Some—if not many—of Harvard’s best moments seem to lie outside the classroom. You could create your own world-class education simply by cherry-picking from amazing speakers that pass through: Ban Ki Moon, David Petraeus, Oprah, Geoffrey Canada, Stephen Colbert. Even if their words are at times trite, their very presence, personality, and tone are master classes in public leadership.

But this surfeit jades the best of us; my freshman fall, I jumped eagerly at the chance to hear Michelle Bachelet, President of Chile, speak at the Kennedy School. I couldn’t believe it. Heads of state would come just to speak to students. I lined up for half an hour and happily sat in the worst seats in the house to see her. Her story, that of a political prisoner tortured by Pinochet turned pragmatic and successful president, was breathtaking.

Yet today, I find myself doing laundry or surfing Facebook instead of trekking to the Kennedy School. Some insidious normalcy has set in, where the routine and banal have edged out remarkable possibility. This evolution is pervasive among students at Harvard, from wide-eyed idealism to nose-to-the-grindstone cynicism. And unsurprisingly, it closely tracks the journey from freshman to senior.

But, I recently put my laundry aside—just for a few days—and rediscovered the intriguing narratives that emerge in the cross-current of speakers on campus. In the span of two weeks, I heard from three profoundly impressive people: Steven Holl, renowned American architect, Dilma Rousseff, President of Brazil, and General Martin Dempsey, Chairman of the Joint Chiefs of Staff. Each had a unique charisma, Holl in his self-assured and sweeping aesthetic vision, Rousseff in her down-to-earth poise, and Dempsey in his frank wit. But, what was more striking than their individual messages or even personal magnetism was the unspoken undertone that linked them.

Holl, an architect not exactly concerned with practicalities, spoke on the use of scale in his buildings. They were daring, ambitious, perhaps even crazy. His “linked hybrid” is a city in the sky, soaring towers joined by floating bridges complete with daycare, cinemas, and cultural venues. His “sliced porosity block” consumes an entire city block, with deep slices cut through the imposing building to provide sunlight to interior apartments. And his “horizontal skyscraper” is exactly as it sounds. They seem like the imaginings of unchained artist, but they exude an unmistakable optimism, that society can be challenged and inspired by audacious architecture. Amazingly enough, these fantastical buildings are being constructed—in China.

The story is much the same for Brazil. President Rousseff, while acknowledging the significant challenges her country faces—crime, poverty, currency appreciation—asserted a confident, optimistic Brazil. It is a nation that has never shied away from dreaming big: in the early 1960s, President Kubitschek ordered the building of a utopian capital in the middle of the country. Photographs of its construction are stunning, modernist monuments rising out of a barren savannah. Half a century later, Brazil has continued to live out the bold spirit of Brasilia: 40 million people have been raised from poverty to the middle class, and before the decade is out, Brazil will have hosted the the Olympics and the World Cup. Rousseff capped her speech tellingly, “Brazil needs Harvard as much as Harvard needs Brazil.”

After all this, Gen. Dempsey delivered the coda, declaring that “America is not a country in decline.” It may not be, but it seems that these days, we have settled for the small and the quotidian. We’ve stopped dreaming and doing big things, our aspiration for the future replaced by narrow cynicism. Acela is what we call high-speed rail, and One World Trade Center is our new architectural centerpiece. That might be how nations evolve, but I sure wish it weren’t.

Jonathan Yip

I was once a huge fan of Tiger Woods. I, like many others, was drawn to his determination, drive, and singular pursuit of excellence. He was changing the face of golf, and I cheered him on, fully invested in his growing legend. His sordid behavior, then, was a betrayal and a stunning fall for a tragic hero.

Since then, I’ve tuned everything Tiger-related out, but now that he’s the favorite to win the Masters, I’ve had to confront my lingering distaste for Tiger. I know I won’t ever cheer for Tiger again, but I can’t quite account for my active desire to see Tiger lose—something about cosmic justice I think. Thankfully, I came across this excellent GQ article which articulates the feeling a good deal better:

When he ultimately returned, what I think we wanted was a sense that he felt fortunate to be back out there. Blessed, maybe. Instead, Tiger seemed to act more entitled upon his return than he had even during his ascendance. At that first tournament back, the 2010 Masters, it took him just a few days to explode a promise—that he’d try to tone down his negative outbursts—by coming as unthreaded as ever, shouting into a tee-box microphone (“Tiger Woods, you suck! Goddammit!“) to the salivating joy of the Internet.

