaurant.

5) The case for a carbon tax

Lawmakers release carbon tax plan. “Representative Henry Waxman, Democrat of California, released a new plan on Tuesday to address climate change and federal budget woes: a tax on carbon emissions…The plan contains three potential per-ton prices for carbon pollution, $15, $25 or $30, and a range of annual cost increases from 2 percent to 8 percent a year to ensure that greenhouse gas levels continue to decline over time. The new proposal would return most of the revenue from the new tax to the public through utility rebates, federal deficit reduction, payments to displaced workers or investments in clean-energy projects.” John M. Broder in The New York Times.

Read this new Brookings study: “Carbon Taxes as Part of the Fiscal Solution” by William C. Gale, Samuel Brown, and Fernando Saltiel.

Why a carbon tax is a win-win. “A carbon tax makes good economic sense: Unlike most taxes, it can correct a market failure and make the economy more efficient. Although there are substantial benefits from energy consumption, there are also big societal costs that people don't pay for when they produce and consume energy - including air and water pollution, road congestion, and climate change. Since buyers of fossil fuels don't directly bear many of these costs, they ignore them when they decide how much and what kind of energy to buy. And that results in too much consumption and production of these fuels. Economists have long recommended a tax on fossil fuel energy sources as an efficient way to address this problem.” William C. Gale in TaxVox.

What energy wonks need to know about methane hydrates. “On Tuesday, Japan announced a major new breakthrough. For the first time, a team aboard the drilling ship Chikyu had successfully extracted gas from a layer of methane hydrates 1,000 feet below the seabed in the Eastern Nankai Trough.” Brad Plumer in The Washington Post.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Read: Ryan’s fiscal year 2014 budget.

The Ryan budget is social engineering with a side of deficit reduction. Ezra Klein.

WonkTalk: The many mysteries of the Ryan budget. Ezra Klein and Neil Irwin.

Chart: Where the Ryan budget cuts. Dylan Matthews.

Chart: Patty Murray’s budget versus Paul Ryan’s. Dylan Matthews.

5 huge things we still don’t know about the Ryan budget. Ezra Klein.

Methane hydrates, the next big energy source? Brad Plumer.

The age of the moving millionaires. Neil Irwin.

Mississippi moves to defend big sodas. Sarah Kliff.

Paul Ryan’s economic projections come straight from CBO. Dylan Matthews.