Barack Obama vs. Paul Ryan: Two Visions of America's Future

By Derek Thompson

The only thing wider than our budget gap is the distance between tonight's speakers and their plans to fix it.

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When Rep. Paul Ryan unveiled his Roadmap for America's Future last year, the Republican Party mostly ignored his plan. It wasn't hard to see why. In a town that shrinks from radical change, the conservative wonk called for nothing less than a full body surgery for the budget.

Tonight, Ryan speaks for Republicans when he delivers the official response to the State of the Union. If the GOP is embracing the man, are they also embracing his vision?

The Republican Study Committee has already wrapped its arms around his proposal to cut trillions in spending this decade. But Ryan's plan went further. Much further. He didn't just reform corporate taxes. He eliminated them. He didn't just reform Social Security. He privatized it. He didn't call for freezing tax rates on the rich. He called for a million dollar tax cut for the wealthiest 200,000 families.

Invest to Expand vs. Cut and Grow

In short, Rep. Paul Ryan offers something more than a rebuttal to President Obama's speech tonight. He offers a completely different way of thinking about deficits, competitiveness, and social welfare.

DEFICITS

To President Obama, the deficit gap has to be closed from two sides, with less spending and more taxes. But he has yet to lay out a comprehensive plan to reduce our long term deficit. To be sure, there has been a piecemeal strategy. The White House fought for deficit-neutral health care reform, higher taxes on the rich, and a salary freeze for the government. But Democrats have not brought anything as comprehensive as Ryan's roadmap to the table.

To Ryan, and many conservatives, we don't have a taxing problem. We have a spending problem, and the only solution is less spending. Ryan's plan would cap revenue near its historical average and pull down government spending on entitlements by essentially privatizing Social Security and moving Medicare into a fixed-payment voucher program. In other words, rather than pay seniors' medical bills as they increase, we would give older folks a voucher to buy health care on their own. To liberals, this is a bit like trying to lose weight by wearing a tight girdle but not changing your diet. To conservatives, buying a girdle is the first step to fitting in it.

COMPETITIVENESS

In President Obama's vision of competitiveness, the government is an engine of the economy. In his vision smart regulations and government spending on roads, and schools, and research are essential to power the private sector. That's why his speech will call for a renewed focus on spending that supports innovation: Schools that inform research, research that churns out products, and infrastructure that gets those products into stores at home and abroad.

Obama sees government as an engine of the economy. Ryan sees it as dead weight.

In Ryan's vision, government is more like dead weight on an airplane than its engine, and the best way to get the private sector flying is to cut down on Washington's drag effect. So he eliminates the corporate income tax code, eliminates taxes on investment income, and replaces some of the lost revenue with a simpler consumption tax. If Obama's vision of competitiveness can be summed up as "invest to expand," Ryan's can be summed up as "cut and grow."

SOCIAL WELFARE

President Obama might use the State of the Union to defend the health care law which House conservatives recently voted to repeal. But he almost certainly won't ask Congress to touch Social Security. That's because the president's approach to our social welfare system is a bit like a copy editor's approach to a newspaper story: He's looking to tweak, not to rewrite. The president is an incrementalist at heart and even his health care law -- lambasted in some circles as socialism -- is, at worst, a too-cautious effort to expand insurance and reform the byzantine system.

Paul Ryan isn't shy about transforming America's safety net. Liberals have sometimes slammed his plan for attacking the poor, although his plan would increase minimum benefits for the low-income elderly and keep tax rates on the poor near historical lows. But he offers a radically different vision of middle-class welfare. In Social Security, he would cut benefits for most seniors and encourage Americans to transfer into personal retirement accounts. His health care overhaul would have government pay less and consumers pay more. His tax reforms, which eliminate middle-class tax credits and create a new consumption tax, would slightly increase the tax burden on the middle class. To be clear, Ryan's plan isn't heartless. But in asking the private sector to take greater responsibility for the economy, he's also asking the middle class to take fewer benefits from the government.

Photo: Pete Souza/White House




This article available online at:

http://www.theatlantic.com/business/archive/2011/01/barack-obama-vs-paul-ryan-two-visions-of-americas-future/70145/