House Budget Committee Chairman Paul Ryan spoke at a breakfast this morning at the Phoenix Park Hotel sponsored by the American Council on Capital Formation. His presentation was an interesting contrast with that of Indiana Governor Mitch Daniels speaking on his education reform program at the American Enterprise Institute yesterday (here’s the video). Daniels was certainly wonky enough, with PowerPoint charts and presentations and with detailed descriptions of the sweeping and ingenious reforms he and the Republican-controlled legislature passed into law. He was also charmingly self-deprecating—and I can say, on the basis of knowing him since the 1980s, that this is not an act. What Daniel did not do is to speak as he has on other occasions about the pressing need for entitlement reform. That is after all not part of his job remit as governor of Indiana and his education reforms are in any case interesting enough to warrant the spotlight.
Paul Ryan did speak about the pressing need for entitlement reform and about the ongoing struggle to extract spending cuts and other concessions from the Obama administration as the price for raising the federal debt limit—all of which is very much part of his job remit as Budget Committee chairman. In an impressive speech delivered without visible text Ryan argued that “government activism” is holding the economy back and that “four foundations for economic growth” are being ignored because of (1) out-of-control spending, (2) “a regulatory state untethered to reality,” (3) “enormous uncertainty” about tax rates and (4) lack of sound money. Medicare, he said, is on its way to becoming the government’s most expensive program and that Medicare “as it is today,” preferred by a 60% to 34% margin in a Quinnipiac poll to the plan in Ryan’s budget, is not on offer, since under Obamacare it is on track to being replaced by a system in which care is effectively rationed by the 15-member presidentially-appointed Independent Payment Advisory Board.
Ryan points out that while the House has passed a budget resolution, the Senate has not done so or shown any signs of doing so soon and the “budget” supposedly sketched out by Barack Obama in his April 13 George Washington University speech isn’t a real budget at all. Therefore, he said, we aren’t going to see the kind of major changes envisioned in his budget until after the 2012 election, but that Congress and the administration can hit “doubles” and “triples” in the forms of spending caps with automatic triggers passed as part of a deal to raise the debt ceiling. Treasury Secretary Timothy Geithner—the administration official Ryan says he talks to most frequently—yesterday delayed the debt ceiling deadline until August 2, providing time for negotiations, presumably conducted in the commission headed by Vice President Joe Biden (at least if there’s any time for negotiating after Biden’s opening remarks: my caveat, not Ryan’s). In response to a question from me, Ryan ruled out any automatic trigger that could result in a tax increase.
Ryan is operating here from a position of strength. The House clearly won’t vote a debt ceiling increase without some kind of spending cuts—leaders are considering a vote on the “naked” debt ceiling increase advocated by Obama, which will clearly fail—and the Senate isn’t likely to either, since at least several Senate Democrats have indicated that they won’t back such a move.