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Budget

Double Vision

President Obama’s budget throws into stark relief two competing worldviews of the federal government’s future size and shape. There’s not much middle ground to be found.

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Shrink-wrap: Americans take for granted such routine government functions as delivering the mail, protecting air travelers, and inspecting beef, but long-term budget woes could make some of these tasks unsustainable.(AP Photo/Elaine Thompson)

Under House Budget Committee Chairman Paul Ryan’s blueprint for the federal government, defense spending will take precedence over domestic programs such as highway projects, environmental protection, and bank regulation. Food stamps and public housing will go to people who hold jobs or agree to enroll in work-training programs. Senior citizens will buy their own health insurance, with the help of government subsidies.

Imagine your 80-year-old mother shopping online for private insurance, comparing deductibles and co-pays. This is the future, according to House Republicans: a smaller, leaner government machine with a shrunken social safety net that, in some cases, comes with strings.

 

Want to collect unemployment benefits? Get ready to take a drug test—or so said the House GOP during last fall’s payroll-tax debate. Want to sign up for Medicaid, the federal health insurance plan for low-income adults and children? You can, but only if your state happens to have enough money on hand to enroll you in the program.

This is a starker take on the notion of the welfare state. OK, scratch that: not starker. It’s an outright decimation of the Democratic Party’s ideals and of the kind of sweeping, many-things-to-many-people federal government that President Obama laid out in his proposed budget on Monday.

Ryan admitted as much in the spring of 2011 after unveiling his own budget: “The role of the federal government is both vital and limited,” he wrote. “When government takes on too many tasks, it usually doesn’t do any of them very well.”

 

The contrast between how the two parties would serve the American people and the menu of government services they would offer has never been clearer than it was this past budget week. The Republicans want to shrink spending and overhaul entitlements—and, by doing so, alter the fundamental relationship between Americans and their government. The Democrats appear to be banking on a misty fantasy left over from the Clinton administration: the hope that economic growth will sort out the nation’s fiscal mess and somehow result in a balanced budget.

These days, the budgetary sniping seems to largely boil down to a single number: the percentage of the economy that should be devoted to government spending.

Republicans have become increasingly explicit on that score. Presidential hopeful Mitt Romney calls for capping federal spending at 20 percent of the gross domestic product by 2016; Ryan has proposed capping spending at 20 percent of GDP by 2015 and 15 percent by 2050. (The last time the federal government spent less than 18 percent of GDP was almost a half-century ago, in fiscal 1966, right before the government created Medicare.)

Obama didn’t talk in those terms this week—which, in itself, says volumes. Federal spending currently accounts for almost 25 percent of GDP, and Obama’s budget would do little to change that. Instead, the president’s narrative for the fiscal 2013 budget is one of economic optimism and growth fueled by increased revenues from taxes on the wealthy and stimulus-like measures such as infrastructure spending to nudge the slow-to-recover economy. Obama’s vision might as well have been an outtake from Clint Eastwood’s Super Bowl commercial.

 
“The idea that you’d cap spending at some point of the GDP precludes the flexibility in advanced economies in a global era.” —Jared Bernstein, former economic adviser to President Obama

The president reportedly took a stab at entitlement reform last year in talks with House Republican leaders over finding a way to forge a grand bargain out of the debt-ceiling imbroglio. But his new budget doesn’t move in that direction. The White House has expressed an interest in talking further with the GOP, but if any negotiations are going to bear fruit, something has got to give. Democrats want to raise taxes but haven’t been as ruthless as the GOP about cutting spending. Republicans want to take a hatchet to government but haven’t figured out a way to boost revenues to cover the nation’s long-term commitments.

“We’ve been having a party with tax cuts and higher Medicare drug costs. We’re not in the slightest bit prepared” to deal seriously with the towering deficit, said Paul Posner, director of George Mason University’s public-administration program, who managed the Government Accountability Office’s budget and public-finance work.

THE SHAPE OF THINGS TO COME?

It’s not enough to say that Republicans and Democrats disagree on issues of spending, taxes, and government assistance. It’s more appropriate to say that the two parties view the world entirely differently. If Democrats are the Impressionist painters (warm and bright, but fuzzy), Republicans are the modern abstract artists (sharp colors, contrasts, and big bold lines).

Ryan, the architect of the GOP’s grand plan, knows that it would be a radical step. “A bold reform agenda is our moral obligation. We have an obligation to provide the American people with a clear path that gets our country back on track,” he told a receptive audience last week at the Conservative Political Action Conference in Washington.

This article appears in the February 18, 2012 edition of National Journal Magazine.

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