My last post was specifically about the idea of turning Medicare into a voucher to buy private health insurance. I wasn’t endorsing the Ryan proposals for health care wholesale – I haven’t thought enough about the Medicaid block grant concept, I can’t see any justification for excluding everyone over 55 from any proposed reform, and I’m opposed to wholesale repeal of the health care legislation passed by the last Congress.
And I wasn’t saying anything about the other tax, spending and regulatory proposals in Ryan’s budget plan.
For the record, I think any serious tax overhaul needs to raise more, not less revenue than the code as it stands. The Ryan tax proposals fail that test, so I’m not taking them seriously. I certainly think it makes sense to cut some taxes – cutting the corporate rate dramatically while eliminating loopholes seems like a very good idea to me, as does cutting the payroll tax permanently. I also think it makes sense to raise some taxes – scale back costly income tax loopholes like the mortgage deduction and impose some kind of consumption tax, whether a VAT or a carbon tax or a combination of various pigovian taxes, whatever. I don’t see a lot of justification for further lowering the top income tax bracket. But the bottom line for me is that a tax overhaul proposal isn’t serious if it doesn’t raise more revenue than the current code, and then we can debate efficiency and distribution effects and so forth.
But on the spending side, there are only two serious debates to be having: one about Medicare, and one about defense. The debate about Medicare isn’t a pure spending debate, and neither is the debate about defense. We talk about Medicare in the context of a larger debate about how to drive better health outcomes for lower cost. We talk about defense in the context of a larger debate about America’s overall foreign policy. We could, in both cases, let budgetary necessity force policy choices upon us, but I do think we’d get better results if we actually talked about policy with the budgetary necessities in mind, and vice versa.