If there is a single issue that has defined Speaker of the House Paul Ryan's career in Congress, it is debt reduction—and in particular, debt reduction through entitlement reform. So it was not exactly a shock when Ryan said this week in a radio interview that after passing tax legislation, Republicans would move on to overhauling Medicare and other entitlements.
"We're going to have to get back next year at entitlement reform," he said. He added, "Frankly, it's the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements, because that's really where the problem lies, fiscally speaking." Ryan noted, however, that this will have to wait until next year, after Republicans finish work on tax legislation. I suspect it will wait much longer than that.
That Medicare and other big entitlements are the largest drivers of the federal debt is uncontroversially true. On several occasions, President Obama made roughly the same argument, and was given nods of approval by the fact checkers of the world.
The Congressional Budget Office's (CBO) numerous reports on the nation's long-term fiscal health are exceedingly clear about the source of our current debt load and the reason why it is expected to increase. Just to pick a recent example, in a long-term budget outlook released in March of this year, the CBO said that deficits are expected to rise over the next 30 years "because spending growth is projected to outpace growth in revenues….In particular, spending as a share of GDP increases for Social Security, the major health care programs (primarily Medicare), and interest on the government's debt." It is that simple: The debt will rise because the federal government will spend more than it takes in, and that spending will be concentrated on entitlements.
Ryan has pitched fiscal responsibility through entitlement reform for practically his entire career in Congress, so in some ways it is not much of a surprise to hear him return to what has long been a signature issue.
Still, it is at least a little—and maybe much more than a little—jarring to hear him hype a forthcoming debt reduction plan at the exact same time that he is helping to lead the charge on tax legislation that would almost certainly add $1 trillion or more to the debt if it is enacted exactly as planned, and much more if it is not, which Ryan himself has suggested is likely. Paul Ryan is basically promising to start working on legislation to reduce the debt—that is, right after he finishes working on legislation to increase the debt.
To be sure, deficit reduction is mostly a matter of spending reductions. But successful debt and deficit reduction efforts in Canada and the United States have typically paired large spending cuts with modest tax hikes.
The disconnect between Ryan's stated objectives and his current legislative efforts is not exactly lost on his critics across the aisle. After hearing Ryan tout entitlement reform, Sen. Bernie Sanders (D-Vt.) griped that "Paul Ryan just admitted that after providing $1 trillion in tax breaks to the top 1 percent and large corporations, Republicans will try to cut Social Security, Medicare, Medicaid and help for the most vulnerable Americans."
Somehow I doubt Sanders has much to worry about. Republicans have an opportunity to reduce Medicare spending as part of the tax bill, and they are planning to skip it.
One of the side effects of the tax legislation that Republicans are now finalizing is that it would trigger an automatic cut to Medicare on the order of about $25 billion a year, thanks to a 2010 "pay as you go," or PAYGO, law that calls for mandatory spending cuts in order to restrain deficit growth.
But numerous Republicans have declared that allowing these cuts to go into effect would be a bad idea. "Medicare is underfunded as it is. If we have to change the PAYGO rules, we'll just change 'em," Rep. Phil Roe (R-Tenn.) told Politico.
This willingness to override the automatic spending reductions is shared by GOP congressional leadership, which has apparently promised Sen. Susan Collins (R-Maine), a key Senate swing vote on the tax plan, that the mandatory cuts will never go into effect. "I am absolutely certain that 4 percent cut in Medicare that I mentioned will not occur," Collins said in an interview with local news. "I have it in writing from both the Speaker of the House Paul Ryan and also Senator Mitch McConnell."
If nothing else, this episode is a demonstration of priorities. Ryan is so committed to debt reduction and reducing entitlement spending that his current priority is passing legislation that would significantly increase the debt while promising to follow it with legislation that would stop modest automatic reductions to entitlement spending.