Paul Ryan: What Do You Need to Know About Mitt Romney’s New VP?

Allison Kade
Posted

Over the past week, one of the biggest pieces of news was that Republican presidential hopeful Mitt Romney named Wisconsin House Representative Paul Ryan as his running mate.

The Ryan appointment will have a ripple of effects, but this appointment largely shifts the political dialogue to one thing: the federal budget.

As The Daily Beast puts it, Ryan is the man “many Republicans revere as the intellectual leader of the party’s drive to shrink government.” Appointing Ryan signifies a doubling down on conservative ideals on Romney’s part.

Ryan is probably best known for his plan to slash the federal budget. Admittedly, the campaign has said that Romney will put together his own deficit-cutting plan rather than use Ryan’s proposal wholesale.

All the same, Romney hasn’t issued a substantial budget plan of his own and may not do so before the election. So, to understand the potential impact of the VP appointment, let’s play a thought experiment.

Let’s just say Paul Ryan’s budget proposals and general economic ideology came to pass. What would that mean?

What This ‘Budget Proposal’ Is, Anyway

The budget issue originally came up around determining the federal budget for next year. Paul Ryan played a very prominent role in crafting the Republican budget proposal, which went under the name “The Path to Prosperity.” (Sometimes people would even call it the “Ryan budget.”) No Dems voted for it, and it eventually got rejected in the Senate.

Although the intent of the plan is to cut the federal budget deficit, the plan contains areas for spending cuts in addition to tax cuts—which means that the spending cuts are counterbalanced with decreased revenues. The nonpartisan Congressional Budget Office predicts the Ryan plan would get the budget balanced in about 28 years, the LA Times reports; Ryan predicts his plan would balance the federal budget by the 2020s because it would spark a lot of quick economic growth.

So what’s in this infamous plan?

Medicare: Fixed Vouchers for Seniors

This is the most famous and contentious part of Ryan’s budget: Each senior citizen would get a fixed amount of money, basically a voucher, to either buy private insurance or sign up for Medicare. The vouchers might cover the full cost of Medicare, especially in the early years, but there’s no guarantee. If seniors’ health costs exceed the voucher amount, they’d have to cover it themselves.

Supporters like the plan because it reduces government spending and encourages seniors to find more competitive plans. Detractors argue that old sick people aren’t the best comparison shoppers, and can be easily misled into buying bad plans. This could also incentivize insurance companies to create easy, cheap plans for young healthy seniors and leave the oldest, sickest patients for Medicare, which will have to soak up the costs.

The public was so alarmed by this plan last year that Ryan had to backtrack and release a slightly different version of the proposal … under which a typical elderly beneficiary could pay as much as $6,400 in additional costs in the year 2022.

But hold up! Will this really come to pass?

The Romney campaign recently said it would restore funding to Medicare, and repeal cuts to the program instituted by Obamacare, in addition to leaving Social Security intact. Not only does this contradict Ryan’s budget—which Romney doesn’t have to go with, of course—but it also makes Romney’s math difficult. He’s promised that federal spending will be less than 20% of GDP by 2016, which means cutting $6-$7 trillion over the next decade, even more than in Ryan’s plan.

How could he make those cuts but spare Medicare and Social Security?

The Center on Budget and Policy Priorities, according to Ezra Klein at The Washington Post, determined that would require cutting every other government program by an average of 40% in 2016 and 57% in 2022 (including education, veterans’ benefits, transportation and more). Considering that Romney is currently shying away from the least popular parts of Ryan’s budget, this makes commentators like Klein believe that Romney’s budget plan is a fantasy.

But since we don’t have a comprehensive plan from Romney, we return to Ryan’s proposal …

Big Cuts for Medicaid

Ryan would save the biggest chunk of federal money by cutting Medicaid, which provides health care for poor and disabled people, including 58 million low-income children, disabled adults and seniors. He’d cut funding by a third and give states the rest to budget as they see fit for care to the poor; Republicans have long argued that greater state and local control of the program will make the whole thing more efficient.

This is a big difference compared to Obama’s plan: A central part of Obama’s healthcare law is expanding Medicaid, not contracting it.

