By: AIF Staff
Washington, DC – Last week, at Georgetown University’s McCourt School of Public Policy, former Speaker of the House and American Idea Foundation (AIF) President Paul Ryan talked with students, young professionals, and the Georgetown University community about fiscal policy and how America’s out-of-control national debt is imperiling economic growth.
In an hour-long discussion facilitated by AIF Board Member Jonathan Burks, who serves as the Executive Vice President for Economic & Health Policy at the Bipartisan Policy Center, Ryan detailed the drivers America’s growing debt, touched on how elected officials can address our short and long-term economic challenges, and why doing so matters to current and future generations of workers and retirees. He also imparted some wisdom for Georgetown students pursuing a vocation in public policy.
To watch A Conversation on Fiscal Policy with Paul Ryan, click here. Excerpts of the discussion follow below and a recap from the GU Hoya is accessible here.
Ryan: Political courage & 21st technology can help save America’s social contract
“ We, as Americans and as Republicans and Democrats, basically agree with the social contract. We want to have it in America. We have had a lot of litigation on this over the years and have debated the Great Society, the New Deal, Obamacare, etc. We have settled on a consensus in both parties that this social contract, which I describe as health and retirement security and a safety net for the poor, is what it is. We basically agree it is something that government should
do. Where we will disagree is how the government executes this social contract. We will disagree in some instances on whether it should be administered by the state or federal government, but that government should do this is not in dispute.
The problem is that we have programs designed in the 20th century that are structured in a way that is proving unsustainable in the 21st century and they are driving us into a debt crisis where the programs themselves will be unraveled and disintegrate and go bankrupt. And we will renege on these promises if we do not get ahead of it and fix these problems.
The good news is, since we started in 1932 with Social Security and with Medicare in the 1960’s, we have learned a lot about how to better run social insurance, retirement, and health care problems. The problem is that we have not applied [these lessons] because of unserious politics.
It’s not for a lack of trying, because some of us have tried to do this, but it has become politically taboo. It is counter to populism.
It is counter to some ideologies to try and do anything that may affect these programs. If you do, you will run into a wave of political attacks that will make those on the program think that their benefits are being taken away. Never mind the fact that you can reform these programs in a way that does not affect people in or near retirement who are using those benefits.
The mere act of trying to reform the social contract in any way, even to make them better, is so politically difficult that it is not done, so we’re walking into a debt crisis.”
Aspiring policymakers: End the era of “Instagram policymaking” & “buy the dip” on policy entrepreneurship
“If you look at the landscape in Congress, this is Kabuki theater. It’s nothing but populism and owning the libs. It’s Instagram policymaking. This moment we’re in, we have more entertainers and legislators in the legislature than ever before, but you have to look at the trends that are coming. This is not sustainable.
This vacuous populism, this entertainment-like quality of our policymaking is not sustainable and what is going to be needed are people who are policymakers. What’s going to be needed are people who care about policy, who have deeply held principles that they want to advocate for and apply these to our problems.
The country will need this soon, frankly, so it is a good time to get into this industry. It is a good time to be an aspiring policymaker, whether you want to run for office or serve in a staff capacity.
It is like buying the dip. The dip, right now, is that we are intellectually less rigorous than we ought to be in policymaking, so we’re in the dip. Buy the dip and become policymakers so that when you come out of Georgetown, you will be running the country in a few years because we need smart, policy-minded people to do that.”
Applying Catholic Social Teaching to public life
“If you look at the body of documents that the Catholic Church has produced on the way that lay Catholics are supposed to operate and conduct themselves in public and private life, it gives you this beautiful mosaic. It gives this beautiful philosophy of getting involved and making your community better.
We have this principle that we call subsidiarity, effectively making a difference where you are. It means the closer you are to the problem, the better you can solve it and people coming together to do that is good for society.
We have another principle, in conjunction with that, which is solidary, meaning we’re all in this together. It means we want to make the world better not just for ourselves but for other people.
To do this, we use prudential judgement. There is a nun, Sister Simone, that used to protest me with Nuns on the Bus. She was a real left-winger and I’m a conservative and we are both Catholics. We do not agree with each other in how to apply prudential judgement, but there is lots of room for discretion to have differences of opinion on how to achieve those goals…. Catholic Social Teaching really accommodates that and to me, it is a great roadmap of how to conduct yourself in public life. I fell short of this all the time, but it gives you an aspiration to achieve.”
