Billions Now, Trillions Later
Apr 11, 2011, Vol. 16, No. 29 • By MATTHEW CONTINETTI
Conservatives are on the verge of victory—if only they can take yes for an answer. The situation on Capitol Hill is fluid, but it appears House Republicans will soon be presented with a choice: accept dramatic cuts in spending for the rest of fiscal year 2011 that, while less than the amount passed by the House in February, are about the same as Budget Committee chairman Paul Ryan originally proposed—or risk a government shutdown by holding out for the maximum amount of reductions, as well as other items on the conservative wish list.
The right decision: Accept a deal to cut tens of billions of dollars in the remaining months of fiscal year 2011. This would not only avoid a shutdown. It would also begin to reduce the size of government, and that would be a real victory. Congress would pass the largest reductions in nondefense discretionary spending in decades. Democrats would implicitly concede that the federal government is spending too much money. And the decks would be cleared for Ryan, who plans to deliver his fiscal year 2012 Republican budget this week.
While reining in government spending on nondefense domestic programs is necessary, Head Start and the Corporation for Public Broadcasting are not the cause of America’s structural deficit. Entitlements, Medicare and Medicaid in particular, are the spigots from which the red ink flows. You could give conservatives everything we want on the domestic discretionary side, and America would still be in a fiscal pickle. What’s needed is a proposal that deals seriously with entitlements. That means preserving benefits for those in or near retirement, while putting health care programs on the path to sustainability. Luckily, there is just such a plan.
The Ryan budget will include significant cuts to domestic discretionary spending. But more fundamentally, it will reform Medicaid into block grants to states to give governors maximum flexibility. It will transform Medicare into a defined contribution program that will be stable for decades to come. And it will propose fundamental tax reform to remove loopholes and increase efficiency and spur economic growth. This is a comprehensive strategy that, over the long term, will reduce spending not by billions but by trillions of dollars.
Nor will this budget be of interest to actuaries alone. Behind the Ryan policy is a realistic vision for conservative governance. The budget accepts the fact of the modern welfare state while targeting aid to the truly needy and refashioning programs in ways that encourage thrift, competition, and self-reliance. The goal is a solvent federal government that pays its bills and performs its limited functions with energy and competence. The Ryan budget also prepares the ground for political battles in 2012 and beyond: The contrast with the liberal Democratic vision of an ever-expanding administrative state that taxes, spends, and regulates an increasingly dependent and indebted America couldn’t be clearer.
Meanwhile, with respect to the struggle over the continuing resolution for the rest of 2011, the temptation to stick to one’s ideological guns and hold out for the best rather than merely the good is always strong and, in some cases, justified. But there is also the danger of becoming blind to political reality. There’s the risk that long-term political capital will be wasted in pursuit of a quixotic short-term goal. There’s the threat that what starts out as a principled stand could collapse into self-righteous and self-destructive posturing.
Conservatives do not now have a monopoly on power. Quite the opposite: The GOP controls only the House of Representatives—not the Senate and, even more important, not the White House. That Republicans are on the path to achieving quite a bit is a testament to the power of their ideas and the nature of our times. Keeping the momentum going, however, requires tough-minded thinking about priorities and long-term goals. To embrace obstinacy over short-term spending and reluctance to tackle big-ticket items like Medicare and Medicaid would get the formula for success precisely backward. So let’s accept an achievable solution for this fiscal year, which is half over, and then begin to move the government in a responsible and conservative direction for decades to come.
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