Scott Galupo, the former Capitol Hill staffer turned blogger for the American Conservative, responds to my last post on Paul Ryan’s policy record, mixing some praise for Ryan with the following critique:
My problem with Ryan isn’t on the entitlement reform side; it’s on the revenue side. His assumption that another round of supply-side tax cuts will spark growth and unleash pent-up consumer demand strikes me as just as wooly-headed as the Tea Party freshmen’s knowledge of the federal budget.
And it’s this outmoded Kemp-ism that undermines his best idea, i.e., premium support. If Ryan and the GOP would have agreed to a sensible compromise on new revenue — which can be accomplished without the higher marginal tax rates that Obama calls for — then a deal on Medicare would have been far more likely.
I agree with Galupo’s first point; I’m more doubtful about the second one. Ryan’s supply-side zeal is probably his most significant weakness as a policy entrepreneur: Like most Reaganites, he has a Kemp-ian belief in the growth-unleashing power of lower marginal tax rates, but he’s operating in an era when (thanks to Kemp and Reagan) those rates are already low enough that there’s a lot less to be gained from slashing them even further. This doesn’t mean that some kind of rate-lowering, base-broadening tax reform isn’t still a good idea — it is, and Ryan’s right to champion it. But it isn’t the only good idea in the world, and the disappointing returns to the Bush-era tax cuts strongly suggest that the interests of the investor class are not always identical to the interests of middle-income Americans, and that the goal of lower rates needs to be balanced against other policy objectives.
Hence my persistent argument that the right needs to embrace a kind of small-government egalitarianism, which focuses on means-testing entitlements and ending corporate welfare and capping upper-income tax breaks (all ideas that Ryan supports) but then plows some of the savings into payroll tax cuts or a family-friendly tax reform or an expanded earned income tax credit, rather than just using them to keep (ahem) Mitt Romney’s taxes as low as possible. This has always been my biggest problem with the Ryan budget: In an age of stagnating incomes in the middle and reduced mobility at the bottom, its proposed reform of the welfare state doesn’t do enough to foster equality of opportunity.
But on the question of how much money the government should take in overall, I think Ryan’s approach has been much more defensible. Yes, new tax revenue may ultimately be required, but it isn’t clear why conservatives should pre-emptively concede, say, a leap from 18 percent to 21 percent of G.D.P. in the hopes that this concession will persuade Democrats not to demagogue premium support. The Ryan budget is ultimately a negotiating position, not a final blueprint, and if the conservative goal is to end up with, say, tax revenue at 21 percent of G.D.P. rather than the 25 percent that many liberals would endorse, then starting the negotiations with a bid in the 18-19 percent range makes a fair amount of sense.
It’s pretty clear from Ryan’s comments during Pat Toomey’s attempt to broker a Supercommittee deal that he would in fact accept a modest revenue hike in a deal that made modest changes to entitlements (retirement-age increases, etc.), and my guess is that he would have accepted something more like the higher Simpson-Bowles revenue range if premium support had been on the table in the deficit commission’s negotiations. (It wasn’t, which is why he and Alice Rivlin crafted their own side Medicare/Medicaid proposal.) One can differ with his judgment on these points — I thought Republicans should have been willing to concede a little more in the debt ceiling/supercommittee negotiations, for reasons I elaborated on here and here — but as an overall negotiating strategy it isn’t as unreasonable as Galupo suggests. And since I have seen no real evidence that this White House or the Democratic leadership in Congress were ever willing to consider premium support, with or without new revenue, I’m not persuaded that the kind of deal Galupo sketches out above was ever within reach anyway, no matter how much more “sensible” Ryan was willing to be.