Time is of the essence to save entitlement programs
“I worry we’re getting close to missing the window…. We are going from 40 million retirees to 77 million retirees in one generation with a drop in birth rates behind them.
What happens is, if you reform these programs for at least those 55 and below, you can give us a new system, which is more of a defined contribution system where you can quantify the rate of these entitlement programs on an accrual basis, [and in doing so] you are forwarding tens of trillions in debt reduction. I would strongly argue the bond markets – and all bond traders say this – will give you credit for that.
So today, if we passed: 1) Legislation that says people who are 55 and below will have a Social Security system that has means-testing, that gradually increases the retirement age, and a few other things; 2) on Medicare, if you go to a means-tested, premium support system, which I think is the best way to go; And 3) Medicaid becomes a per-capita block grant where you send money back to the states based on their population with a growth cap on it.
Those three things, right there, will save you from a debt crisis….
If you do that, the bond markets will say: ‘Because you passed a law that says starting in 10 years, you are changing the trajectory of spending from here to here, I will give you credit for all that savings now and let you, America, borrow for those baby boomers at these cheap interest rates because we see that once the Baby Boomers cycle off, you are back down to a debt to GDP ratio that is totally workable’…
If we go into a tariff-driven recession, it pulls forward these numbers and gives us a step function increase in the deterioration of America’s balance sheet and that could bring auction failures, a debt crisis, and all that horrible stuff.”
Ryan: Examples of using data to break stalemates on fighting poverty
“[MIECHV] is a program where we would send nurses to lower income, expecting mothers who had no experience in pre-natal or post-natal care. The government ran a randomized controlled trial on it and collected a lot of data on it during the Bush Administration, and it was really
successful.
So, George W. Bush founded it, President Obama doubled it, and Donald Trump kept it. Why? Those are three very different people – just take my word it – but the evidence was clear that this works.
We take this approach with 1% of all federal poverty fighting programs. That’s it. So, Patty Murray and I created this Commission with that purpose – to release this data so that economists can look at it and measure what works and what doesn’t. We passed the Commission’s findings and recommendations into a law called the Evidence Act, which is being rolled out across the federal government.
The thinking here was let’s get past our party and our ideology. We want people out of poverty. We want to get at the root causes of poverty to break the cycle of poverty. So let’s do what works! That is hopefully where we can go to leapfrog this partisan stalemate we have had.”
Reforming the social safety net to always promote upward mobility:
“My foundation, and Jonathan is on the board of that, we look at programs that we think have promise to see how well they do and if they do well, we want to franchise, scale, and replicate them around the country. We evaluate these programs in conjunction with Notre Dame economists, and the point I’m trying to make is we should have a strong emphasis on helping the poor in this country….
We want upward mobility. We are working on digitizing the social safety net to build a digital wallet for the poor so they can have their safety net built into it with programmable benefits and with algorithms that smooth out the benefit cliffs, so you don’t block upward mobility.
One of my frustrations is that we have these 20th-century welfare benefits that are well-intended, but our poverty rates are the same. We have had the same poverty rates since we started the War on Poverty 50 years ago and we are at trillions of dollars spent on it.
If we measure in the War on Poverty by throwing money at the problem and creating new programs, rather than measuring whether people are actually getting out of poverty, we are not doing it the right way. We need to focus on outcomes, not inputs…
The problem, in a nutshell, is in the 20th century, we took a cookie-cuter approach to these programs. We treated all people the same. A single mom, with two kids, has a job. Let’s say, she takes a second job. She will calculate in her mind, rationally, that if I take this job, I am going to lose my childcare benefits because of the program’s benefit cutoffs. She will say: I am not going to pursue that raise because I will lose more than I gain by taking this risk, working longer hours, and being away from my kids. You don’t want the safety net to force people into those kinds of decisions.
In the 20th century, there was not a lot we could do about it. Now, with blockchain technology and digitization, we can fix this with an algorithmically smoothed program so when that woman gets that raise, her benefits are reduced by less than that amount. It should always pay to take that step, to take that raise. We can say: You will only lose some of your childcare benefits if you take this raise, not 100%…
The point I’m trying to make is we should focus on poverty and upward mobility, but if we think about redistribution of income through the tax code, we will kill the Golden Goose, which is a growing economy.
So let’s fix these problems in a 21st century way with good technology that has smart economics and build a safety net wired for upward mobility.”