We expect those given second chances to learn, grow, and repent. Yet, Tiger has proven constitutionally unable to do any of them. The Masters are his to lose, and I hope he does.

I recently watched Act of Valor, an action film about Navy SEALs in which the soldiers were played by actual Special Forces operatives. The movie, marred by stilted acting and a shallow plot, currently has a 30% rating on Rotten Tomatoes. SEALs may not need stunt doubles, but they certainly need acting ones.

While some were troubled by the Department of Defense’s close support for the film and its propaganda-like qualities, our cultural landscape is rife with depictions of heroic warriors. Act of Valor is no different and is hardly a standout in that genre (it is a fun movie though).

However, I found a different aspect of the film far more troubling: the air of impunity and exception with which the Special Forces approached sovereignty and American power. The SEAL teams parachute or swim into Thailand, Somalia, Mexico, and other countries with little mention of diplomatic back channels or permission. They start firefights, capture or kill their targets, then disappear into the night and move onto the next locale.

Now, the film probably elided the intense negotiation that allows these operations to occur. But, a reading of Marc Ambinder’s well-reported book on the Special Forces, The Command: Deep Inside the President’s Secret Army, portrays an organization which sees itself as the elite backstop of American and global freedom, an attitude that has poisoned our government’s covert operations apparatus before.

In being the best of the best, the Joint Special Operations Command (JSOC), which encompasses the SEALs, espouses a mentality that elites in general often adopt: they are the only ones who can fix the problem, as no others can match their sheer ability. Ambinder writes about JSOC’s audacious covert exploits in China, Iran, Peru, Pakistan, and elsewhere that certainly echo the tone of the film. He also details JSOC’s buck-stops-here mindset, “The Command hoards contingency planners. When the president travels overseas, a JSOC team usually shadows him. Its members are trained to take charge should the mammoth security structure of the Secret Service break down…JSOC is also a key part of the classified contingency plans to preserve the U.S. civilian government in the event of a coup from the military or anyone else.”

These elites are also implicitly trusted on the assumption that their capability is unimpeachable or beyond comprehension (and in this case, important to keep secret). Ambinder makes clear that JSOC allows only select members of Congress and political appointees to be privy to its planning. This free hand further allows for plausible deniability: politicians can honestly tell Pakistani officials that they are fully confident of Pakistan’s capacity to secure its nuclear arsenal. JSOC, of course, already has an elaborate contingency, ready to intervene in Pakistan if the need should arise, Ambinder reports.

Of all arenas, the military is one where elitism is understandable; certain people are excellent shooters and operators, and only the best SEAL team could covertly kill Osama Bin Laden. Yet, even in the military, there are glimmers of the hubris and self-confidence that elite institutions can breed—especially in deep secrecy.

And JSOC has not been immune. In Iraq, JSOC brutally interrogated detainees: “Reportedly, special operations officers acted as though they were above the law, and the Senate review later concluded that JSOC interrogators regularly brutalized their detainees. At the same time, members of both the CIA and Defense Intelligence Agency (DIA) sent word up their respective chains of command that JSOC was possibly breaking the law.” Ambinder further explains that the Department of Defense itself attempted to impose a set of more humane—and legal—interrogation standards on JSOC, only to be ignored. By late 2003, JSOC’s tactics were so beyond the pale that the DIA, FBI, and British Special Forces all refused any further cooperation with JSOC. It took General Stanley McChrystal to finally clean up JSOC in 2004.

This hubris seeps into every elite institution. Andrew Delbanco recently wrote in the New York Times about this tendency in higher education, “The charge that elite college culture encourages smugness and self-satisfaction contains…a germ of truth.” Our hubris is an intellectual one—that, we know better than everyone else. We are often reminded by our professors and peers that we are the best and that the world is ours to change.  Rarely, however, are we told to be humble in thought and prescription, that for all we do know, we still know so very little. Delbanco continues, “To the stringent Protestants who founded Harvard, Yale and Princeton, the mark of salvation was not high self-esteem but humbling awareness of one’s lowliness in the eyes of God.” Delbanco’s solution to this smugness is an emphasis on charity and service, a worthy recommendation. But, maybe we could just start with acknowledging the self-importance—intellectual, martial, and otherwise—that elites breed.

