April 22, 2011

Cutting our losses

When considering practical budget solutions, politicians cannot afford to be idealistic

A previous editorial (“A Deficit of Compassion,” 4/12/11) stated that the Republicans in Congress lack compassion. I would like to examine this idea a bit further. Representative Paul Ryan recently introduced a budget proposal that would cut spending and significantly alter two pillars of the social safety net, Medicare and Medicaid. As stated by Gururangan in his editorial, the plan would turn Medicaid into a block grant program that would leave more control to the states while Medicare would subsidize seniors buying private health insurance. It was contended that the changes to Medicaid, in particular, would endanger the welfare of those who depend on its services.

The approach being taken with Medicaid is similar to the welfare reform of the 1990s. In 1996, the Aid to Families with Dependent Children (AFDC) was changed from being funded on a matching formula basis (like today’s Medicaid) to a block grant. Like critics of Ryan’s plan today, Democratic Representative John Lewis of Georgia asked, “Where is the compassion?” and plainly stated that “this bill is mean.” The actual result of this so-called “mean” bill was that both child poverty and the welfare rolls decreased while the income of those formerly in the program increased, all while saving the taxpayers billions. Now this is not to say that Ryan’s plan will be as successful, but it does show how states can address the needs of their residents better than the federal government can. The fear that those who need Medicaid may lose it is understandable, but block grants have the potential to greatly improve the system for both recipients and taxpayers.

Though it is doubtful that this budget will pass in its current form, it has formed a starting point for a national discussion on our fiscal situation. On April 13, President Obama gave a speech in response to Ryan’s budget. Though he outlined some substantive cuts to spending, his plans for tax reform and lowering healthcare costs were much less specific. However, instead of relying on Obama’s speech for an accurate idea of his budget plan, it would be better to use the actual budget he proposed a few months ago. President Obama’s actual 2012 budget would lead to 9.5 trillion dollars in deficits over the next ten years, and by 2021 would explode the debt to 87% of GDP, according to the CBO. So until the President and the Democrats present a realistic budget that meaningfully tackles the deficit, it will be hard to take them seriously on this matter.

To solve the deficit, it has been suggested we continue to spend even more on infrastructure, green energy, healthcare technology, and education. So the solution to too much spending is more spending? While the urge to spend in these areas comes from admirable intentions, the facts just don’t bear out. Education spending has continued to increase for decades, yet there has been little to no academic improvement. Having the government pick winners and losers in green energy is an inefficient way to spur innovation and can, as in the case of the Bush administration’s ethanol subsidies, lead to disastrous results. Spending on highways and health information technology will produce economic benefits, but it won’t close trillion-dollar deficits or fix runaway entitlement programs.

Given the crisis we face, we cannot dismiss a plan just because it reduces spending on programs that help the poor. Criticizing a plan that cuts spending on Medicare and Medicaid is easy, but actually finding and proposing a real solution to our debt problem is not. The simple fact is that these programs must be reformed or they will not survive. So, going back to the opening question: Do Republicans lack compassion? The answer, for the most part, is actually 'yes', but this is the case for most politicians over the past few decades. They are the ones who made promises to future generations (i.e. us) that they knew could never be kept. They are the ones who spent recklessly knowing full well that it would not be they who would be stuck with bill, but we. In short, bankrupting the next generation of Americans is about as far from compassion as one can get. Those in government who truly have compassion are the Republicans and Democrats working on practical, tangible solutions that would allow for these programs to continue for both us and future generations.

Max Viscio is a student in the College.