James Pethokoukis

Politics and policy from inside Washington

Sarah Palin’s huge 2012 move: She endorses Paul Ryan’s ‘Roadmap’

Dec 10, 2010 15:55 UTC

With one op-ed piece in the WSJ, Sarah Palin has made a lasting impact on the dynamic of the upcoming Republican presidential race — even if she doesn’t run. (Though I think she will.) By strongly endorsing Rep. Paul Ryan’s outstanding Roadmap for America’s Future, Palin has set a floor for how radical and sweeping an agenda the 2012 candidates can offer. Anyone offering less will look timid and inconsequential and most un-Tea Party-esque. One of the big knocks against Ryan’s plan is that few of his colleagues are supporting it. Now the most high-profile Republican in America has given it her seal of approval. The Ryan Roadmap is quickly becoming the de facto GOP economic platform.  And if Palin does decide to run, she immediately starts out with  a specific and coherent agenda.  Candidates beware: Bullet points and platitudes aren’t going to cut it.

COMMENT

Fresh off her pronouncements on the Fed’s “quantitative easing” and federal aid to the states, Sarah Palin now adds the deficit and Medicare to her Potemkin façade of policy expertise. This is more than a little ironic for the propagator of the “death panels” myth. As it turns out, Ryan’s plan would inevitably lead to the rationing of the Medicare program on which 46 million American seniors now depend.

Hoping to lead the party that tried to block Medicare in the 1960′s and gut it in the 1990′s, Palin is endorsing Ryan’s proposal to cure what ails the health insurance system for millions of American seniors by killing it. When Ryan unveiled his Roadmap back in February, privatization of Medicare was the centerpiece. But because the value of Ryan’s vouchers fails to keep up with the out-of-control rise in premiums in the private health insurance market, America’s elderly would be forced to pay more out of pocket or accept less coverage.

George W. Bush’s disastrous drive to privatize Social Security helped undermine his presidency. Now, in the wake of a Wall Street meltdown that evaporated the retirement savings for countless thousands of Americans, the Republican Golden Boy Ryan is calling for an encore.

Yeah. Ryan is the one Republicans should be considering for president or VP. Go for it.

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Paul Ryan and the conservative economic mind

Nov 23, 2010 15:24 UTC

A member of the Bush White House once told me that the two key influentials when it came to conservatives/Republicans and economics were the Wall Street Journal editorial board and CNBC’s Larry Kudlow. Well, I think you can add a third name to that list: Rep. Paul Ryan. In a newspaper chat,  the GOP budget guru gives his two cents on the Fed:

Ryan is regarded by many as a rising star in the GOP and a Republican point man on economic issues. The controversy allows him to showcase his fascination with the arcane business of central banking. ”Monetary policy was always my first love,” he said.

Asked if the industries in his district have contacted him in favor of a cheaper dollar, Ryan said: “I’ve heard from manufacturers who want that. But it’s from people pursuing sort of a narrow view of interest. I had some manufacturers say it to me a couple of weeks ago in Kenosha, steel manufacturers.”

There’s no question that Ryan’s district is hurting. It includes three of the highest unemployment areas in the state, all with 10% unemployment or higher: Racine; Kenosha, where Chrysler shut an engine plant last month; and Ryan’s hometown of Janesville, where General Motors shuttered an assembly plant two years ago. The state’s only metro area with higher unemployment is Beloit, at 14.4%, which borders Ryan’s district. ”I won’t dispute that a cheaper dollar can help boost exports in the short term,” Ryan said. “But I don’t think it’s a good tradeoff to do so at the expense of inflation.”

To Ryan, the root of the problem is the Fed’s dual mandate, which calls on the central bank to promote employment as well as throttle inflation. Ryan said he has pushed for years to rewrite the Fed’s statutes in favor of a single mandate to control inflation and preserve the dollar as a store of value, making the Fed more like the European Central Bank.

