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On Paul Ryan

By Jared Bernstein
Posted: 08/06/2012 6:05 pm

The New Yorker's Ryan Lizza provides a profile [ http://www.newyorker.com/reporting/2012/08/06/120806fa_fact_lizza?currentPage=all ] of Rep. Paul Ryan, with a rich discussion of his vision for limited government.

It's a good read, but it left me thinking about what it is that troubles me most about Rep. Ryan, an earnest guy who's come a long way and influenced a lot of people at a relatively young age. The problem is his numbers don't add up. And that's a particularly big problem for a celebrated budget wonk.

It's actually not hard to write down plans that purport to quantify Ayn Randian visions. You cut deeply here and there -- always from 30,000 feet up so you don't have to get into fights about specifics -- you turn big programs over to the states (e.g., you "block grant" foods stamps and Medicaid), you privatize social insurance, you voucherize Medicare with vouchers whose costs lag prices.

Then, in the spirit of another Ryan hero, Jack Kemp, you write down a bunch of supply-side tax cuts.

But the problem with all that is obvious, and here Ryan is guilty of that which he accuses his adversaries: intellectual laziness. Ayn Rand was a philosopher, a novelist. She never worried about public infrastructure, retirement security, budget deficits. Kemp's trickle down ideas, still promoted today by the likes of Art Laffer and Larry Kudlow, not to mention Gov. Romney, have never come anywhere close to working. They've led not to balanced budgets and broadly shared growth, but to larger deficits and greater income concentration.

It's thus no more plausible nor responsible to tout such an unrealistic vision from the right than it would be for an American politician to proclaim his allegiance to the ideas of Karl Marx and write down plans for confiscating wealth and socializing the means of production.

Moreover, and this is really pretty inevitable, when you learn a bit more about the politicians who write down and support plans like Ryan's, it turns out that the federal government has played and continues to play an important role in their district and state, as has very much been the case with Ryan in Wisconsin.

Note this quote toward the end of the New Yorker article, where Ryan asserts:

"Of course we believe in government. We think government should do what it does really well, but that it has limits, and obviously within those limits are things like infrastructure, interstate highways, and airports."

I guarantee you that Rep. Ryan would place programs to serve vets within that circle along with food and water safety, law enforcement, border patrols, and countless other measures. But his budget disallows their existence.

It's in this regard that Ryan's work suffers from the same problems as Mitt Romney's [ http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/02/nine-takeaways-on-romneys-tax-plan/ ] (in fact, Gov. Romney has praised and emulated Ryan's fiscal approach): there are deep, loosely specified spending cuts, matched with large, regressive tax reductions whose cost is to be made up with closing unspecified loopholes.

But in real life, the government will continue to play a larger role in our lives than the plans imply, the unspecified loopholes will turn out to be both politically unassailable and not large enough to offset the tax cuts [ http://www.taxpolicycenter.org/UploadedPDF/1001628-Base-Broadening-Tax-Reform.pdf ],* and thus the deficit will only grow larger, as it has under other Republicans, like Reagan and George W. Bush, who proclaimed similar visions of limited government and trickle down.

On the first point -- the magnitude of government's role -- here's a piece of CBPP's analysis [ http://www.cbpp.org/cms/index.cfm?fa=view&id=3708 ] on the Ryan budget that is a central focus of the New Yorker piece:

House Budget Committee Chairman Paul Ryan's new budget plan specifies a long-term spending path under which, by 2050, most of the federal government aside from Social Security, health care, and defense would cease to exist, according to figures in a Congressional Budget Office analysis released today.

The CBO report, prepared at Chairman Ryan's request, shows that Ryan's budget path would shrink federal expenditures for everything other than Social Security, Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and interest payments to just 3¾ percent of the gross domestic product (GDP) by 2050. Since, as CBO notes, "spending for defense alone has not been lower than 3 percent of GDP in any year [since World War II]" and Ryan seeks a high level of defense spending -- he increases defense funding by $228 billion over the next ten years above the pre-sequestration baseline -- the rest of government would largely have to disappear. That includes everything from veterans' programs to medical and scientific research, highways, education, nearly all programs for low-income families and individuals other than Medicaid, national parks, border patrols, protection of food safety and the water supply, law enforcement, and the like. [my bold]

And then there are the supply-side tax cuts -- again, from CBPP [ http://www.cbpp.org/cms/index.cfm?fa=view&id=3728 ]:

Even as House Budget Committee Chairman Paul Ryan's budget would impose trillions of dollars in spending cuts, at least 62 percent of which would come from low-income programs, it would enact new tax cuts that would provide huge windfalls to households at the top of the income scale. New analysis by the Urban-Brookings Tax Policy Center finds that people earning more than $1 million a year would receive $265,000 apiece in new tax cuts, on average, on top of the $129,000 they would receive from the Ryan budget's extension of President Bush's tax cuts.

And taxes would actually go up slightly for low-income families.

Am I suggesting that none of this could ever happen? Well, George W. Bush was certainly able to push through highly regressive tax cuts, which are still screwing up budgets and politics (they're a main factor in the fiscal cliff we're barreling towards), and Romney doubles down on them, so I'd never-say-never on this part of the agenda.

The spending cut part does seem highly unrealistic, as a) even Tea Partiers, it turns out to no great surprise, highly value Medicare [ http://www.slate.com/blogs/weigel/2011/04/19/poll_70_percent_of_tea_party_supporters_oppose_medicare_cuts.html ], b) even small cuts that affect members' districts become cherished when they're actually on the chopping block [ http://www.washingtonpost.com/business/economy/special-interests-win-in-senate-panels-attempt-at-tax-reform/2012/08/02/gJQASwL1SX_story.html ], and c) you really can't run a modern advanced economy without federal investments in public goods like infrastructure and education, not to mention innovation (like the Janesville Innovation Center in Ryan's district, supported by a $1.2 million grant from the federal government).

But that doesn't mean Republicans led by Ryan won't continue to go after a lot of stuff they don't like, things like low-income programs without powerful constituents (Ryan: the safety net has become a hammock [ http://www.dallasnews.com/incoming/20120609-rep.-paul-ryan-at-texas-gop-meet-u.s.-safety-net-has-become-hammock.ece ] !).

The moral of the story is to beware of politicians pumped up on ideological visions stoked by novelists and fairy tales about how slashing taxes and spending sets us free. The world is more complicated than that. Our economic challenges will never be resolved by those who pledge never to raise taxes or spending any more than it would by those who pledge never to cut them.

And especially don't be fooled if they happen to possess the numeracy to write their ideas down in budgets. Their numbers just don't add up.

*This point was a key finding of the TPC's work (link above) on the Romney tax plan, but they noted that Ryan's plan suffered from the same shortcoming (see footnote #3).

This post originally appeared [ http://jaredbernsteinblog.com/a-paul-ryan-profile-in-the-new-yorker/ (with comments)] at Jared Bernstein's On The Economy [ http://jaredbernsteinblog.com/ ] blog.

© 2012 by Jared Bernstein

http://www.huffingtonpost.com/jared-bernstein/paul-ryan-budget_b_1749275.html [with comments]


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Obama Super PAC Waiting To Unload On Mitt Romney's Embrace Of Paul Ryan Budget
08/07/2012
http://www.huffingtonpost.com/2012/08/07/obama-super-pac-mitt-romney-paul-ryan_n_1751054.html [with comments]


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