Tomorrow, we are told that Congressman Paul Ryan will unveil the first serious plan for long-term debt reduction. I’ll wait to see it before I comment. But the leaked outlines are highly encouraging. Medicare would become Obamacare for seniors, with competing private insurance options, rather than a single payer; Medicaid would be turned into block grants for the states to finance healthcare for the poor. For good measure, there appears to be serious tax reform, elimination of tax shelters and tax breaks in order to bring down the rate of income tax, while not losing revenue. This $4 trillion bite into long term debt passes the credibility gap for me. But here’s where I go squishy.
I think there needs to be some revenue increases as well – and a return to Clinton era rates for the super-rich. I’d also favor a gas tax to recoup the expense for the unfunded wars, and make that tax directly linked to the costs of war in the future. By the same principle, bank bonuses should become subject to a new tax, to help recoup the lost revenue caused by the banks’ recklessness. This is called shared sacrifice. To balance the budget entirely on the backs of the poor will not and should not fly.
But this Ryan plan is an obvious first offer. The Dems, in my view, should neither dismiss nor demonize it. The fiscal crisis is real. But the Dems can suggest tax increases, like the ones above, as well as spending cuts, as the Tories have done in Britain. It’s a win-win if that happens.
(Photo: Committee Chairman Rep. Paul Ryan (R-WI) holds up a copy of Congressional Budget Office’s ‘The Budget and Economic Outlook: Fiscal Years 2011 to 2021’ during a hearing before the House Budget Committee February 10, 2011 on Capitol Hill in Washington, DC. By Alex Wong/Getty Images)