Moment of Truth

It was a season of fiscal perestroika. Last fall, the Simpson-Bowles deficit commission released a bold report on how to avoid an economic catastrophe. For a few weeks, the think tanks and government offices were alive with proposals to reduce debt and reform entitlements, the tax code and just about every other government program.

The mood did not last. The polls suggested that voters were still unwilling to accept tax increases or benefit cuts. Smart Washington insiders like Mitch McConnell and President Obama decided that any party that actually tried to implement these ideas would be committing political suicide. The president walked away from the Simpson-Bowles package. Far from addressing the fiscal problems, the president’s budget would double the nation’s debt over the next decade, according to the Congressional Budget Office.

But the forces of reform have not been entirely silenced. Over the past few weeks, a number of groups, including the ex-chairmen of the Council of Economic Advisers and 64 prominent budget experts, have issued letters arguing that the debt situation is so dire that doing nothing is not a survivable option. What they lacked was courageous political leadership — a powerful elected official willing to issue a proposal, willing to take a stand, willing to face the political perils.

The country lacked that leadership until today. Today, Paul Ryan, the Republican chairman of the House Budget Committee, is scheduled to release the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes. Ryan is expected to leap into the vacuum left by the president’s passivity. The Ryan budget will not be enacted this year, but it will immediately reframe the domestic policy debate.

His proposal will set the standard of seriousness for anybody who wants to play in this discussion. It will become the 2012 Republican platform, no matter who is the nominee. Any candidate hoping to win that nomination will have to be able to talk about government programs with this degree of specificity, so it will improve the G.O.P. primary race.

The Ryan proposal will help settle the fight over the government shutdown and the 2011 budget because it will remind everybody that the real argument is not about cutting a few billion here or there. It is about the underlying architecture of domestic programs in 2012 and beyond.

The Ryan budget will put all future arguments in the proper context: The current welfare state is simply unsustainable and anybody who is serious, on left or right, has to have a new vision of the social contract.

The initial coverage will talk about Ryan’s top number — the cuts of more than $4 trillion over the next decade. But the important thing is the way Ryan would reform programs. He would reform the tax code along the Simpson-Bowles lines, but without the tax increases. (It’s amazing that a budget chairman could include tax policy in his proposal, since it’s normally under the purview of the Ways and Means Committee.)

The Ryan budget doesn’t touch Medicare for anybody over 55, but for younger people it turns it into a defined contribution plan. Instead of assuming open-ended future costs, the government will give you a sum of money (starting at an amount equal to what the government now spends) and a regulated menu of insurance options from which to choose.

The Ryan budget will please governors of both parties by turning Medicaid into a block grant — giving states more flexibility. It tackles agriculture subsidies and other corporate welfare. It consolidates the job-training programs into a single adult scholarship. It reforms housing assistance and food stamps. It dodges Social Security. The Republicans still have no alternative to the Democratic health care reform, but this budget tackles just about every politically risky issue with brio and guts.

Ryan was a protégé of Jack Kemp, and Kemp’s uplifting spirit pervades the document. It’s not sour, taking an austere meat ax approach. It emphasizes social support, social mobility and personal choice. I don’t agree with all of it that I’ve seen, but it is a serious effort to create a sustainable welfare state — to prevent the sort of disruptive change we’re going to face if national bankruptcy comes.

It also creates the pivotal moment of truth for President Obama. Will he come up with his own counterproposal, or will he simply demagogue the issue by railing against “savage” Republican cuts and ignoring the long-term fiscal realities? Does he have a sustainable vision for government, or will he just try to rise above the fray while Nancy Pelosi and others attack Ryan?

And what about the Senate Republicans? Where do they stand? Or the voters? Are they willing to face reality or will they continue to demand more government than they are willing to pay for?

Paul Ryan has grasped reality with both hands. He’s forcing everybody else to do the same.