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Ryan Says Congress Will Dodge Entitlement Cuts

Mar 17, 2011

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Congress is unlikely to tackle major changes in Medicare, Medicaid or Social Security before the 2012 election because of few signs that Republicans and Democrats are willing to assume the political risk, according to House Budget Committee Chairman Paul Ryan, R-Wis.

Ryan, speaking Thursday at a breakfast hosted by POLITICO, offered a gloomy assessment of prospects for significant entitlement reform this year. The House Republican's point man on budget and spending issues said he has not spoken with President Obama or senior White House advisers about the prospects for major entitlement reform, adding that if the “political demagoguery occurs,” it will become a 2012 election issue.

Obama has been widely criticized by Democrats and Republicans for not addressing entitlement reform in his 2012 budget proposal. Ryan, who served on Obama’s fiscal commission last year but did not endorse the final recommendations of the panel’s co-chairmen, said he was disappointed with the president’s budget and accused him of “punting” on the debate.  “He is ignoring the problem,” Ryan said.

Congress and the White House have been consumed by a battle over spending levels for the current fiscal year, and the Senate is expected to approve the sixth temporary spending resolution since October to keep the government operating. 

Neither the White House nor congressional Republicans have been willing to offer a proposal for controlling the long term deficit by scaling back  or containing entitlement programs and reforms of the tax code. However, Ryan and other House GOP leaders have promised to unveil a fiscal 2012 budget plan next month. 

Ryan said most of the fiscal gap, or unfunded promises, are the health care entitlements. He estimates they will reach $88.6 trillion in 2011. The Republican deficit hawk acknowledged that even though Social Security is not a significant driver of the country’s debt from a “functional standpoint,” it is an easy one to fix and not as complicated as the other social  safety nets. Changes to Social Security to guarantee its long term viability could build confidence and signal financial austerity in the credit markets, he said.

Ryan would not reveal specifics of his budget proposal, which include details of entitlement reform, saying he and his staff were still in the discussion and research stages. He plans to unveil it in the first week of April.  The plan is expected to call for substantial future savings which will make the $61 billion in government program cuts being debated in Congress for the remainder of the current fiscal year look  relatively minor.

Ryan wants to start acting on the  Erskine Bowles and  Alan Simpson deficit reduction proposals. Last year, Democrat  Bowles and Republican Simpson co-chaired the White House's deficit-reduction panel and released a prescription of steep spending cuts, entitlement reform and revenue increases that would cut $4 trillion from the deficit over 10 years. Since then, a bipartisan group of six senators, known as the “Gang of Six,” have been working to implement some of those proposals into law.

On Wednesday Senate Majority Leader Harry Reid, D-Nev. said he was willing to take a look at  changes in Social Security in 20 years but not now. “It boggles my mind,” Ryan said in response to Reid’s comments.

Social Security has been seen as the deadly third rail of American politics that politicians did not want to touch, but a new ABC News/Washington Post poll finds that state budgets may in fact pose the greater hazard to ax-wielding lawmakers. Eighty-one percent of Americans see a crisis ahead for Social Security if changes aren't made, up 10 points from six years ago. And more than half now favor "major" changes to keep the system secure.

As Congress struggles to agree on how much to cut from the federal budget and reduce spending, lawmakers have steered clear of the big-ticket items such as Social Security, Medicare, Medicaid, and national defense.

Ryan said the easiest way to tackle spending and bring down the projected $1.65 trillion deficit for this year is to reduce discretionary spending and force Congress to prioritize spending.  The fight over the 2011 continuing resolution to fund the government for the remainder of the fiscal year is so important, he said.

“That is the kind spending where we can get some discipline early,” he said. “When you reform entitlements it takes time for those savings to accrue.”

On Tuesday, the House passed a three-week stop gap bill that cuts $6 billion in government programs and would keep the government operating through April 8.  The Senate approved that measure later today and sent it to the White House for the president’s signature. Both parties have said they want to avoid a government shutdown, but neither party has showed willingness to compromise on spending cuts.

With the passage of each short-term spending measure, the possibility of a government shutdown is temporarily averted. Ryan said that while there is still no final spending agreement for this year, a government shutdown is possible but “it sounds worse than it probably is.”

Overhauling corporate tax reform is one area Ryan believes could be completed this year and one of a few issues that both Democrats and Republicans agree upon. “That’s one thing I think we have a shot at bipartisanship, only because the White House talks about it constantly,” he said. “We all are beginning to get a consensus that this corporate tax system we have is terribly uncompetitive.” The president backed a corporate tax overhaul as outlined in his State of the Union address.

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