Michael Meeropol: Thoughts on the Paul Ryan Candidacy for Vice President

Sep 7, 2012

Four years ago at this time, my commentary focused on the bizarre selection by Senator John McCain of Alaska Governor Sarah Palin as his running mate.  I was horrified that McCain would pick such an unbelievably unqualified individual for that position, just to help increase his chances of winning.  Everyone who has either read the book GAME CHANGE or seen the movie of the same name knows what a disaster that was.  (Luckily for us, it was a disaster for the Republicans not the country.) 

In 2012, I am pleased to say that the Republican Vice-Presidential candidate, Representative Paul Ryan of Wisconsin, is a much more serious choice.  That does not mean he is a good choice for the country.  Mr. Ryan’s career in the House of Representatives gives ample reason to reject him for the role of potential President.

(For a really good analysis of many aspects of Ryan’s career and record, see the September 18 [2012] issue of THE NATION with articles by John Nichols, Melissa Harris-Perry, Jonathan Schell and Eric Alterman.)

First of all, let us dispense with the idea which has been stated over and over again that Mr. Ryan is a responsible fiscal conservative who will make sure that over time the Federal Budget is reined in and deficits reduced.  That is pure nonsense as the evidence shows

Some listeners may remember that back in 2006 I delivered a commentary called “What’s Wrong with Medicare Part D?” which addressed serious defects in the Prescription Drug Benefit that had just been added to Medicare.  Representative Ryan, despite his supposed fiscal responsibility voted for  that bill.  By supporting a bill without a mechanism to pay for it, he was actually voting for a long run increase in the federal deficit.  He made matters worse by supporting the failure to include any effort at cost control.  In that bill, Medicare was specifically prohibited from using its bargaining leverage with drug companies to moderate price increases (something the VA does with good results). 

(For details comparing the way the VA sets drug prices and the way Medicare Part D sets prices, see Families USA. 2007. "Rhetoric vs. Reality:  Comparing Medicare Part D Prices to VA Prices." New York. April.  http://www.familiesusa.org/assets/pdfs/rhetoric-vs-reality.PDF)

I might add that despite the almost universal Republican opposition to the individual mandate in Obamacare, Medicare Part D has an individual mandate.  Every senior citizen MUST have prescription drug coverage – a boon to pharmaceutical companies despite the failure to include any cost control mechanism other than the so-called “magic of the market.”

Since I mentioned the so-called “magic of the market” I’d better define my terms.  This “magic” refers to the idea that if you let private businesses compete they will compete prices down to affordable levels. One very important principle of consumer choice that economists usually don’t stress enough is that consumers must be knowledgeable about the product they are contemplating buying.  Otherwise, the producers (who know much more about the product than the consumers) will be in a position to pull the wool over their eyes.  Consumers are not knowledgeable about different drugs – often doctors themselves rely on drug company salespeople to make their decisions.  Pharmaceutical companies faced with Medicare footing the bill would have no incentive to compete as proposed by the “magic of the market” fundamentalists.

Next let us briefly consider the so-called Ryan Budget passed in two different versions by the House of Representatives.  Most of the focus in the campaign is how the original Ryan version ended the Medicare guarantee and substituted a voucher system – euphemistically called premium support --  for the purchase of private insurance.  I commented on this attempted obfuscation in a commentary when the first Ryan budget was passed.  The important point to remember is that “premium support” amounts to a smaller amount of money than would be needed to buy a private sector equivalent of what people now receive from Medicare.  This led the Congressional Budget Office to predict rising out of pocket costs for seniors.

The Romney-Ryan ticket has tried to emphasize the fact that in Romney’s version, all seniors will still have the option of adopting traditional Medicare.  They neglect to tell us the result which will be that healthy seniors would flock to the private insurance providers leaving Medicare with the sickest group.  This will, in turn, get prices rising for all seniors.

However, I want to focus on a different aspect of the Ryan budget.  It is important to note that the Ryan budget includes a doubling down on the Bush tax cuts already skewed to benefit high income individuals.  The top rate would be lowered to 25% and the revenue would somehow magically be raised by closing loopholes and slashing spending on the civilian side of the budget.  These cuts in spending have so outraged some religious leaders that a large number of Catholic women religious and priests and even bishops have condemned Ryan’s failure to live up to the teachings of his faith.  Also the slashing of spending on the civilian side is offset in part by Ryan’s promise to raise defense spending dramatically.

The result, as pointed out by no less a conservative icon as Richard Vigurie, is that the Ryan budget even with very optimistic projections of future economic growth does not balance for over 20 years.  Just in case folks didn’t believe me when they heard it on the radio here’s a direct quote from Vigurie:

"While Ryan gets a lot of credit among fiscal conservatives for having the gumption to propose a plan to balance the budget, his plan takes 28 years to do so. It is hardly the kind of radical change in Washington's culture of spend, borrow and tax that Democrats make it out to be, and conservatives think is required to save our country from bankruptcy.”  (See http://www.christiannewswire.com/news/5975820378.html)

In fact, Paul Ryan’s whole career has not been one of a fiscal conservative willing to make hard choices.  Instead he has proven over and over again that he wants the economy to distribute its resources so that the super rich increase their share while the poor and working people of this country experience the shredding of what safety net remains from the New Deal and Great Society legislation and, if the major loopholes are actually closed, an increase in taxes on middle class Americans.

What a perverse choice by Mitt Romney.  The choice of Ryan is a dangerous predictor of what a Romney Presidency will be like.  I have criticized President Obama’s administration in these commentaries in the past and I will continue to do so in the future, but at least we know he will not permit the Ryan budget or any of its clones to become the law of the land.

Michael Meeropol is visiting professor of Economics at John Jay College of Criminal Justice of the City University of New York. He is the author of Surrender, How the Clinton Administration Completed the Reagan Revolution.

The views expressed by commentators are solely those of the authors, and do not reflect the views of this station or its management.