Ryan's Budget Squeeze

Issue Brief
Tuesday, April 12, 2011

Under Paul Ryan’s budget plan, the country’s three big entitlement programs – Social Security, Medicare and Medicaid – would make up a larger share of non-interest federal spending than they would under the budget President Obama proposed earlier this year.

It is not that Ryan’s budget raises spending more for the big entitlement programs, but that he would cut so much from everything else. That’s because he wants to hold federal taxes to no more than 19 percent of the economy -- slightly above the past 40-year average -- while eventually balancing the budget.

This inevitably produces a squeeze. Without higher government revenues than in the past, the federal programs driven by an aging population and rising health care costs will consume more and more of the budget -- even with the large cuts proposed by Ryan.

But it is hard to see how we can remain the dominant world power and make important economic investments if retirement income and health care programs claim two-thirds to three-quarters of all federal dollars.