Only Two Tax Brackets

Ryan’s plan would maintain the tax cuts brought into being under President George W. Bush, in addition to instituting an extra $4.5 trillion in tax cuts over the next decade.

Right now, our tax law has six different tax rates (what you probably know as “tax brackets”). Under the new plan, there would be only two: 10% and 25%.

Though this might sound awesome (“I only have to pay 10% income tax!”), not all Americans would get a tax cut because the plan would simultaneously repeal current tax breaks for some low-income families adopted under Obama. When all is said and done, the bottom fifth of households would face a tax increase, probably ranging from less than $100 to over $1,000. Households earning over $1 million a year would receive nearly 40% of the plan’s benefits, with an average tax cut of about $265,000.

Currently, one of the big benefits of being a higher income taxpayer is that capital gains have a lower tax rate than normal income—in other words, if you have enough money to invest, then you won’t be taxed as much on the gains you earn from it. Back in 2010, Ryan called for entirely eliminating capital gains taxes (though Romney opposed that idea and Ryan hasn’t mentioned it again this year).

To make up for the lost tax revenue, Ryan says he’ll take away tax shelters from people in the top tax brackets. (It’s unclear as of yet exactly what those are.)

Increase the Military Budget by $300 Billion

Right now, we could be facing a “fiscal cliff” that will automatically institute $1 trillion in spending cuts across all categories if Congress doesn’t reach a deal before the new year. That would include defense and domestic programs. Ryan would flip that—he’d cut domestic programs but increase military spending by $300 billion over the next decade.

Other Social Programs

The Ryan plan would deepen the domestic cuts of the “fiscal cliff” by an additional $700 billion over a decade. That would include funding cuts for food stamps, Pell Grants for college kids and worker training programs. As with Medicaid, the Ryan plan would put these programs more under state control.

Proponents argue that it’s better to imbue states with more autonomy over these programs. Other pundits argue that this is a way of skirting responsibility; one editorial in The New York Times says, “Medicaid, food stamps and other vital programs would be offloaded to the states, but the states would not be given the resources to run them. The federal government simply would not be there to help the unemployed who need job training, or struggling students who seek college educations. Washington would be unable to respond when a city cannot properly treat its sewage, or when the poor and uninsured overload the emergency room.”

The op-ed goes on to cite that three-fifths of Ryan’s cuts come from programs for low-income people, and that the spending reductions are so drastic that Catholic bishops in the U.S. protested the proposal because it will “hurt hungry children, poor families, vulnerable seniors.”

Anything Else You Should Know About Paul Ryan?

His hero is Ayn Rand. He’s an Aquarius. He likes Monty Python. He’s basically a lifetime politician.

He has close ties with wealthy Tea Party donors like Charles and David Koch, and, according to The New York Times, his “network of conservative and libertarian donors … now rivals, and occasionally challenges, the Republican establishment behind Mr. Romney.”

He’s firmly against all abortion rights; he is against same-sex marriage or adoption; he’s received an “A” record from the NRA for his voting record on gun rights; Ryan voted against the Dream Act, which would offer a route to citizenship for law-abiding, educated illegal immigrants who came to the U.S. as kids—he deems the Dream Act to be treating a symptom rather than root cause and would rather focus on measures like securing borders.

  • Emarie21

    Something is going to have to give in the future.  Most economic forecasts state that the US economy is running on fumes.  Note that there has been emergency spending/funding of the Federal govn’t at least 3 times in as many years.

  • BW2011

    This article isn’t at all one-sided…

    • Wil

      What happened BW2011?  What is one-sided about this article?  Im an independent and have read many non-partisan reports in order to better understand what Paul Ryan brings to the table. At the end of the day, this is what it comes down to: Ryan’s budget cuts vital services and increases taxes for the poor while increasing our military spending and increasing tax cuts for the rich.  All policies that will continue to increase the inequality rate in this country, to say the least.  Just look at any analysis from the non partisan Center on Budget and Policy Priorities.  This is also all coming from a person, Paul Ryan, who was for TARP and stimulus funding during the Bush Administration, and is a life long politician.  This person is hardly the hero, that any fiscal conservatives have been looking for.  

