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GOP's high-stakes gamble to slash deficit

By Ron Haskins, Special to CNN
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STORY HIGHLIGHTS
  • Rep. Paul Ryan's budget plan could be a turning point, Ron Haskins says
  • He says Americans are unwilling to pay for the size of government that exists
  • Haskins: To solve problem of spiraling debt, spending cuts, revenue increases needed
  • He asks if two parties will cut a deal, or continue to burden future generations with debt

Editor's note: Ron Haskins, senior fellow at the Brookings Institution, was an adviser on welfare issues in Congress during the shaping of the 1996 welfare reform legislation and senior adviser to the president for welfare policy in the George W. Bush administration.

Washington (CNN) -- The budget proposal introduced Tuesday by the Republican chairman of the House Budget Committee, Paul Ryan, is potentially a turning point for the federal government and for American culture.

The most basic tenet of Republican governing philosophy is that small government is best because individual initiative, personal responsibility, and reliance on work, family and community are the essence of the American vision. But since the Founders made our Constitution consistent with this vision, government has exploded.

To take just one example, as recently as 1962 the federal government spent only $29 billion on programs for poor and low-income Americans; in 2010 the federal government spent $789 billion on these and similar programs, a 27-fold increase. This example could be multiplied, especially with reference to retirement programs, health programs, education programs and federal regulations.

Liberals regard this outpouring of spending and expansion of government authority as a triumph; conservatives and libertarians regard both as excessive. Worse, they think the programs give too many people what they should work for themselves, thereby reducing individual initiative and down-sizing the American vision.

GOP budget plan cuts Medicare, tax rates

At various times in the past, Republicans have actually attempted to govern in accord with their small government philosophy, often at considerable political risk. The sweeping changes in the federal budget enacted by congressional Republicans in 1995 and vetoed by President Clinton that resulted in government shutdowns was one example. A successful example was the welfare reform law of 1996 that led to an unprecedented increase in work and decline in welfare dependency and poverty among single mothers.

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Now the Ryan proposal brings the nation to another seminal moment. Here is a case in which necessity meets Republican philosophy. The American people seem unwilling to pay for the amount of government they are getting.

The American people seem unwilling to pay for the amount of government they are getting.
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Polls show that Americans increasingly realize that the government cannot continue to live on borrowed money, but they are having trouble realizing that the implication of their new understanding is that reliance on debt can be reduced only by shrinking government, increasing taxes, growing the economy to produce additional revenue or some combination of these three.

The Ryan small government approach calls on two of these instruments for reducing debt. He would cut spending by $5.8 trillion over the next decade, thereby reducing the deficit by $4.4 trillion over the same period. He would also reform the tax code by removing tax breaks and lowering rates for both businesses and individuals.

Most economists agree that a tax code with fewer tax breaks and lower rates would be fairer and would improve efficiency, thereby helping grow the economy and possibly producing extra revenues. But Ryan would not raise taxes because to do so would violate the Republican goal of achieving smaller government.

The most radical and politically dangerous of the Ryan proposals is to fundamentally change Medicare, a program that provides health benefits to more than 46 million elderly Americans. There is widespread agreement that unless we can "bend the curve" of federal spending on health care, it will eventually consume an unsustainable share of federal revenues. Ryan's proposal would address this central problem by providing a defined contribution to the elderly and requiring them to purchase health insurance on their own, probably in the exchanges that will be established under President Obama's Affordable Care Act.

In all likelihood, the federal government would pay a flat amount toward the insurance premium of each individual, with a higher subsidy for poorer and sicker people. But the government subsidy will not be enough to pay the entire premium now and in the future, hence the health care savings in the Ryan approach and the increase in costs imposed on the elderly.

Democrats are already attacking the Ryan proposal on Medicare as well as many other proposals in his bill. The language of the attacks is already harsh and promises to get harsher. Although Ryan and the House Republican leadership are certain to get -- and deserve -- kudos for having the nerve to put serious and risky proposals on the table to reduce the nation's unsustainable deficit, they are also being tested by the onslaught of attacks.

Two of the most important questions now are whether the American public, especially the Tea Party and independents, will rally to provide support adequate to sustain Republicans in the high-risk trail they are blazing and whether the president will part company with most Hill Democrats and use the Republican plan as an occasion to resurrect the balanced proposal of his deficit commission and engage in serious negotiations.

If so, the ultimate question arises: Can the two parties agree on a budget compromise that cuts spending, raises revenues and tames the federal deficit? Republicans are unlikely to support a deal that does not substantially reduce the size of government; Democrats are unlikely to support a deal that does not include revenue increases.

Without such a deal, the nation will continue to teeter on a precipice created by delusion and sustained by indifference to future generations.

The opinions expressed in this commentary are solely those of Ron Haskins.

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