Paul Ryan’s Plan to Cut Spending Benefits Latino and Millennia Voters

By Alex Gonzalez

Paul Ryan is by everyone’s account a “Policy-Person,” and Latinos and Young Americans should be quite pleased with that. The financial woes in the country have structural problems that started about 30-years ago,  yet neither Party has done a thing to fix them. With a $2-trillion estimated cost from the general budget–which draws from the young to pay for Entitlements–Paul Ryan is the only  serious policy-maker who shows Republicans and Democrats how to tackle these looming fiscal predicaments with great courage.  Additionally, Ryan brings energy into the Republican Party because, as conservative writer Jonah Goldberg points outs, it is time for the GOP to stop selecting “boring old white guys” and make the Party more attractive for Latinos.  So this combination of youthfulness and policy expertise on entitlements, should lure many young and Latinos Millennia to the GOP since both Latinos and young—until the structural programs are fixed—are currently bearing the burden of out-control Entitlements programs.

Ryan’s youthfulness policy savvy-ness will be appealing to the young Millennia, because, as Jonah Golberg puts it:

the GOP will benefit from having a boring white guy as its presidential nominee…But going forward, the GOP needs to figure out a way to become more appealing to new constituencies, particularly younger voters and Latinos… Boring white guys aren’t great for that project. 

Paul Ryan also fits the profile that could appeal to a new constituency  for the GOP and help to prevent the Party from becoming regional brand only in the South.  The Republican party needs to be strategically smart, apart from rhetorical speeches on Taxes and social issues, and be willing to put their policy ideas forward to the American People.  And Ryan is not afraid to so. Ryan has openly talked about our current broken system and how it is unsustainable and unfair to the young because Entitlements is “the “transferred of wealth”  for young Americans to wealthy seniors.

Ryan is right in addressing the fact that the young are paying for a program they themselves won’t enjoyed. According to Samuel Roberson, a young generation of America is being “squeezed” out of their “wealth.”

The young (and I draw the line at 40 and under) face two threats to their living standards. The first is the adverse effect of the Great Recession on jobs and wages.  Even if this fades with time, there’s the second threat: the costs of an aging America. It’s not just Social Security, Medicare and Medicaid — huge transfers from the young to the old — but also deferred maintenance on roads, bridges, water systems and power grids. Newsweek calls the young “generation screwed;” I prefer the milder “generation squeezed.”

Thus, Ryan’s new Plan, just like the previous Path to Prosperity,  directly tackled these structural problems negatively affecting Latinos.

You may wonder how Ryan’s  views benefits Latinos? Latinos are 20% of Millennia generation. And 65% of Latinos, especially in the Southwest, are under 25 years of age.  The median age of Latinos in the nation is only 25 years of age while the medium age of “whites” is 42 years.  Thus, the budget idea championed by Ryan to fix entitlements do have direct impact on Latinos and their offspring if Entitlements are not reformed.

President Obama may argue that Obamacare (ACA) helps the poor and the young, but Obamacare does not stop the “transfer of wealth” from young Millennia Latinos to boomers.  That’s because, in Paul Ryan’s words, “The distribution of government transfers has moved away from households in the lower part of the income scale.  In effect, Social Security and Medicare have been transferring money from low earning young people (who don’t pay income tax but are hit by the payroll tax) to increasingly affluent old people; which is the main reason why AARP supports ACA while opposing any changes to the current entitlements programs. Further, 20% of the Millennia generation–ages of 18-35—in the U.S. is Hispanic. But the Millennia generation is the segment of the population with the highest number of uninsured Americans.

Consequently, ACA, presents a contradiction for young uninsured Latino workers because, while it may offer healthcare access via a government mandate, it does not stop the ‘transfer of wealth” from young Americans to fund Medicare, Social Security—programs that will not be there for the Latino millennia generation.

Federal spending for Medicaid and CHIP was about $275 billion and $9 billion, respectively, in 2011. The Congressional Budget Office (CBO) projects that federal Medicaid spending will rise rapidly over the coming decades because of expanding eligibility under the Affordable Care Act, higher federal matching rates for new enrollees, and the aging of the population.  Also, the CBO estimates a total of  over the 10- year period from 2012 through 2021, enactment of the coverage provisions of the ACA was projected last March to increase federal deficits by $1,131 billion, whereas the March 2012 estimate indicates that those provisions will increase deficits by $1,083 billion.

Medicare is financed by a portion of the payroll taxes paid by workers and their employers. It also is financed in part by monthly premiums deducted from Social Security checks. Moreover, Medicare alone will soon double to $8,000 per enrollee. As a result, there is an urgency for its reform as Medicare is growing faster than federal spending and the general economy. The Ryan Plan fixes this problem.

Under current law, Medicare spending—the largest health care purchaser and largest driver of federal entitlement costs and the federal debt—is expected to jump from $522.8 billion in 2010 to $932 billion in 2020.  Today, Medicare spending equals 3.6 percent of the national economy as measured by gross domestic product (GDP). By 2030, it will account for between 5.2 percent and 5.9 percent of GDP. The program’s long-term unfunded liabilities—the total cost of the benefits promised but not paid for—amount to a breathtaking $36.8 trillion–-90% of Medicare enrollees are seniors over 65.

The principal driver of future federal deficits is the rapidly mounting cost of Medicare. How Are Social Security and Medicare Financed? The major source of financing is payroll taxes on earnings paid by employees and their employers. Self-employed workers pay the equivalent of the combined employer and employee tax rates. During 2011, an estimated 158 million people had earnings covered by Social Security and paid payroll taxes; for Medicare the corresponding figure was 162 million. Thus, the total general funds for Social Security and Medicare in 2012 are $420 billion, or 2.7 percent of GDP. Redemption of trust fund bonds, interest paid on those bonds, and transfers from the general funds provide no new net income to the Treasury, which must finance these payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public. Consequently, $203   billion dollars are transferred from general fund to pay for Social security benefits each year.

How does this affects Latinos and the Young?

  • 1.  Latinos are the youngest groups with median age of 25 years of    age.
  • 2.      Only about 8%  of enrollees in Medicare are Latino
  • 3.      Medicare is expected to jump from $550  billion in 2011 to $932 billion in 2025.
  • 4.      Medicare Alone will soon double to $8,000 per enrollee.
  • 5.      The projected general revenue demands from general funds for Social Security and   Medicare in 2012 are $420 billion annually.

Therefore, Ryan’s youthfulness, energy, policy savvy-ness, his ability to connect with Millennia generation, and his ability to explain the cost of not fixing entitlements, could invigorate and woo Independents and young voters to the shrinking base of the GOP. More importantly, Paul Ryan is not an ideologue and his policy-oriented views are unwavering;  thus, is very unlikely that Ryan can be drawn into the type of rhetoric on immigration, or gay marriage,  that often pushed Latinos and young voters away.His Libertarian views may help with masses of Latinos in the Southwest, and the Catholization  of the Republican Party in the West.  

So Ryan image and Plan is the antidote to the “old white guy”, and ideologue, image problem the Republicans have with young  Millennia and Latinos.

Alex Gonzalez  is a political Analyst and Political Director for Latinos Ready To Vote!  He received a Bachelors Degree and a Masters’ Degree, with emphasis in American politics,  from San Francisco State University.
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