      • lk123

        “Increase taxes on the poor?” What country do you live in? The poor pay no taxes. Before you knock Ryan’s proposal, take a long close look at what the Obama “plan” has done. Dramatic increases in poverty, unemployment, food stamp dependency, and a skyrocketing debt that threatens the security of every American. Obama has proven himself to be a quixotic visionary, i.e, an incompetent, who reminds me of the old saying — “The road to he** is paved with good intentions.” It’s time to replace him with someone who has proven himself to be a successful businessman, (BainCapital), sucessful leader (2002 Olympics), and successful Governor (Massachusetts). America has floundered for four years under the leadership, or rather, lack of leadership, of the current president. It’s time to replace him with someone with a solid record of success, i.e., Mitt Romney.

  • Joanne P

    I don’t see a perfect solution to this situation we are in.  And, no matter what is proposed, we will have an outcry and criticism, and saying people will be hurt and we then are sitting on our hands once again.  We still have to have the cutbacks, no one likes that, we need more income, and we have varying ideas of how to have that take place albeit big business, all of us paying, different scales, etc.

    What much of this comes down to is each person’s idea of their worldview of how the economy ought to be run by the keynesian view of government, the free market, a federalist, an anti-federalist, a libertarian, more a socialism viewpoint, republican, democratic, confused?, etc.  Also, what is your personal accountability of saving, spending, personal views of habits, morals, lifestyle?  No two people are alike, so no one will agree unless it is someone who thinks like we do, or close to the way we each think.

    We need to make big adjustments as a government of the states, federal, and personally as people.  How? I’m not sure.  I know personally what I would do, but will it take place?  It remains to be seen.  Our future depends on it…..

  • Katie S

    So I’m guessing Republican Learnvest writers don’t exist? I guess budgeting is only good for our own wallets, and not the federal government’s.

  • NC lifetime voter

    sounds like my kinda VP!  i agree with most, if not all, of his views.  

  • Cc11782n

    In my honest opinion, the government should put together a team of CFPs and economists and let them tackle the issues. Trying to have a bunch of politicians work out a way to balance a budget to me just seems like trying to have a bunch of 5th graders do rocket science. Most of them are more concerned about not crossing party lines and being reelected than they are about actually FIXING the issues.

    Look, in simple terms, its obvious we’ve overspent in the past, and are continuing to overspend. We have large debts that need to be paid. Someone needs to give the Fed this “Control your Finances” Bootcamp that LV has ;)

    Options to pay off debt, on a microeconomic scale are either 1) increase the amount of money coming in, 2) cut your spending, or 3) mix both. I can’t pay off my credit card debt by continuing to spend more than I make, even if it IS on food and shelter. I get things are more complicated when you get into a macroeconomic situation and have the general public’s welfare to be concerned with, but it all boils down to the same thing at the core.

    • Rob Drury

      You’ve made a really good case for Ryan.  He is anything but a party line Republican.  He is a strict fiscal conservative who has proven he has the courage to swim against the popular stream and do the unpleasant for ecomonic betterment.

      • sgcolumbia

        The second you included “strict fiscal conservative” you proved both that you didn’t understand (or ignored) Cc11782n’s post and that Ryan is a politician with his own agenda.

        • Rob Drury

          Of course I ignored it. It was silly nonsense.

  • Lesleyhall

    The person who wrote this article has absolutely no understanding of Paul Ryan’s views or the reasons behind them. The title of the article should be “What you should know about Paul Ryan if you don’t really want to know anything aboutmainstream want to know what someone else wants you to think about him”. If you enjoy letting other people make up your mind for you, then enjoy. If not, then ignore drivel like this and take some time to really study the actual legislations, dig into the real documents, look at the budgets, and never ever respond to anyone’s opinion with anything except a ” oh, really. I’ll have to look into that.

    • Johanna WS

       So please explain rather than simply criticize.  If you have a differing understanding of Paul Ryan, what exactly is your understanding and how is it different than what is presented here?  Do you find any of her references incorrect?  Let’s hear it.

  • Rob Drury

    “… the plan contains areas for spending cuts in addition to tax cuts—which means that the spending cuts are counterbalanced with decreased revenues.”

    C’mon, a financial columnist should know better.  Tax cuts have increased revenue every time they’ve been allowed to play out.

