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The Great Society's Great Defender

Ron Paul doesn't have a plan to rein in Medicare spending.

6:00 AM, Dec 31, 2011 • By JOHN MCCORMACK
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Des Moines
The conventional case against Ron Paul's fiscal policy is that it's unrealistic because it's too bold. That's true enough: Ronald Reagan couldn't abolish one department; Ron Paul wants to abolish five (Education, Energy, HUD, Interior, and Commerce). But there's a much stronger case to be made that Paul's fiscal policy is not that bold at all. It is, in fact, the most timid fiscal policy put forward by any Republican presidential candidate this year.

Ron Paul 2007

All across Iowa this week, Ron Paul, the great libertarian hope, has been promising voters that we'll have plenty of money to protect the crown jewels of the New Deal and the Great Society--Medicare and Social Security--if we simply cut "overseas spending."

“I want to take care of the people who become so dependent on government, even though there would have been a better way to take of them," Paul said at a rally in Des Moines on Wednesday evening. "You take the elderly on Social Security—there was a contract. But we can’t honor that contract if we keep spending this money overseas. So I’m for taking care of those people on Medicaid, Medicare, and anyone on Social Security.”

“Just remember the military budget is different than the defense budget. The military budget is all the weapons the military-industrial complex wants,” Paul said. If we have sound money and a “sensible foreign policy,” he continued, “we don’t have to give up anything. We don’t have to give up our defense.”

“The money we spend overseas should be the easiest money to cut," he explained at a townhall-style meeting earlier Wednesday in Newton. "We’re spending well over a trillion dollars a year—probably about $1.4 trillion to operate all our activities overseas."

Leave aside for the moment any (legitimate) concern that Paul's gutting of the defense budget would leave us vulnerable. As a matter of simple arithmetic, Paul is indulging in a fiscal fantasy.

First of all, the entire annual defense budget, including war spending in Iraq and Afghanistan, is less than $700 billion--not $1.4 trillion as Paul claims. More important, by 2025 Medicare, Medicaid, Social Security, and interest on the debt will consume all federal revenues. In other words, we could eliminate all defense spending and all other federal spending, and we'd still be running a deficit in a little over a decade.

So what's Ron Paul's plan to avert the oncoming fiscal catastrophe? He doesn't have one. Paul's "Plan to Restore America" doesn't deal with Medicare, which is on track to be the biggest driver of our debt. And Paul's plan doesn't deal with Social Security. But he does endorse block-granting Medicaid to the states.

Although Paul thinks that Social Security, Medicare, and Medicaid are "technically" unconstitutional, he would like to fund the programs for more than 60 years because people are now dependent on them. But Paul has no specific plan to keep Medicare and Social Security solvent during his long-term transition period. 

According to his campaign manager, Paul simply wants to have an "adult conversation" about how to keep Medicare and Social Security working. (If that sounds a lot like Barack Obama's plan to deal with entitlement spending, that's because it is.)

"Ideally, we'd like to fund them for everyone over 25 and will work hard to make that possible while having an adult conversation about other ways, outside of any sort of tax increase, to keep the system solvent," Paul campaign manager Jesse Benton wrote in an email to THE WEEKLY STANDARD. But has Paul endorsed any specific ideas to keep Medicare solvent--such as raising the retirement age, means-testing, or switching from a single-payer system to a premium-support system for the next generation? "No," replied Benton.

"Dr. Paul will dramatically cut other big government spending so that we can take care of people who have become dependent on Social Security and Medicare while we work our way through a transition back to Constitutional solutions for medical care and retirement," Benton wrote. "One of his first elements of that transition would be to allow workers 25 under to opt out, keep their own money and take responsibility for their themselves."

Ron Paul's "Plan to Restore America" is a pledge to reduce spending by $1 trillion his very first year in office and balance the budget in three years. “I want to cut one trillion dollars out of the budget the first year. This make a few people nervous. 'Oh you can’t do it. That’s too much!'" Paul said at the townhall meeting in Newton. "People say, 'Well that means everybody will suffer.' Not necessarily. Maybe the people who got bailed out, they might have to suffer. But they should suffer. They should go bankrupt.”

Even if Paul's unrealistic plan passed, it would be a Pyrrhic victory. Deficits would begin to shoot up again because entitlement spending would still skyrocket.

But, again, Paul's plan is never going to pass. So, in reality, the effect of his message--that we can save Medicare by cutting "overseas spending" and having an "adult conversation"--is that it will be more difficult to rein in entitlement spending.

"This is something of an intellectual fight," Paul said of his cause at his Des Moines rally on Wednesday. But by doing nothing to address Medicare's unsustainable status quo, Paul is performing a great intellectual disservice to his cause. By being the only Republican presidential candidate who has failed to endorse the central idea of the House Republicans' plan to reform Medicare for the next generation--or any reform at all--Paul is running from the biggest fiscal fight that our country faces.

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