Upon Closer Investigation

Why the Romney-Ryan Budget Plan Should Both Frighten and Intrigue You

By Harry Glass

When Governor Mitt Romney selected Congressman Paul Ryan as his running mate, both parties saw an opportunity to have a substantive conversation on their respective ideas about an economic road-map and role of government. Still, as of yet, neither seems particularly intent on outlining specifics of their plans, probably because—as Romney discovered earlier in the campaign—white boards, felt tip markers, and wonkiness do not resonate with voters. This article will take a closer look at some of the specifics of the Romney-Ryan budget.

The Romney-Ryan plan proposes to cut spending by 5 trillion dollars, simplify the tax code by reducing loopholes and exemptions, reduce the deficit, reduce the debt, cut taxes across the board, bring down the size of the government, increase defense spending, and repeal the Affordable Care Act (ACA).

This should seem reasonable—except, of course, to supporters of the ACA.

But perhaps the more important problem with the budget plan is that it remains vague on some rather key points, leaving it unclear what exactly Romney-Ryan budget plan proposes to do all of the above at once. What exactly this simplified, minimal-loophole tax code will look like?

One way to achieve the plan’s debt reduction while simultaneously cutting tax rates would be to close certain tax deductions; this would, however, raise some Americans’ taxes substantially.

Alternatively, the cost of lowering tax rates could be passed on to the government—in other words, it could be paid for by decimating spending. Infrastructure, education, national parks, assistance for veterans, assistance for the poor, assistance for the hungry, foreign aid, defense spending, investments in technological and medical research—all of these programs would have to be cut substantially. Government health care for the poor would be halved by 2050.

In light of this laundry list of victims, the Romney-Ryan plan does not seem as attractive. Especially today, when the most lucrative jobs are reserved for those with undergraduate or graduate degrees, America should be investing as much as possible in education.

In addition, cutting relief for the poor does not save money; contrary to popular belief, such practices cost money. As noted in the Washington Post by Dennis Culhane, professor at the University of Pennsylvania School of Social Policy and Practice and director of research for the National Center on Homelessness Among Veterans, homelessness works on a power-law distribution curve. This means that, despite our assumptions about how many people are chronically homeless, most homeless people are only homeless for one day. The next most common duration of homelessness: two days. It is only a small majority of the homeless, the poor, and others who who are chronically destitute. And chronically homeless people are less likely to be able to afford their medical costs, which are usually several times higher than an average person’s. All of their medical burdens get pushed onto the taxpayers.

After crunching the numbers, Professor Culhane and Philip Mangano, the Bush-appointed executive director of the U.S. Interagency Council on Homelessness, have both found that it is cheaper to provide the chronically destitute with their own homes and basic care and to monitor them thereafter, than to create a revolving-door system of medical coverage. Reducing relief for the poor and homeless while also eliminating the more expansive health care plan would not only be morally questionable, but also a financially disastrous.

Beyond that, the Romney-Ryan budget proposal makes the claim that by “voucherizing” Medicare and passing it off to private insurance companies, their plan would give patients more control and thus drive cost down through competition. But this simplified theory of capitalism has been proven inapplicable to health care. Unlike other markets that bring together consumers (in this case the patient) and producers (the insurance company), the insurance company does more than sell a product; it acts as a personal financial advocate and risk assessment agency. This fact seriously complicates the “more competition is good” style of thinking. This is precisely why the United States have the most privatized health care system in the modern Western world, and yet spend the most on health care out of any industrialized nation.

Henry Aaron, one of the forefathers for the philosophy behind the Romney-Ryan’s proposed system of voucher care (sometimes better known as “premium support”) insists that this type of medical coverage would require an informed consumer and a well-regulated system. The first of Aaron’s assumptions calls into question the adaptability of this system to those perhaps most susceptible to cognitive problems – senior citizens. The second forces us to consider whether this system should be implemented by this Congress, since the Republican legislators seem opposed to any regulation whatsoever. Aaron now cites the failure of both assumptions as his reason for advocating against the voucher system.

Upon closer inspection, the still loosely defined Romney-Ryan budget is not only morally unsound for America—with its gross spending cuts to necessary government programs and its ill-informed revision of Medicare—but it is bad economic policy to boot. Nevertheless, its opponents should not dismiss it altogether. Medicare will inevitably go bankrupt. Simply putting this issue off and finding new ways to extend the program by 5 or 8 years at a time will not suffice. In addition, the tax code needs simplifying as its complexity is only hurting American business. There are too many tax exemptions, giveaways, loopholes and rebates. Marginal tax rates for businesses across the board are some of the highest in the world, adversely affecting U.S. competitiveness in a global economy.

For all its faults, the Romney-Ryan budget does acknowledge several issues that are too often being dodged, and remain unanswered in today’s society. Although it attempts to address several problems that have been avoided by both sides, namely entitlements, the Romney-Ryan solution is imperfect, and the importance of these issues merits a continued search for an improved plan.

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