    • sgcolumbia

      C’mon. Any basic microeconomics student can explain the following. They
      could also tell you that nearly every economist on the planet has
      debunked the claim that tax cuts result in increased revenue–even the
      ones working in the Bush Administration (http://www.time.com/time/magazine/article/0,9171,1692027,00.html).

      The fact is that as long as we allow both political parties to make empty promises about the economy and punt the difficult decisions, we will all lose. There is not a politician alive that is willing to go to the American people and remind them that the purpose of government (to quote Thomas Jefferson) is to enable the people of a nation to live in safety and happiness, and to remind them that that costs money to do.

      ——

      The immediate effect of tax cuts is a decrease in government revenue (or, more accurately, a decrease in government income). If you decrease the amount of money that you collect from people, you will have less money to spend.

      The immediate effect of tax cuts is an increase in household income, but whether tax cuts stimulate economic activity (the long-term effects) really depends on how people use their additional income and how the government reacts to the cuts (preferences, in both cases).

      This is why the long-term effects of tax cuts on the economy are unpredictable: if a person recognizes that the tax rate will increase in the future because of a current tax cut (something that will have to happen in order to meet future need), then they will save and opt NOT to spend their additional income. If they don’t, then they spend it now (applies to older people in particular, who may conclude that they won’t be around to see the tax increase and will spend it all now). Now multiply that uncertainty by 240 million people.

      In the long-term, the national deficit skyrockets each time there is a
      tax cut because the government needs to borrow more in order to overcome
      the funding gap–in reality, tax cuts are a way for current generations
      to benefit (whether they save or spend) while passing off the losses (whether in services or higher tax rates) to future generations.

      • Rob Drury

        Thanks for making my point. Tax cuts increase discretionary income for both households and business. The difference between in savings and how it effects the economy is the difference in the cash-hoarding you’ve described and responsible investing, which further prospers the economy. In every possible scenario where there is no obstruction, tax cuts INCREASE tax revenue in the intermediate and long run.

  • Sharkatac9

    You mean Ryan wants to (gasp!) abide by the constitution and let hard-working Americans KEEP more of their own money?  Now that would be a 180 degree change in the current direction America is heading.

    • Guest

      Why can the wealthy “hard-working Americans” keep more of their earned income? Don’t lower income people work just as hard? If not harder?

      • Rob Drury

        That’s just it; they can’t. Way too many political forces are trying to separate the wealthy from their money. And no, most lower income people don’t work nearly as hard, but that’s irrelevant. All people deserve to keep more of their income, and that’s what conservatives are trying to accomplish.

  • Mediscare

    I have to say, as a regular LearnVest reader, I am extremely disappointed in this article.  

    Ms. Kade – have you read the Ryan Budgets?  Or did you just read Ezra Klein’s (whose economics you fail to mention are about as polar opposite from Paul Ryan as they come…) description of those budgets? I say budgetS, plural, because Paul Ryan (as Chairman of the House Budget Committee) has authored more than 1 budget, which include different proposals.  That seems important to me.

    For instance – the most recent iteration of the “Ryan Budget” doesn’t include a “voucher system” at all.  Last year’s budget included a premium support proposal that
    would allow future seniors – those 54 and younger – to choose between a
    variety of plans to
    pick the coverage option that best meets their needs. Then the premium
    for the plan would be paid directly from Medicare to the insurer. It
    is in no way a “voucher” or “coupon” program. Additionally, the plan is income and health sensitive – lower income
    seniors and the chronically ill would receive more money from the
    government while the wealthiest seniors would receive less.

    Interestingly, this model was a compromise plan with
    Democratic Senator Ron Wyden. In this proposal, future seniors, in
    addition to having the option to choose between a variety of plans,
    could also choose to remain with traditional fee-for-service Medicare. Maybe in addition to mentioning his “close ties with wealthy Tea Party donors like Charles and David Koch,” you could have mentioned his willingness to work across party lines and alter his proposals when he receives legitimate criticism? 

    Another thing worth mentioning might be that, according to the Medicare trustees, without any changes to Medicare the program goes broke in 10 yrs.  That means there’s nothing, nada, zilch for ANY beneficiaries.  Where’s Vice President Biden’s plan to avoid this?