History is littered with the stunning failures of the best and the brightest. Elitism has its place in solving the world’s tough problems. But without a healthy self-awareness of its limits and overconfidence, elitism is worse than mediocrity.

What they bill as “a radical rethinking of the way to fight global poverty” is the ultimate triumph of pragmatism. Give the treatment group the policy intervention (bed nets, deworming medicine, etc.), don’t give it to the control group, and measure whether the treatment group does better. While effective and definitive, this “quiet revolution” can only answer the small questions of optimal policy design, not the big ones of solving poverty: what drives growth? What are the best ways to reduce corruption? What kind of local institutions are most effective in developing countries?

Pragmatism is a welcome relief in the bitter, intractable struggle between aid skeptics and aid boosters. And this clearheaded thinking and policy design will improve millions of lives. But, you cannot help but wonder if there’s a bigger answer out there; global crises cry out for sweeping solutions. Poor Economics suggests that there aren’t any.

Poor Economics is also valuable for the amazingly nuanced portrait it paints of the extreme poor. Far from lazy or unintelligent, they, without the safety nets we take for granted, manage their households and businesses with great rationality. They juggle countless difficult economic and budgetary decisions under the burdensome mental overhead that comes with the conditions of poverty. They live lives we cannot even imagine. Poor Economics manages to give us a glimpse, and for that, it is a profoundly enriching read.

Given that I proposed a food issue more than two years ago, it is my great pleasure to finally present to you the Politics of Food.  While the culinary and gastronomic—the world of foie gras and Big Macs—might seem out of the norm for the Harvard Political Review, this cover in fact epitomizes the kind of politics that lies at the heart of our mission; it goes far beyond the daily tracking polls and horse race of cable news. At the HPR, we believe that politics, broadly construed, touches and shapes every human endeavor. And, of course, few are more basic than eating.

It is amazing how intricate this most fundamental of human activities has become. We take so much of the sustenance and flavor of food for granted, but it was only a few hundred years ago that conquistadors brought the tomato to Europe and Asia. Since then, stunning advances in agricultural technology, including the Green Revolution, have made possible a world that can sustain a staggering seven billion people.

Developed economies also owe much to increasingly efficient agricultural sectors, which have freed citizens to pursue education and innovation in other industries. And today, globalization has brought American fast food across the world and made fresh foods more available than ever before.

The human story of food, then, has largely been one of continual progress: better food, more food, safer food. Yet, however far we’ve come in promoting sustainable agriculture or in tackling the obesity crisis in America, the story remains one of glaring failure. Some 900 million people go hungry every day, and one in four children in the developing world is critically underweight.

These are often the statistics of guilt and dismay, and they should be. But this year, they are also ones of hope. Though the absolute number of malnourished has increased in recent years, as a proportion of the world population, the hungry have dropped from 35 percent in 1970 to just 16 percent in 2010.

Most promisingly, developing countries are finally beginning to recover from the food crisis of 2008 and the global economic slowdown. In their combined wake, food prices shot up, millions went unemployed, and credit and aid flows contracted. We are, today, exactly where we were a decade ago: 16 percent of the world remains hungry.

But now, we have an unprecedented technological capacity to end hunger. Bill Gates has invested smartly in research on disease-resistant grains and called for a digital revolution in using genetically modified foods and satellite imagery to improve farm yields. While these policies will doubtlessly save lives, extreme hunger is not a technological problem; there is enough food to feed the world. The calories needed by the world’s hungry could be provided with one percent of the global food supply. At its core, extreme hunger is about politics. Nobel laureate and Harvard professor Amartya Sen once wrote, “there is no such thing as an apolitical food problem.”

We can end extreme hunger in our lifetimes. But in our age of technological miracles and government dysfunction, it is, ironically, more politics, not more technology that will be the answer. It is no coincidence that the rise of capitalist China was the greatest decrease in malnutrition in human history. Economic growth is the be-all and end-all of solving extreme hunger. To finally feed the world, then, we need strong governments and sound economic policy. And that’s all politics.

