On Those Ryan Spending “Cuts”

Paul Krugman mocks the idea that Paul Ryan is a fiscal hawk by evaluating what his policy proposals mean for the next decade:

So if we look at the actual policy proposals, they look like this: Spending cuts: $1.7 trillion Tax cuts: $4.3 trillion This is, then, a plan that would increase the deficit by around $2.6 trillion.

But would Romney-Ryan really reduce the size of government at all. Paul?

approximately $800 billion comes from converting Medicaid into a block grant that grows only with population and overall inflation – a big cut compared with projections that take into account rising health-care costs and an aging population (since the elderly and disabled account for most Medicaid expenses). Another $130 billion comes from doing something similar to food stamps. Then there are odds and ends – Pell grants, job training. Be generous and call all of this $1 trillion in specified cuts. On top of this we should add the $700 billion in Medicare cuts that Ryan denounces in Obamacare but nonetheless incorporates into his own plan.

Romney is now saying that these Obama-Ryan proposed reductions in Medicare will not happen if he is President. OK! Barkley had this to say about the Medicaid proposal:

the part of the Ryan plans that is most potentially destructive both fiscally and economically, which I do not see repudiated by the Romney version, even if it is less clearly stated, is neither of the above, is what it/they do to Medicaid. This is to fix the amount sent to the states and then send it to the states as a block grant.

As I noted:

The numerical importance of this is right there in the document Ryan instructed CBO to produce. CBO predicts by 2050 under the current system that Federal spending for Medicaid and CHIP will be 4.25% of GDP. Ryan's budget would reduce this to 1% of GDP. Will the states pick up the 3.25% of GDP difference? If so, it would have to be with increases in what are traditionally regressive taxes.

Romney-Ryan are not proposing to reduce the long-term tax burden at all. They are just deferring it either to state governments or the future.