The Ryan Plan and Bipartisan Compromise

I have a dream.

Let me begin by making clear my personal position up front. I think America faces a serious long-term fiscal challenge. Not one that needs to be addressed in 2013– trying to fix this all at once would be highly counterproductive. But I believe that the American political system is badly broken. The voting public expects to get something for nothing, and the two parties compete to promise to give them exactly that. I’m persuaded that both tax increases and drastic entitlement reform will eventually be necessary. I would like to see debate and even a consensus reached today on exactly how we plan to implement both measures over time.

One thing I liked about Representative Paul Ryan’s (R-WI) approach to slowing the growth in entitlement spending was that he was trying to frame the question exactly the way I think it needs to be posed. We need a system in which we debate and choose each year not the type of medical services the government is going to provide, but instead the dollar amount the government is willing to contribute out of the total. That ultimately is the only way to live within a finite budget. The key step is finding a system that could operate on the principle of setting limits on the budget itself on an annual basis.

Another thing I liked about Ryan’s approach is that he was initially trying to find a consensus by working with moderate Democrats like President Clinton’s OMB Director Alice Rivlin and Senator Ron Wyden (D-OR).

I did not like the Ryan Plan (nor did Rivlin or Wyden) as it actually came out, because it attempts to package entitlement reform with big tax cuts. I also think that would be a losing strategy politically if Romney and Ryan try to run on such an idea– pushing Granny off a cliff in order to give tax cuts to people like Mitt Romney is never going to sell.

Miles Kimball thinks that Romney might do reasonably well as President if the Democrats hold the Senate, but worries that if Republicans were to take the House, Senate, and White House, a Romney presidency would make many serious mistakes in trying the implement the ideas on which the Republicans campaigned.

But here’s an idea for you. What if Romney were to say, no, this problem is too big for one party to solve by itself– both parties got us into this mess, and both parties have to agree on a way out, promising to veto anything that does not have bipartisan support?

And here’s another idea, or let me even call it a campaign suggestion– Romney should begin the process right now. Having secured the nomination, if he wants to win the election, he’ll have to move toward the center relative to where either he or Ryan were a few months ago.

Just to continue that thought, if President Obama sees this bipartisanship theme getting traction, he might want to jump on the train, too, before it leaves the station.

Call it an idea, call it a campaign suggestion for both presidential candidates– or call it a dream.

About James D. Hamilton 244 Articles

James D. Hamilton is Professor of Economics at the University of California, San Diego.

Visit: Econbrowser

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