Wintery Knight

…integrating Christian faith and knowledge in the public square

What’s wrong with the American economy and how Paul Ryan would fix it

This is a pretty long, but very educational, article from National Review.

Here’s the intro:

There’s been an avalanche of commentary on Paul Ryan’s “Path to Prosperity,” and rightly so. Ryan’s proposal, which would reform entitlement spending, balance the budget, and begin paying off the debt, is the most important legislative proposal of my lifetime. It may not pass in its current form. But there is a much better chance than you’d think that it will pass in modified form, perhaps under another president. Either way, it will change the way we talk about the deficit and the debt for a very long time.

The plan is quite comprehensive, encompassing discretionary spending, defense spending, financial regulation, Fannie and Freddie, tax reform, welfare programs, and Medicare and Medicaid. (As David Brooks puts it, PTP “dodges Social Security,” which is acceptable, given Social Security’s lesser impact on our long-term fiscal problems.)

As for getting debt under control, here’s what the Congressional Budget Office had to say about the “Path to Prosperity”:

The resulting budget deficits under the proposal would be around 2 percent of GDP in the 2020s [down from 9 percent in 2010] and would decline during the 2030s. The budget would be in surplus by 2040 and show growing surpluses in the following decade. Federal debt would equal about 48 percent of GDP by 2040 and 10 percent by 2050.

And Yuval Levin has put together some nice charts, based on the CBO numbers, that show how dramatically PTP changes our country’s fiscal trajectory, relative to both current law and the Obama budget.

[...]So let’s sift through the most controversial aspects of the plan: those related to health-care entitlements. It’s going to be a rather wonky exercise, though I’ve done my best to make it readable by breaking it up into bite-sized chunks.

Here’s a summary of his nine points:

  1. It reduces the growth of Medicare and Medicaid spending so that it is similar to countries like France, Germany and Switzerland
  2. It reduces the costs of health care by letting individuals control how their own money is being spent – reducing demand naturally
  3. It lets individuals decide what medical insurance coverages they want – just like they do with auto insurance
  4. It mandates that seniors have to pay appropriate premiums for any extra medical insurance coverage they choose
  5. It encourages states to save money and to prevent fraud by giving them financial rewards for doing so
  6. It requires the rich to pay more for Medicare than the poor -by means-testing service provision
  7. It introduces a voucher system where the government gives each person money (e.g. – $15,000) to choose a plan they like
  8. The Democrat alternative to the “Path to Prosperity” plan is tax increases and rationing health care
  9. The CBO agrees that if we do nothing about entitlement spending, we will bankrupt the country

I really encourage my Christian readers to take a shot at reading this article. It is very important for us to be seen as being informed about policies down to the details, so that we can discuss things other than Christianity intelligently. No one is going to trust you to discuss spiritual things unless they can see that you have some familiarity with material things. The reason why Bill Craig can back atheists into an auditorium is because he understands things about cosmology, physics, history and philosophy. People trust him, because he knows what he is talking about. You have a plan for a Christian life too, and you need to be able to do a good job of making decisions. You need to understand your country’s economy in order to make good decisions. And not just voting decisions, but spending decisions, educational decisions, career decisions and investing decisions. And then when you talk about your faith to others in public, you can link it to all kinds of different public areas of knowledge. So that Christianity will come up naturally, no matter what the topic is.

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5 Responses

  1. Michael says:

    Hey wk, I watched this video today and thought it was a great, succint and to the point video on healthcare from a top economist from Harvard!
    It is more than worthy of having a post made out of it (with due credit for the recommendation of course ;P)!

    • Michael, you are awesome! Thanks so much for sending this!

      • Michael says:

        Lol no worries.
        Here is a collection of links and a few comments about the Ryan plan from another Harvard economist, Greg Mankiw, one of the top economists in the world. He’s written all of the main textbooks on economics for undergraduates around the world, including the one we use in Oxford!
        http://gregmankiw.blogspot.com/2011/04/ryan-plan.html
        He’s centre-right but is very objective and fair in almost all his comments.

        • Michael says:

          I hate to keep spamming this, sorry wk!
          But this one’s actually relevant to health care though :)
          http://gregmankiw.blogspot.com/2011/04/two-visions-for-medicare.html

          Key quote from Mankiw:
          “Here we see the fundamental differences between the parties: One believes in spending more and allocating that spending via central planning. The other believes in spending less and harnessing individual choice and competition to ensure that the money is spent wisely.”

          And that’s from a guy who really is very fair minded and objective, as you can tell from the rest of the post.

          • No, I am happy that you are interested in economics. I consider him to be center or center-right. He just KNOWS economics, and it’s a conservative field because it’s like physics or chemistry – it deals in evidence.

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