There's going to be a lot of talk now and in the future about exactly what Republican congressman Paul Ryan's plan to reduce the national debt would entail and the consequences of such policies. Since it's no fun listening to conversations you don't understand, we've put together an FAQ for those of you who are not just kind of confused, but utterly, hopelessly clueless about what Ryan's proposals are about.
I heard that Ryan's plan wants to do away with medicine. Is he a Scientologist?
What? No, first of all, you mean Christian Scientist, and anyway, it's Medicare, not medicine. Medicare is a government-run health-insurance program mostly for the elderly (65 and older), and also the disabled.
So how does Ryan want to change this "Medicare"?
Under Ryan's proposal, starting in 2022, the government would no longer insure your medical care, but instead provide you with a subsidy to help you pay for insurance from a private carrier. In essence, instead of saying, "Here is some health-care insurance, elderly people," Medicare would be saying, "Here is some money, elderly people, use it to buy health insurance."
Tomato, tomahto, right? This is controversial?
Yes, because while it would save a ton of money for the government, there could be consequences for the elderly. The government is helping them get insurance, but no longer guaranteeing it. If Medicare enrollees can't afford the insurance they desire with the subsidy they've been given, that's too bad. They have to spend more of their own money, or, if they don't have the money, buy a lesser plan or even possibly forgo care altogether.
I also heard that Ryan's plan would alter Medicaid, which I'm pretty sure is a robot.
It is not a robot. Medicaid is the government health-care program for the poor, and under Ryan's plan, it will switch to a block grant system.
So the cash will be stacked in a more efficient rectangular shape, saving on shipping costs.
Sort of, but not really, at all. Currently, the federal government matches the money that states spend on Medicaid, so as states spend more, the federal government spends more. Under the block grant system, the federal government would just send a defined chunk of money to the states.
And that matters because ...?
If the federal government gives the states less money for Medicaid, the states, already cash-strapped, could find themselves in trouble. As seventeen Democratic governors recently wrote in a letter to congressional leaders, "We strongly oppose a congressionally-mandated block grant of federal Medicaid spending, which would shift costs and risk to states. Such a cost shift would severely undercut our ability to provide health care to our residents and adequately pay providers."
But doesn't reducing the debt mean making sacrifices? Everyone doing their part? For example, I'm going to stop brushing with toothpaste.
That's very noble of you, but personally saving money will not help reduce the debt. And while you're right that scaling back government spending should require everyone to sacrifice, this plan isn't asking for everyone to sacrifice. For example, changes in Medicare will only affect people currently 55 years old or younger. Everyone older than that — people who vote a lot, coincidentally — doesn't have to worry about affording health insurance.
Nevertheless, surely rich and poor alike will have to sacrifice.
Actually, no. As part of the tax-reform part of the plan, the tax rate for corporations and the top income bracket would be lowered from 35 percent to 25 percent, while the lost revenue would be offset by ending various deductions, exemptions, and credits that save money for the middle class. According to the Center for Tax Justice, taxes for the poorest 90 percent of Americans would rise under this plan.
But doesn't the middle class need money more than the wealthiest 10 percent of Americans?
They do. As Jonathan Chait writes, Ryan's plan includes "a huge tax cut for people who don't really need it." But Republicans believe that after giving more money to rich people, it will trickle down to the rest of us eventually. It's called trickle-down economics.
Because ... it's trickling down.
So when will this all be enacted into law?
Almost certainly never, as Democrats vehemently disagree with much of it, and they control the Senate and the White House. But it's still an important proposal because it's the first attempt by either party to offer up a comprehensive solution to the debt problem that everyone recognizes has to be tackled. Consequently, it will help to shape the debate going forward.
Right. At least Ryan has produced a solid proposal that stands up to the close scrutiny it was inevitably going to face.
Not really. Internet sleuths have quickly picked away at some of the plan's underlying assumptions. For one, it assumes that medical spending will rise at the rate of inflation, when in reality it will almost certainly rise much faster than that. In addition, Ryan's plan is apparently supposed to herald in an unheard-of unemployment rate of 2.8 percent, which the country hasn't seen since the early fifties. As Paul Krugman writes, "If Obama tried to claim that his policies would achieve anything like this, he’d be laughed out of office."
They say laughter is the best Medicare.
That's not how it goes.