Paul Ryan and the Education Lobby’s Suicide March to Fiscal Oblivion

By 08/20/2012

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Mitt Romney’s selection of one-time think-tanker Paul Ryan as his running mate has unleashed a torrent of “wonky mud-slinging,” says the press. It’s about time. The nation faces huge demographic and fiscal challenges—trends that will put ever-growing pressure on the public fisc in general, including the education budget. Yet rather than demonstrate the creative problem-solving skills that educators claim to be imparting to their students, their lobbyists are playing short-term politics with America’s long-term future.

The basic challenge—this is hardly news—is that America is aging and, as a result, is spending a lot of money on healthcare and retirement expenses. These expenses will go up and up in coming decades; they’re built into our demography. Unless economic growth can outpace the cost increase, however, that means less money for everything else—education included.

So let’s say you want to protect the education budget and other investments in the young—in the future. The first thing you need to do is constrain public outlays for the old—which mostly means holding the line on healthcare spending. And the second thing you need to do is encourage maximum economic growth. Get both of these things right and you avoid Armageddon.

Now hold on, you say, there are other options. You can go after the defense budget. You can raise taxes on the rich. That’s true, and these might help at the margins, at least for a while. But as the chart below shows, defense spending is hardly putting pressure on education spending—healthcare is. And as many economists will tell you, if you tax the rich too aggressively, you’ll drive down economic growth. You might slice the pie more evenly but a smaller pie means less for everyone. (And taxing the rich won’t raise nearly enough revenue, anyway.)
Ryan Graph
Notes: Sources here, here, and here. Education spending is all government outlays for K-12 and higher education. Healthcare spending is all expenditures, public or private.

Which brings us back to the real options:

  • Rein in healthcare spending. President Obama says the Affordable Care Act will do that, but there are many skeptics. Ryan’s approach—capping the amount of healthcare the government will pay for—by voucherizing  Medicare and block-granting Medicaid, would almost surely do more to drive down healthcare spending, making room for education and everything else. For Medicare especially, Ryan would stop Uncle Sam from writing blank checks for all the health care that seniors can consume. Yes, that would lead to a form of “rationing,” at least rationing the publicly-paid-for services. But you can either “ration” health care or you can “ration” education (and all other social spending). Take your pick.
  • Grow the economy. There’s a debate to be had here, too, with Democrats urging investments in infrastructure and public employee salaries and benefits, and Republicans calling for a simplified pro-growth tax code and a bunch of deregulation. A mix of the two is probably the right prescription—but higher taxes over the long-term would almost certainly backfire.

Yet, unless I missed it, I don’t recall hearing the NEA or AFT or Committee on Education Funding calling for measures to slow down healthcare spending or kick-start the economy. Instead they are sticking to the same old argument, squawking about short-term cuts to the federal budget (which is a thin slice of all education spending anyway).

Just as Scott Walker’s purportedly “anti-educator” reforms freed up money in his state for more spending in the classroom, so would Paul Ryan’s “radical” reforms free up money for education nationwide. It’s too bad that the public-education lobby remains unwilling to acknowledge it.

-Mike Petrilli

This blog entry first appeared on the Fordham Institute’s Flypaper blog.

Comment on this article
  • Doug says:

    Looks like that military budget is the first place to look and higher taxes on the rich and corporations – oh look problem solved.

  • Kathleen Wright says:

    Rep. Ryan has proposed a budget that raises healthcare spending while reducing benefits to the poor and the elderly. Obama has added benefits and reduced payments to providers, creating a net improvement in the healthcare trust fund, which Ryan’s plan further depletes. I have addressed healthcare spending and the remedy with the aging of the population more fully in my blog as a topic of relevance to retired educators, and I concur with the President’s approach through the ACA. Read more here…

  • Al A. says:

    This is a interesting conservative look at the issue, but is replete with problems and half truths. America’s aging, as are all developed countries and now even many in the developing/almost developed world (need this new term to apply to places like Brazil, Argentina, Chile, Uruguay and so on that are hybrid countries in many respects). However, American wealth remains quite high and profits at the top have skyrocketed, in part because of outsourcing high paying jobs to countries where the same work can be done for much less. Furthermore, the GOP has slashed public sector jobs including teachers, firemen, and police and this has made the unemployment situation worse (and they’ve asked for pay and benefit cuts from public employees despite the fact that they are usually paid less on average than private sector workers).

    Despite this, foreign capital continues to flow into the US. This article’s argument is flawed because there is a false assumption that we’re running out of money when in fact it’s the opposite. America is awash in capital, it’s just being used to help a small group of people get richer (through financial positioning mostly as opposed to creating things of use) and a slightly larger group below them are getting a bit of the overflow. The majority isn’t seeing this and the GOP simply wants to create a much harder road to success by cutting any form of assistance they can while pretending that they all simply made it through hard work (as opposed to stable and often wealthy family help and government help they received, but now don’t want others to receive).

    Also, that defense budget is not correct. It is common to take the Pentagon budget alone and put it up as a comparison to the other big chunks of the federal budget, while leaving out the wars, interest on these wars and past military adventures, r&d for weapons (and costs and interest on canceled programs), nukes found in the dept of energy and so on. The actual defense budget is significantly higher than people think, but it’s hidden in different depts and budgets. Next, yes healthcare costs are too high. They are too high because insurance companies profit from being middle men and take a whole lot of money for it. Their bureaucracy and need to profit are a huge problem that could be fixed if Medicare for all were made into a reality, but there is now resistance from conservatives as they view healthcare as a privilege and not a right, which is a big problem. Take insurers out of the equation (and Big Pharma which conducted a quid pro quo with the Dems to get a slightly better deal than insurers who got a good deal, but want a little more because they are greedy after all) and you’d have a much better situation.

    I don’t buy this sort of analysis that presents us with a doom’s day clock when it’s so fabcricated. It’s conventional and reeks of excuses. Facing the fact that the country is aging doesn’t change the fact that we have found trillions of dollars for defense and wars in a time when we have no real adversary (terrorism is an intelligence and surgical strike issue and shouldn’t require all this massive spending). $2 trillion spent in Iraq and Afghanistan is a staggering figure (and where it is in this graph we see?) that conservatives just pretend isn’t there. Plus, the conservative movement wants to dismantle public education and replace it with dysfunctional charter schools and Christian private schools (who are getting hit with the rise of charter schools, which is a hilarious unintentional effect!). These aren’t solutions, these are a means to further corrupt society with a tainted system of crony capitalism that abhors real competition and instead uses political power and leverage to seize public funds while pretending to be a simple competitive entrepreneurial business venture.

    This article is very sneaky and deceptive overall, with only a few good points such as combining tax hikes on the rich with infrastructure building as one possible solution to the economic woes (and is, of course, opposed by the GOP). Otherwise, largely incorrect.

    It’s good to read this stuff to see how adept the conservatives are making us believe that we’re running out of money. That’s about as insightful as when someone says ‘creating’ wealth. You mean moving money from one place to the next or printing money and causing inflation? Now you can ‘create’ wealth by getting foreign capital, but there is no money tree. America is aging, but has a lot of resources to keep things going for many decades to come so long as we don’t keep going down this path of enriching finance (as if it’s all constructive work when it’s not and should be taxed), allowing the rich to run the system with super pacs and lobbying and not falling for this sky is falling alarmist nonsense.

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