Jonathan Chait

Path To Prosperity Even More Insanely Unworkable Than You Thought

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The more analysts dig into Paul Ryan's comically villainous "Path to Prosperity," the more unworkable it gets. Here's Robert Greenstein of the Center on Budget and Policy Priorities explaining how the Medicare privatization would work:

In 2022, the first year the voucher would apply, CBO estimates that total health care expenditures for a typical 65-year-old would be almost 40 percent higher with private coverage under the Ryan plan than they would be with a continuation of traditional Medicare.  (See graph.)  CBO also finds that this beneficiary's annual out-of-pocket costs would more than double  from $6,150 to $12,500.  In later years, as the value of the voucher eroded, the increase in out-of-pocket costs would be even greater.

Okay, so Ryan proposes to sidestep political opposition by leaving all Medicare benefits for being currently 55 and older untouched. But then the plan is for people currently 54 to turn 55 and immediately start paying double the out-of-pocket costs of the folks who are just one year older than them. And from that point on, the discrepancy would get progressively larger over time. Does anybody out there want to argue why they would accept this, and why Congress would decline to intervene?

It's crazy. To reiterate the point of my column, even if you don't care about screwing over the poor, Ryan's plan is horrible and horribly designed to slash the deficit.

Meanwhile, Greenstein looks more closely at the long-term numbers, which is where Ryan shows the national debt dwindling away. See if this sounds like a realistic plan:

On the chairman's plan to dramatically shrink the size and scope of government, the documents that he released show that his plan would shrink federal spending to about 20 percent of Gross Domestic Product (GDP) by 2015 and to 14.75 percent of GDP by 2050 the lowest level since 1951, a time when Medicare and Medicaid did not exist.

Yet, Medicare and Medicaid would actually fare better than most of the rest of the budget.  Perhaps the single most stunning piece of information that the CBO report reveals is that Ryan's plan "specifies a path for all other spending" (other than spending on Medicare, Medicaid, Social Security, and interest payments) to drop "from 12 percent [of GDP] in 2010 to 6 percent in 2022 and 3½ percent by 2050." These figures are extraordinary.  As CBO notes, "spending in this category has exceeded 8 percent of GDP in every year since World War II."

Defense spending has equaled or exceeded 3 percent of GDP every year since 1940, and the Ryan budget does not envision defense cuts in real terms (although defense could decline a bit as a share of GDP).  Assuming defense spending remained level in real terms, most of the rest of the federal government outside of health care, Social Security, and defense would cease to exist.

Anybody want to explain how that would really happen?

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