It’s my pleasure to present to you Dispatch, the Harvard Political Review’s new print showcase of student opinion. At the HPR, we firmly believe that politics goes far beyond the confines of the daily polling numbers and presidential horse race. Politics—broadly construed—intersects with our lives each and every day, from sweeping regulation in Washington to academia right here at Harvard. This inaugural issue runs that gamut, with our writers tackling Harvard in India, China’s cyber-censorship, Proposition 8, Steven Pinker, European technocracy, and, of course, the NFL. At our core, we’re dedicated to nurturing and publishing sharp student writing, and we think Dispatch will grow to be an integral part of that mission.

We hope you enjoy it.

But for all the pomp and circumstance, what truly amazed was the policy. Even in my relatively small office, the breadth and depth of policy-making was breathtaking. The issues that passed through were varied, meticulous, and eye-opening. The far-reaching policies get the front page of the New York Times, whether healthcare reform or Dodd-Frank, but what often goes unmentioned or under-examined is just as important, if not more.

From electric infrastructure grants to rules on federal loans for for-profit universities, these policies rarely rile up activists, or, for that matter, anyone really. But these are the countless policies that cross the desks of policy-makers at every level of government every day—and shape our daily lives.

Few know or care about the Department of Labor’s new rulemaking on whether retiree investment advisors should be held to higher “fiduciary” standards. But for our parents and grandparents, this rule could be worth thousands of dollars. Has your bank started charging you for debit card use? You can thank the Durbin Amendment of the Dodd-Frank Act and new rules from the Federal Reserve. Perhaps your doctor is keeping electronic health records or even using an iPad. That is the Department of Health and Human Services and their new incentives for using IT in healthcare.

By DC standards, these are, in fact, wide-ranging and weighty rules. Far from minutia, they are worthy of hearing upon hearing and heavy lobbying from interest groups. Outside that realm, however, most of us would rather bury our heads in a problem set than learn more about the Appalachian Regional Development Initiative. Yet this “small stuff” is the stuff of everyday governance; it affects our lives in tangible and meaningful ways.

There is a propensity for all of us who fashion ourselves policy-minded or political to emphasize the big picture. Where has Obama left liberalism? How does the Paul Ryan budget refashion the American social contract? What does Occupy Wall Street say about Rawlsian fairness? Is American drone policy constitutional?

These are important questions of equality, history, and justice. But, we should not lose sight of what government actually does each and every day. Government is neither a theory nor an ideology. It exists to improve citizens’ lives, and much of that mission occurs in the details and the small bore. It is not particularly glamorous or exciting, but it is fundamental.

This focus on the particulars is sometimes mistaken for an argument of pragmatism over principle. President Clinton’s second term “triangulation” may have been the epitome of political pragmatism in its small uncontroversial initiatives, child gun trigger locks and school uniforms. But, if anything, the everyday consequences of policy minutia demand nothing less than principled debate. Indeed, we should encourage and expect ferocious wrangling over the details of government.

The fight to cap debit card fees charged to merchants, the Durbin Amendment, had been raging for almost a year, and finalized after a storm of comment and lobbying from Wall Street, credit unions, and retailers—the National Grocers Association included—over every last cent banks could charge per swipe. Though on a significantly smaller scale, these battles are waged month after month across the policy map. Added together, these increments change things.

These are the trenches where government—and ideology—matter and affect our daily lives. It is in the post-legislation regulation and the seemingly minor announcements where policy shines and governing is done. It is not grand strategy, and it will not change the world, but it is the foundational work of government. And it affects citizens’ lives. So while we strive to tackle the big issues and big questions, as we well should, let us not forget the small ones percolating in government offices that push policy forward every day.

Jonathan Yip ‘13 is the World Editor Emeritus.

Last October, a Bloomberg poll found that 43 percent of Americans felt that TARP had weakened the economy, while only 24 percent felt it had strengthened the economy. Despite being conceived by a Republican administration and continued by a Democratic one, TARP is likely one of the most hated programs ever implemented. Nonetheless, TARP undoubtedly averted greater economic catastrophe and ultimately cost far less than expected.

