does Ryan deserve his reputation as a fiscal conservative?

Duck Soup · 18-08-2012 05:42PM #1

I've heard/read for commentators on both the left and the right that Paul Ryan has an unearned reputation as a fiscal conservative and a deficit hawk.

Both point to the fact that in Congress, he's voted for large spending commitments, unfunded by either cuts elsewhere or revenue raising.

In 2003, he voted for the Medicare Modernization Act, which gave $400bn over 10 years primarily to drugs companies.

He voted for the Highway bill that included the famous Bridge To Nowhere.

He voted for TARP.

He voted for the auto industry bailout (he had a car factory in his district).

He voted for subsidies for oil companies.

He voted for two wars, neither of which were funded by a 'wartime' tax increase or War Bonds.

In fact, the accusations against Ryan fall into two distinct parts. The first is mainly from people on the right and within the Republican party: that his voting record belies his rhetoric.

The second, mainly but not exclusively, from the left is that his famous plan, in its various iterations is economically illiterate. To quote Krugman from his blog today:

Ryan: The First Decade
Continuing with my Ryan series, let’s look at what his budget actually proposes (as opposed to vaguely promises) in its first decade.

http://budget.house.gov/uploadedfiles/pathtoprosperity2013.pdf

First, there are a set of tax cuts for higher income brackets and corporations. The Tax Policy Center (pdf) estimates the cost of these tax cuts, relative to current policy, at $4.3 trillion.

http://www.taxpolicycenter.org/numbers/Content/PDF/T12-0075.pdf

Second, there are spending cuts. Of these, approximately $800 billion comes from converting Medicaid into a block grant that grows only with population and overall inflation – a big cut compared with projections that take into account rising health-care costs and an aging population (since the elderly and disabled account for most Medicaid expenses). Another $130 billion comes from doing something similar to food stamps. Then there are odds and ends – Pell grants, job training. Be generous and call all of this $1 trillion in specified cuts.

On top of this we should add the $700 billion in Medicare cuts that Ryan denounces in Obamacare but nonetheless incorporates into his own plan.

So if we look at the actual policy proposals, they look like this:

Spending cuts: $1.7 trillion

Tax cuts: $4.3 trillion

This is, then, a plan that would increase the deficit by around $2.6 trillion.

How, then, does Ryan get to call himself a fiscal hawk? By asserting that he will keep his tax cuts revenue-neutral by broadening the base in ways he refuses to specify, and that he will make further large cuts in spending, in ways he refuses to specify.

And this is what passes inside the Beltway for serious thinking and a serious commitment to deficit reduction.

He does like to bandy numbers around, but do they actually add up?

southsiderosie · 18-08-2012 06:06PM

I posted this in the other thread, but both Martin Wolf of the FT and the former director of the OMB under Reagan have both trashed Ryan's plan.

I also don't know why supporters of Ryan are trying to act like the changes to Medicare are that far off. There are a lot of voters under the age of 55, and considering how many 50-somethngs have been laid off can cannot get full-time work again, the thought of having to pick up over half of their medical costs in old age has to be terrifying.

Cheerful Spring · 18-08-2012 10:43PM

Ryan is a Republican so his policies are clearly designed for protecting the rich and screwing over the less well off.

If Ryan and Romney get elected/ America has finally shifted to the far right and that is a scary proposition.

How would they deal with an emerging and expansionist China? Is a war with Iran likely? Those decisions will impact us here in Ireland.

I doubt Romney will get elected ( cheating maybe rigged election)

He is a Mormon will Republicans elect him and non republicans I wonder?

Also at the moment he will only hand over two years of tax returns and is refusing to hand over any other years-

five years has always been the way it has been done. It suggests he is hiding something mostly likely he has paid no tax in those years and had accounts outside the country. This will probably put an end to him being president, if he still refuses the request.

Duck Soup · 19-08-2012 04:15AM

Thanks for the links, Rosie.

Here's the Wolf article, without the FT paywall:

http://gulfnews.com/business/opinion/paul-ryan-does-not-offer-a-credible-plan-for-america-1.1063234

Duck Soup · 19-08-2012 09:31PM

Matt Miller of the Washington Post casting a similarly sceptical eye over Ryan's fiscal conservative credentials:

http://www.washingtonpost.com/opinions/matt-miller-recognizing-paul-ryans-tell-when-he-is-trying-to-avoid-something/2012/08/16/f70201fa-e7df-11e1-8487-64e4b2a79ba8_story.html

Channel Zero · 20-08-2012 06:36PM

"Starving the beast" is a fiscal-political strategy of American conservatives[1][2][3] to cut taxes in order to deprive the government of revenue in a deliberate effort to create a fiscal budget crisis that is intended to force the federal government to reduce spending (rather than raise tax levels). The short and medium term effect of the strategy has increased United States public debt rather than reduced spending.

The term "beast" refers to the American government and the programs it funds, particularly social programs[4] such as welfare, Social Security, Medicare[3] and public schools; and does not usually refer to spending on military, law enforcement or prisons.

http://en.wikipedia.org/wiki/Starve_the_beast

Suryavarman · 20-08-2012 08:05PM

Peter Schiff wrote a short article on LewRockwell.com criticising Ryan's budget plan. I found the couple of paragraphs of the assumptions underlying Ryan's budget plan particularly interesting:

Because there are no actual cuts in his budget, Ryan hopes that fiscal balance can be restored by 2040 only because he assumes that we achieve returns to the annual economic growth that are equal to levels averaged for much of the last century. In other words, he sees slow growth of the last four years as the aberration, not the new normal. As with all other government projections, this is on the extreme optimistic end of the spectrum. In truth, there is nothing on the horizon that should make anyone think these growth figures will be achieved. America's crushing debt, burdensome regulations, political paralysis, and nagging demographic problems bode poorly for the return to trend line growth anytime soon. More likely, based on the speed towhich republicans will shrink from popular backlash, is that the "cuts" that Ryan proposes will be abandoned as soon as they prove to be politically unpopular.

In fact, among his other overly-optimistic assumptions are that the unemployment rate falls to 4% by 2015 and an unprecedented 2.8% by 2021, another real estate boom begins almost immediately, and there is an average inflation and ten-year treasury rate for the next ten years of 2.04 and 4.15 respectively. These are assumptions that would make even the most rabid economic cheerleaders sit on their pompoms. Despite these pollyannish economic growth and record low unemployment projections, Ryan still assumes interest rates will remain near historic lows and that none of the cheap money showered onto the economy will ever find its way into the CPI. In other words, it's the economic equivalent of winning the lottery twice in a row while failing to account for the higher taxes that accompany such good fortune.

Ryan really is living in fantasy land if he thinks the Federal Government can continue to pile on debt at such a ridiculous and get back to the levels of economic growth that the US has enjoyed over the last century.

That he uses these extremely rosy scenarios and then proposes a budget that doesn't balance until 2040 shows what a coward he really is.

does Ryan deserve his reputation as a fiscal conservative?

Comments