    Your biased approach to this story worries me.  When I read Learnvest I’m often reading about issues I am not familiar with and relying on your writers to inform me.  Now I read about an issue I have studied closely and see that you’re not informing, you’re influencing.  Maybe I need to start fact-checking EVERYTHING I read on Learnvest?

    • http://twitter.com/littlebitofliz Elizabeth Candelaria

      Actually, fact-checking should be something you do regardless of where you read it. Just saying.

  • Sea Breeze

    Sure, they wanted to shift the political dialogue to the federal budget, but instead, everyone is talking about Ryan’s desire to impose Taliban-like restrictions on American women and redefine rape. So, choosing him as a candidate hasn’t gone too well so far.

    • Wheatie09

      Um, define “everyone” for us please, ’cause I think it’s just you, plus a handful of female liberals who always seem to think that all women are supposed to place vagina-centric issues at the top of their list of political concerns. The adults in the room (presumably all of whom are, like myself, ladies) want to talk about what is best way to save our country from massive financial ruin, kthxbye

      • Sea Breeze

        Hey Wheatie, are you seriously saying that Paul Ryan’s connection to Rep. Todd Akin hasn’t been in the news lately? Why then, did Paul Ryan have to come out with a statement this week that “rape is rape” –in order to distance himself from Akin. (The two of them co-sponsored bills on the subject of redefining rape with respect to abortions.) Paul Ryan is touted as being a Republican leader who wants to shrink government, but his ideas about women’s rights are NOT small government.  He wants to take away basic rights from American women. That is the hypocrisy that is being addressed. Oh, and given the track record of Republican politicians of the last decade, they are the last people to be trusted with the task of moving the country towards economic prosperity. 

        • Wheatie09

          Hmmm, let’s see, just about EVERY SINGLE major politician releases a boilerplate statement that they disagree with what Akin said, and Ryan now has a national profile due to the whole being-on-the-VP-ticket thing going on, so naturally he has a statement out too, and you call that a connection? Fine, then I guess there’s a “connection” between the two of them. They’re both House members, so there’s a “connection” between Ryan, Akin, and several hundred other House members. My congresswoman also happened to have released a statement about it. Gasp! She must be connected to Akin too!

          I’m not going to debate you further on all of these so-called women’s issues, not because I don’t enjoy doing so; far from it, I enjoy it a great deal. No, I’m not going to debate it because it has absolutely nothing to do with Paul Ryan’s plan for fiscal solvency.Do you, Ms. Breeze, have anything of substance to say on the very important financial and political matter of how we as a country will prevent the coming financial implosion due to the current structure of our social security system? Shrinking thedeficit? Privatization vs public funds for retirement funds? The federal tax rate? Or do you just see Paul Ryan’s name (or the word “Republican”) and go “Yay, I get to talk about rape! It’s of suuuch paramount relevance on a website devoted to managing finance!”

          Go back to Jezebel or Gawker, you’ll be in like company.

          • Sea Breeze

            Wheatie,
            You aren’t debating me, you are insulting me and trying to change the subject. As a true lady, you should offer me an apology for your language.
            My original statement was that the media focus on Ryan shifted from his budget ideas to his hard-line conservative ideas about rape and abortion. You said it wasn’t an issue being covered in the media, but he HAS been out there doing interviews on that very subject.  Ryan is out there making statements like these:
             
            1. “rape is rape”
            2. Use of the term “forcible rape” in legislation was just “stock language
            3. “rape is a method of conception”. 

            If the man wants to be vice-president, then his ideas need to be discussed openly. Changing abortion laws would most definitely have a financial impact on American women. 

  • guest

    Wow…this is a completely biased article based on hearsay and gossip. Where are the citations for the “facts” that were presented? I was hoping to read a factual piece, not an opinion piece. I am neither Republican nor Democrat and I don’t particularly care for politics, but I have realized that I need to care and educate myself. This article taught me nothing and I am highly disappointed by this editorial and the writers lack of true research.

    • sgcolumbia

      Did you not see the links that the author included?