But voters’ instincts are not wrong. For all its achievements, TARP cannot be called a great success; it failed to stem the foreclosure crisis, increase lending, hold bankers accountable, and stop rocketing unemployment. It also sparked a still simmering distrust of policymakers and government.

The Road to TARP

The US housing bubble  collapsed at the height of the financial crisis in 2008, devaluing mortgage-related securities and the banks that held them. The stock market plunged in the wake of major bank liquidity crises and insolvency. Ad-hoc government-brokered sales of Merrill Lynch and Bear Sterns only created more uncertainty.

In September 2008, over an extraordinary 19 days, the US financial system moved toward catastrophe. The Federal Deposit Insurance Corporation (FDIC) moved Washington Mutual through the largest bank failure in US history, Fannie Mae and Freddie Mac were placed in conservatorship, Lehman Brothers suddenly filed for bankruptcy, the Federal Reserve began an $85 billion rescue of the American International Group (AIG), and the Treasury guaranteed $3.7 trillion worth of money market funds. Chairman of the Federal Reserve Ben Bernanke later claimed that the growing crisis was “a cataclysm that could have rivaled or surpassed the Great Depression.”

Convinced that a more comprehensive plan was needed to reassure markets, Bernanke and Secretary of the Treasury Henry Paulson conceived of TARP, an unprecedented $700 billion authorization to allow the Treasury to purchase toxic assets from banks. Congress recoiled at the price amidst growing public outrage, rejecting the first iteration of the bill. But as the markets convulsed, Congress passed a marginally amended version of the bill.

Given the delay, Secretary Paulson decided that purchasing toxic assets was no longer practical and instead elected to spend the first $350 billion by directly injecting capital into banks. The nine largest banks, representing 75 percent of all American banking assets, were given $25 billion each in exchange for stock. This initial round of funding bolstered the banks’ capital reserves, but without any preconditions attached, failed to increase lending.

As President Bush’s term drew to a close, some $17 billion in TARP funds were loaned to General Motors (GM) and Chrysler to avoid bankruptcy. Together, in January 2009, President Bush and President-elect Obama requested that Congress release the remaining $350 billion in TARP as further capital infusions seemed likely. By the end of the month, TARP had disbursed $301 billion in total.

Shortly after, the new Secretary of the Treasury Tim Geithner ordered the TARP banks to undergo stress tests to gauge their financial resilience. Expecting poor results, he further laid out a new rescue plan that would have created a private- public bank to purchase and hold up to $500 billion in toxic assets. This plan, however, was soon abandoned after banks refused to sell their assets at large losses in spite of generous government financing.

Simultaneously, Chrysler and GM, beginning to exhaust their existing federal loans, returned to seek more funds. The President’s auto task force, after guiding both GM and Chrysler through bankruptcy and significant restructuring, granted the automakers $25 billion in TARP loans.

In June, under heavy lobbying and with better-than-expected stress tests, the administration began to allow banks to repay their TARP funds. To date, the Treasury has recouped $313 billion of the $412 billion it dispersed. Both GM and Chrysler paid back their TARP loans several years ahead of schedule. While the bank bailout itself was profitable, the administration estimates that the total cost of TARP, including assistance to insurers like AIG, will be $48 billion.

What Went Right

In the broadest sense, TARP was a success. It halted the collapse of the US banking system and may have prevented a second Great Depression. The Congressional Oversight Panel wrote in its final report that TARP “provided critical support to markets at a moment of profound uncertainty.”

In September 2008, as the market was making three digit swings, TARP not only provided a mechanism for resolving the core of the crisis, but also served as a strong statement that the government would take extraordinary measures to ensure the survival of the financial system. Mark Zandi, chief economist of Moody’s, wrote that “the capital purchase program was ultimately the one key thing that was necessary for stabilizing the financial system and the economy.”

TARP also prevented an even deeper recession. A study done by Zandi and Alan Blinder of Princeton determined that without TARP and the Federal Reserve’s monetary easing, GDP growth would have been 4.7 percentage points lower and unemployment would have been 4.0 percentage points higher in 2010.

