Without Medicare Privatization, GOP Budget Won’t Eliminate The Deficit

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House Republican leaders see the political writing on the wall and won’t be making a hard push for their plan to privatize Medicare.

That’s a bitter pill to swallow for rank and file members who already voted for the GOP budget. Now the official position of the House of Representatives, it has won praise from conservatives — and even many mainstream media figures — for making “hard choices” to tackle long-term debt and deficit. But crucially, a huge chunk of the savings in the plan came from … the now-withered plan to privatize Medicare — to shift a significant portion of Medicare costs on to consumers.

It turns out that if you strike the Medicare plan from the GOP budget — authored by Rep. Paul Ryan (R-WI) — it doesn’t achieve fiscal balance anymore.“It certainly blows a major hole in his plan,” said Paul Van de Water, a health care and budget expert at the Center on Budget and Policy Priorities, in a phone interview.

If you take Ryan at his word, and assume that the tax-side of his plan is revenue neutral — a big “if” — his plan balances the budget over decades entirely on the spending side of the government’s ledger. Van de Water explains that if you take the Medicare privatization plan out of the equation, the budget sinks — dragged down by higher spending, and then higher interest payments as a result of larger-than-projected deficits.

“That plus interest gets you into a range where you no longer balance the budget,” Van de Water said.

That’s not to say Ryan’s plan would blow up the deficit. “Would it turn [it] into a disaster? Probably not because he was cutting so much elsewhere in his proposal. He has very deep cuts in in Medicaid, he also has very, very deep reductions in the rest of the government as well.”

Of course, eliminating deficits is supposedly Congress’ entire raison d’être at this point. But if phasing out Medicare is off the table, and tax increases are off the table, that’s just not going to happen.

ABOUT THE AUTHOR

Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight and the debt limit fight. He can be reached at brian@talkingpointsmemo.com
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