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

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

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.


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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.


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