And, from a cost standpoint, TARP was a greater accomplishment than anyone had possibly imagined. At its onset, estimates ranged in the hundreds of billions of dollars. The Congressional Budget Office initially determined that the program would cost $356 billion.

This significantly reduced cost stemmed not only from stronger-than-expected bank performance, but also from effective Treasury management. The Congressional Oversight Panel reported that the “Treasury deserves credit for lowering costs through its diligent management of TARP assets and, in particular, its careful restructuring of AIG, Chrysler, and GM.”

TARP, then, also allowed for the orderly bankruptcy of Chrysler and GM. Without the TARP funds, the carmakers would have exhausted their funds and been liquidated to pay creditors. Such a shutdown would have been devastating, wiping out over one million jobs in the motor vehicle industry and likely taking Ford down as well. Today, Chrysler and GM have restructured, paid back their funds ahead of schedule, and appear to be on the road to recovery.

What Went Wrong

In the final analysis, TARP must be faulted for accomplishing less than originally anticipated and for the significant financial and cultural distortions it created. TARP may have prevented the worst of the financial crisis, but it ultimately failed in its other stated goals—preventing the foreclosure crisis and increasing lending.

In fact, part of TARP’s low cost can be attributed to the failure of the Treasury’s foreclosure prevention programs. Expected to cost $50 billion, the TARP-created Home Affordable Modification Program (HAMP) was supposed to restructure mortgages and prevent 3 to 4 million foreclosures. Instead, this goal has been lowered over time, and today only 1.5 million trial modifications and 500,000 permanent modifications have been made. Since TARP’s authorization, 7.1 million homeowners have received foreclosure notices.

HAMP attempted to save mortgages through temporary reductions in interest rates and monthly payments. But even with these lower payments, many homeowners were still underwater at high risk of default. The Congressional Oversight Panel recognized that HAMP was flawed: “moderate, long term payment relief did not provide the deep, short term relief necessary to keep unemployed borrowers temporarily without income in their homes.”

Many of TARP’s greatest costs, however, cannot be strictly measured in dollar amounts. Though TARP rescued large banks and the motor vehicle industry, Americans perceived it as a massive bailout of undeserving bankers, underscoring the nexus between Wall Street and Washington and undermining public confidence in policymakers and regulators.

TARP may have done too well in rescuing banks and too poorly in addressing the broader economy, allowing bankers to rebound and pay bonuses even as unemployment remains high. Felix Salmon of Reuters summed up the sentiment: “The little guy was hurt hard; the fat-cat bankers are smiling, unremorseful, and back to their old ways already.”

This attitude is undoubtedly simplistic, but TARP’s rushed execution and failure to provide accountability is seriously twisted policymaking. Anil Kayshyap, Professor of Finance at the Chicago Booth School of Business, said, “The public’s frustration has led to a general rise in populist political rhetoric and has polluted the policy discussion in many other areas.” The significant backlash has frustrated further government efforts to stabilize the economy and prevent a double-dip recession.

Closing the Book on TARP

TARP was a hastily executed effort of unprecedented size to rescue the US financial system from collapse. In that regard, TARP succeeded; without the immense government intervention, the recession would have been deeper, longer-lasting, and far more serious.

But as TARP comes to a close, it is clear that the program failed in several serious ways. Its foreclosure efforts were poorly designed and will not provide the mortgage relief needed. Toxic assets were not ultimately purchased, and banks did not use TARP funds to restart lending. The program’s greatest claim, then, is also its downfall. TARP saved the economy by saving the banks. And while its creators and promoters had hoped TARP would do far more, it failed to deliver. The American people, facing a 9.1 percent unemployment rate (as of September 2011), have a right to despise it.

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Unfortunately, on examination, both plans fail to pass muster for typical Washington reasons. President Obama’s proposal is disappointingly vague and does not provide any necessary details that could be scored by the Congressional Budget Office. The Ryan plan is comparatively detailed, but his grand scheme fails to address rapidly rising healthcare costs.

Despite representing a significant rewriting of America’s contemporary social contract, the Ryan proposal, “The Path to Prosperity”, takes initiative in aggressively facing the deficit and debt reduction. Over 10 years, Ryan’s plan would save $3.9 trillion more than Obama’s budget. By 2050, government spending would be 20 percent of GDP, a smaller proportion than any time since Herbert Hoover. In the Reagan era, federal spending averaged 22 percent of GDP, when medical costs and entitlement rolls were significantly lower. This two percentage point cut, then, shrinks government to a size unparalleled in recent history.

