Paul Ryan, ranking Republican on the House Budget Committee, has asked the CBO to analyze a set of proposals to address the federal government’s long-term structural deficit, proposals which include health care reform and entitlement reform. The CBO released the analysis today.
The key graph from the analysis is this:
“Alternate Fiscal Outlook” (the solid purple line) is the CBO’s projection of the national debt as a percentage of GDP under a continuation of current policy. “Roadmap” is the CBO’s projection of the national debt as a percentage of GDP under Ryan’s proposal.
For those of you who were waiting for alternative policy proposals from Republicans, it’s all there in the report. The short version is:
- Progressive indexing of social security benefits (reduced benefit increases for wealthy retirees — a soft form of means testing)
- Optional carve-out private accounts with federal insurance of a minimum rate of return equal to inflation.
- A very gradual increase in the Medicare retirement age
- Converting Medicare to a voucher-based program (with voucher amounts adjusted for age and health status of the beneficiaries) for those retiring in 2021 or later, and indexing the vouchers to the average of general inflation and medical sector inflation. Out-of-pocket medical expenses for retirees would be subsidized via means-tested federal contributions to an HSA in addition to the voucher.
- Replacing tax deductability for employer-provided health insurance with a refundable tax credit for both employer-provided insurance and individually-purchased insurance.
- Freezing nondefense discretionary spending at 2009 levels from 2010 through 2019.
- Cancel the remainder of the stimulus and end TARP early.
- A set of tax proposals (which the CBO declined to analyse in detail in this report, instead assuming a uniform revenue of 19% of GDP once the current recession ends) intended to simply the tax code by applying a lower tax rate to a broader tax base similar to the 1986 tax reform act.
Overall, it strikes me as a very good idea, both for its policy effects and for its fiscal effects.
I picked up the link from Arnold Kling. His reactions can be found here.
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I suspect that by the time this proposal got through the committees and built up any significant Congressional support, it would be so laden with compromises and vote-buyers that it — and the graph — would look nothing like this.
And I suspect that would be true no matter which party controlled Congress.
I like it.
The way things are going, it may be passed next year.
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