Fighting inflation and boosting employment often are diametrical goals, he said. ”Basically the Fed is driving a car with two feet, one on the brakes and one on the gas pedal, and it’s a real jerky ride,” he said.

What’s fascinating about Ryan is that he keeps saying things that should get him into political trouble, but they don’t. He wants to rework Social Security. He wants to restructure Medicare. He  thinks a cheaper dollar is a bad idea.  And he won reelection with 68 percent of the vote in a district that Obama carried by four points. Good ideas expressed well and with conviction are powerful things.

Paul Ryan’s pro-market healthcare reform

Nov 19, 2010 16:41 UTC

Rep. Paul Ryan, along with fellow Obama deficit panel member Alice Rivlin, has put together a plan to cut the growth of government healthcare spending. This is the heart of it:

A new Medicare program should be created for future retirees (those who first become eligible by turning 65 on or after January 1, 2021). The new Medicare program would provide a payment – based on what the average annual per-capita expenditure is in 2021 – to purchase health insurance. The payment would grow annually at a rate of GDP +1 percent.

The annual payment would be adjusted by income, with high-income seniors receiving a reduced payment and low-income seniors receiving extra support. The payment would also be geographically rated and adjusted for health risk. In addition to a higher Medicare payment amount, low-income “dual-eligibles” would also receive a fully funded account from which to pay out-of-pocket expenses.

In order to receive the Medicare payment, a beneficiary would select a plan from a newly created Medicare Exchange. Health plans which choose to participate in the Medicare Exchange must agree to offer insurance to all Medicare beneficiaries, thereby preventing cherry picking and ensuring that Medicare’s sickest and highest cost beneficiaries receive coverage.

For those now enrolled in Medicare, or becoming eligible before 2021, the traditional fee-for-service Medicare program would continue. Premiums for the current program would be held harmless from the effects of the creation of the new Medicare program.

This plan is based on the Medicare fix outlined in Ryan’s fantastic Roadmap for America (as translated by the Congressional Budget Office).

Starting in 2021, new enrollees would no longer receive coverage through the current program but, instead, would be given a voucher with which to purchase private health insurance. In 2021, when enrollees would first receive the voucher, the average voucher for 65-year-olds would be worth $5,900 (in 2010 dollars). The voucher would be adjusted to reflect the age and health status of enrollees. If all Medicare beneficiaries (including older people with higher average expenditures) were to receive a voucher in 2021, the average voucher amount would be $11,000 (in 2010 dollars). …  The amount of the Medicare voucher … would be indexed to grow at a rate halfway between the general inflation rate, as measured by the consumer price index for all urban consumers (CPI-U), and the rate of price inflation for medical care, as measured by the consumer price index for medical care (CPI-M). Using that blended rate, CBO estimates that those amounts would increase at an average annual rate of 2.7 percent for the next 75 years, in comparison with the average annual growth rate of nearly 5 percent that CBO expects for per capita national spending for health care under current law.

So one big difference between the Ryan Roadmap and Ryan-Rivlin is that the growth rate for the Medicare payment/voucher is higher under Ryan-Rivlin. Also, the  Ryan Roadmap is more aggressive on raising the age for Medicare eligibility. Compare the two. First, the Roadmap:

The age of eligibility for Medicare would increase incrementally from 65 (for people born before 1956), as it is under current law, to 69 years and 6 months for people born in 2022 and later.

Now Ryan-Rivlin:

In 2021, begin raising the Medicare eligibility age to correspond to OASDI normal retirement age (2 months per year beginning in 2021 and stopping at age 67).

Now both the Ryan Roadmap and Ryan-Rivlin are far preferable to Obamacare and the modified-Obamacare plan outlined in Bowles-Simpson which relies on government technocrats to lower costs rather than market forces. Here is how Ryan-Rivlin compares to the status quo:

ryanrivlin

A huge improvement, but the Ryan Roadmap would lower health spending to roughly 5 percent of GDP in 2050 — half of Ryan-Rivlin –which is why the Roadamap’s long-term budget chart looks like this:

ryanchart

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