At Your Discretion

To achieve this reduction, Ryan would cut some $1.7 trillion in discretionary spending over the next decade, including defense spending. From 1962-2008, discretionary spending averaged 3.3 percent of GDP. By 2021, the Ryan budget would lower spending to 1.5 percent with unspecified cuts to education, agriculture, infrastructure, and housing.

President Obama proposed cutting discretionary spending by $600 billion over 10 years, resulting in a still historically low 2.2 percent of GDP. The reductions in both plans are drastic, potentially undermining vital long-term investments in roads, teachers, medical research, and other national priorities. Furthermore, these cuts are paired with significant increases in Medicare and Social Security funding, skewing already unbalanced spending even more greatly towards the elderly.

Surgical Cuts

These medical entitlements are at the heart of America’s fiscal crisis, and yet neither plan addresses them fully. Healthcare spending has increased from seven percent of GDP in 1970 to 17 percent in 2009. The Office of Management and Budget estimated that Medicare and Medicaid alone would cost 20 percent of GDP—almost the entire current proportion of federal spending—by 2050.

The Ryan plan successfully cuts Medicare and Medicaid spending in half by 2040 and restrains its rapid growth. It would also repeal President Obama’s Patient Protection and Affordable Care Act (ACA), more affectionately known as Obamacare. Undoing the healthcare law would result in lower taxes and a lower government healthcare burden. But 32 million individuals would be once again be uninsured.

Ryan achieves these cost reductions by essentially shifting the healthcare burden to beneficiaries. Medicare would become a voucher system, giving the elderly a lump sum to purchase healthcare in exchanges—ironically a policy proposed by the possibly-to-be-repealed ACA.

Henry Aaron Jr., a Senior Fellow at the Brookings Institution, explained to ARUSA that these vouchers would quickly become inadequate for covering medical care. Instead of being indexed to the faster rising costs of healthcare, the vouchers increase at the speed of inflation. Compounded over time, that difference of several percentage points becomes very large. The CBO estimated that a beneficiary’s out-of-pocket share of healthcare costs would increase from 25 percent today to over 68 percent by 2030. Furthermore, without the purchasing power of Medicare, these private plans are estimated to cost 44 percent to 67 percent more than traditional Medicare.

The Ryan plan similarly shifts the Medicaid burden to the states. The federal government would make lump-sum grants to states. But again, these grants would be indexed to inflation and not cost of medical care, slowly eroding federal support for the program and leaving states to cut care or other services. Ryan’s plan is daring in its effort to cut entitlement but does not have a true solution to tackle uncontrolled healthcare costs.

The Obama plan, on the other hand, is far more incremental and builds off the President’s healthcare law. Aaron noted that in the realm of serious efforts to lower health spending, the ACA was “the only game in town.” He specifically pointed to its pilot programs designed to lower costs, including the Medicare Independent Payment Advisory Board, health IT incentives, pay-for-quality programs, hospital readmission penalties, and medicine comparative effectiveness research. These pilots, of course, may amount to nothing, and the CBO has appropriately been conservative in scoring their fiscal benefits.

Take Your Pick

The Obama and Ryan plans, then, are flawed in their own ways. Obama, through the ACA, provides a series of speculative programs, which may fundamentally bend the cost curve of medical care and halt the looming fiscal crisis. On the other hand, if cost savings do not emerge, the addition of 32 million covered individuals will only further worsen the deficit and debt. Ryan offers guaranteed cuts to federal expenditures and entitlements, but at the cost of increasing the burden on states, elderly, and poor.

Neither plan, however, provides a sustainable vision for America’s future. The discretionary spending cuts are too facile a political tool, penny wise and pound foolish. Both President Obama and Representative Ryan would bring this long-term investment to historic lows, re-envisioning how education, infrastructure, and research spending drives the American economy. Real solutions may emerge from the Gang of Six or the debt ceiling supercommittee, but for Washington, I wouldn’t hold my breath.

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