- - Tuesday, May 22, 2012

On May 16, Senate Democrats continued their three-year-old tradition of failing to pass a budget. But not before voting down four Republican budget plans, plus the Obama budget, which received the special honor of being dispatched unanimously. The real news? The increasing support for the budgets offered by two men named “Paul”: Rep. Paul Ryan, Wisconsin Republican, and Sen. Rand Paul, Kentucky Republican.

The Ryan budget was defeated, 58-41. The bolder Paul plan, by a more definitive 83-16.

The relative popularity of the two is less important than the fact that both fiscally conservative budgets received more votes this year, an election year, than they did 12 months ago. Despite being savaged by the left. And Mr. Paul’s support more than doubled, from 7 “yeas” to 16.

These “defeats” feel like the sort you find in the first chapter of a victory narrative.

Indeed, we may be witnessing the beginnings of a new era, in which the dividing line is not between conservatives and progressives, as much as it is between two kinds of conservatives, whom I call “managerial optimists” and “constitutional realists.” Or to put it more provocatively, between “Paul Ryan technocrats” and “Rand Paul federalists.”

This new fault line, while faint today, could open into a chasm, should the Republicans get a chance to govern next year.

While the “federalists,” who include the staunch Sen. Jim DeMint (R-S.C.), are numerically smaller, they are growing in confidence and will likely grow in numbers, too, after November. They could very well form a “majority within a majority,” steering the entire Senate, and nation, rightward.

Both the technocrats and federalists want government to be smaller, more efficient and less intrusive. Both want to make entitlements more affordable and taxes fairer. But the technocrats want to achieve these goals by streamlining and modernizing government programs, while the federalists want to do it primarily by eliminating programs and decentralizing government power.

Both schools want to reform entitlements with greater individual choice and a sensible defined-contribution approach. But federalists would do this in less bureaucratic, more individualized ways and would ultimately move health, education and welfare back to the states.

The technocrats tend to assume the economy can be managed efficiently from Washington. That is why, for example, they generally supported the TARP Wall Street bailout in 2008 and are cool toward restoring sound money in place of the Federal Reserve’s manifest failure to preserve the value of the dollar. Federalists tend to come down on the opposite side of such questions, because they see centralized power as the real source of most problems.

There is also an outlook difference. The technocrats often speak as though their proposed reforms will work as promised and will never be amended or exploited for malign purposes by special interests and the left. The federalists are less sanguine.

The technocrats, in short, trust government, provided it is in the right hands. The federalists do not.

The divide is increasingly visible in numerous areas. Consider:

Spending: Mr. Ryan’s budget would achieve balance in 26 years; Mr. Paul’s, in five. To achieve his savings, Mr. Ryan relies mostly on formulaic spending caps enforced by sequesters (meat-ax reductions, in the absence of specific policy reforms). By contrast, Mr. Paul eliminates four Cabinet agencies - Commerce, HUD, Energy and Education - and a host of federal programs.

Defense: Mr. Ryan increases defense spending. Mr. Paul does not spare the Pentagon from scrutiny.

Taxes: Mr. Ryan reduces the number of income-tax brackets from five to two; Mr. Paul, to just one. Mr. Ryan would lower the top rate to 25 percent; Mr. Paul, to 17. (It is currently 35.) Mr. Ryan is willing to retain politically driven tax-code distortions, such as the mortgage-interest deduction. Mr. Paul is not.

Medicare: Mr. Ryan and Mr. Paul both embrace a “premium support” reform, but Mr. Ryan would leave power effectively centralized in the hands of the Medicare bureaucracy, which has strong incentives to impose price controls and ration access to care. Mr. Paul would fire the massive Medicare bureaucracy and entrust the program to the Office of Personnel Management, which has no such incentives. Mr. Ryan describes his plan as resembling the highly popular congressional health care plan. Mr. Paul’s approach is the congressional health care plan.

Health care: The worst development of this Congress has been the quiet “RomneyCare-fication” of the GOP. Because Medicare has an individual mandate even tougher than ObamaCare’s, Mr. Ryan’s Medicare plan can fairly be described as “RomneyCare for seniors.” And unfortunately, a number of Hill conservatives have embraced the Heritage Foundation’s universal health care tax-credit plan, which, in an earlier form, included the individual mandate. I call it “RomneyCare for non-seniors.” It provided the template for both RomneyCare and ObamaCare. Assuming the president’s health law is struck down or repealed, the Heritage plan would, I think, ultimately enable ObamaCare to rise from the ash heap of history. Federalists like Mr. Paul and Mr. DeMint have wisely avoided this trap, standing firm against the individual mandate and for maximum patient freedom.

Are we witnessing the first rumblings of an intra-GOP battle between technocrats versus federalists? If so, may the best federalist win.

Dean Clancy is FreedomWorks legislative counsel and vice president for health care policy.

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