      And if you’re looking for facts, go ahead and look at Ryan’s voting record.

      http://votesmart.org/candidate/key-votes/26344/

      You are, of course, entitled to come to your own conclusions. But the conclusion that I come to from looking at his voting record is that he is anti-regulation when it affects his pro-business constituents (anti-EPA, anti-FDA, anti-consumer advocacy, anti-financial regulation) and pro-regulation when he wants to impose his social order on others (abortion, same sex marriage, military, nuclear disarmament, civil rights, religion).

      Others are right that he is not Republican party line, but all that tells me is that he is unpredictable, and in some disturbing ways. I understand libertarians because at least they are consistent–don’t regulate me through EPA but also don’t tell me I can’t have an abortion or take away my civil rights–but, in general, I find the tea party politicians to be frightening in that they apply a double-standard: don’t tell me what to do, but I am going to tell you how to live your life.

      By contrast, while I do have major problems with the Democrats, I find that their finger-wagging is (generally–both parties are guilty of stripping our civil liberties) of a less invasive nature. As in, we’ll allow abortions, but if you don’t want one, don’t get one–but we’re leaving it as an option for others. As in, we’ll allow same sex marriage, but if you disagree, that’s ok, just don’t attend one.

  • Sjmva78

    Very disappointed with this extremely biased article. I am proud to say that Paul Ryan is from the state I live in and that I have a relative that works for him. I only wish he were running for president.

  • guest

    I’m really disappointed with your article.  What we need is a media that reports the facts and then lets us make up our minds.  What happened to responsible journalism?????

    • Sea Breeze

      Exactly which facts were left out!? Please list them for us.
      Are you disappointed that this article didn’t discuss what a phenomenal liar Paul Ryan has turned out to be? If so, then I agree with you. 

  • http://twitter.com/clementine65 Mary Arangua

    Journalists suffer from a “smarter than thou” bias. Also, so much of what passes for journalism is nothing more than political porn.  Freedom through the eyes of radical secularists, liberals, progressives–the ilk of journalism–is that we can do what we want–what feels good–what trips our trigger and not the freedom to do as we should morally, traditionally, doing unto others as we would have them do to us.  This plays to their sources of capital–advertizers et al–who know that if you can play to those basest instincts in humans you can make a fast buck off them.  Vanity of vanties, all is vanity, alas.  Obama is America’s fantasy man

    • Sea Breeze

      Are you high? You appear to be tripping out on a number of fantasy-based ideas about journalism. None of which has anything to do with the topic under discussion–Paul Ryan.

    • http://twitter.com/clementine65 Mary Arangua

      It’s no fantasy this country is headed for a depression and Paul Ryan’s budget tried to avert it in 2011.  That man in the White House would not agree to any entitlement reform or compromise on tax reform.  He put all his eggs in the ACA basket, cares not a whit if he destroys America, and is gearing up under the FISA to take over our country when chaos, he decides what that means, reigns.  So he will become our first black dictator. Am I high?  Was Clint Eastwood high?  Are you the only sane person in the room?  Is that how you handle discenters?    I believe in cutting to the chase.  The distortions in this article are purposeful.  I can criticize the Obamedia.  I don’t have to be “high.”  It is not divinely inspired. 

      • Sea Breeze

        Huh? You have replied to your own comment with another paranoid stream-of-consciousness style comment that contains only one sentence about Paul Ryan. That is cutting to chase? Oh, and I handle “discenters’ by telling them they need to look up the correct spelling of the word.

  • LC

    wow way to be unbiased, Learnvest. How about providing facts (instead of stolen commentary from liberal journalists/editorials) and letting your readers decide for themselves. Isnt that what this website is about?

  • http://twitter.com/latinAbroad A Nomadic Translator

    I must say, though, this was a very biased article, LearnVest. I would expect way more from you… but I digress (for now):

    I’m sorry, but Paul Ryan is an idiot just by stating that his hero is Ayn Rand.
    Why? Ayn Rand was more of a libertarian and would grossly disagree with all of the Republicans’ plans to control  the private lives of Americans (i.e. outlaw abortion, outlaw gay marriage, etc.).

    Just because of this, to me, Paul Ryan is a hypocrite. Oh, and his speech at the RNC? Proof that he is a compulsive liar.

    I am an independent, do not associate with any political party. But with a guy like Paul Ryan running as VP? No way I’m voting for THAT ticket!