Congressman Paul Ryan is not the earnest young man sounding the alarm about the nation’s soaring debt and busted fiscal equation that he claims to be. And most especially he is not the “honest, open-minded, solution-oriented fiscal conservative” about whom some middle-of-the-road pundits vacuously jabber.
In truth, he is an accomplished beltway pettifogger who peddles a lame scheme of fiscal legerdemain that gets rinsed and repeated every year—-all to no constructive purpose whatsoever. Yet in promoting this embarrassment of contradictions and hot air, Ryan has managed to coopt the genuine deficit fears of the GOP rank and file and has badly mis-educated grass roots voters as well. Even Sarah Palin has figured that out:
“The latest Ryan (R, Wisconsin) budget is not an April Fool’s joke,” former Alaska Gov. Palin — and, like Ryan, a former GOP vice-presidential candidate, wrote on her Facebook page. “But it really IS a joke because it is STILL not seeing the problem; it STILL is not proposing reining in wasteful government overspending TODAY, instead of speculating years out that some future Congress and White House may possibly, hopefully, eh-who-knows, take responsibility for today’s budgetary selfishness and shortsightedness to do so
In terms of policy and numbers, the Ryan Budget is a total deception about the nation’s true, dire fiscal plight. It holds that the giant middle class social insurance entitlements do not have to be cut by even a dime; that a bloated defense establishment needs even more money; that waving a silly wand called “block grants” can make hundreds of billion in safety net spending go away without harming genuinely needy beneficiaries; that bloated programs favored by GOP constituencies like veterans benefits and homeland security are not part of the spending problem; that we can have dramatically lower tax rates based on a secret plan to close loopholes; and that Rosy Scenario 2.0, the already pie-in-the sky economic assumptions used by the CBO, can be amped-up several more notches, thereby producing a budget surplus by 2024.
In short, the Ryan Budget is a complete, blatant and undiluted expression of beltway mendacity. Its central lie is that we can beat-up on 10 or 20 million poor people and our entire fiscal calamity will go away. In truth, the problem reaches to the entire population of 315 million Americans, and it cannot be alleviated without unprecedented sharing of burdens and pain—by virtually all spending beneficiaries and every taxpayer alike.
The latest version of the Ryan Scam starts with a whopper—namely, that some $2 trillion of its $5 trillion in total savings over the next decade will come from repealing Obamacare. To be sure, this outcome would be devoutly to be desired—since Obamacare is the single greatest legislative disaster of the last half-century. But Ryan doesn’t do that. In fact, he leaves in place more than $1 trillion in new Obamacare taxes and the huge $700 billion Medicare cutback that was integral to the 2010 Affordable Care Act, and which Romney-Ryan inveighed endlessly against during the 2012 campaign.
So doing the correct and honest thing—-repealing the entire act—would save only a fraction of Ryan’s claim–perhaps $500 billion out of the CBO baseline. In that context, it happens that baseline spending over the 10-year projection period is about $50 trillion. In other words, honestly reckoned the centerpiece of the Ryan Plan would amount to about 1% of even the CBO spending baseline–a forecast that itself drastically understates the true picture.
To be sure, the Obamacare revenues and Medicare cuts could be offset with alternative measures. But that’s exactly where the endless legerdemain of the Ryan brand of fake fiscal conservatism comes into play. His plan already claims to spur miracles of economic growth— owing to sweeping reductions in income tax rates from 40% to 25% for the affluent and down to 10% for everyone else. The last standing supply-side guru, Professor Art Laffer, is undoubtedly tickled pink by this proposal, but for everyone else who uses ordinary math there is a slight problem.
The Ryan tax rates would reduce Federal revenues over the next decade by upwards of $5 trillion. So then how does our fiscal faker get to a balanced budget anyway? Why he follows the advice of the befuddled economics professor who was asked how he would get out of a 30-foot deep hole. “Assume we have a ladder”, he replied.
Ryan assumes that there is not merely a corporal’s guard, but an army of House Republicans who would stand up to the combined arms of the K-Street lobbies and their own business constituencies to close $5 trillion of loopholes. Well, let’s see.
The largest single loophole among the widely advertised $1 trillion per year of so-called “tax expenditures” is upwards of $200 billion for employer health plans and other medical care deductions. Right behind that is another $200 billion for pensions, 401Ks, Keogh Plans and other retirement preferences, and upwards of $150 billion for mortgage deductions and reduced taxation of capital gains on home sales. And then we have nearly $100 billion for state and local income and sales tax deductions and tax-exempt bonds–followed by huge deductions for charitable giving.
Last year Ryan’s colleague and Chairman of the House Ways and Means Committee, Congressman Dave Camp, nosily launched a campaign to broaden the income tax base and slash rates per the Ryan scheme. It is worth noting that 10 months later, Camp announced that rather than bring a bill to the House floor, he would retire from Congress, instead!
So the Ryan Budget already consists of pure air balls on the tax front, but now he’s going to close another $1 trillion of loopholes to replace the Obamacare taxes? Hardly. His plan just quietly counts the Obamacare revenue embedded in the CBO baseline, and urges his GOP colleagues to look the other way.
Yet when it comes to the heart of the Big Government/Welfare State budget, Ryan’s look the other way advice becomes truly egregious. CBO’s baseline spending for Social Security and Medicare over the next decade is just short of $19 trillion—and represents nearly 40% of total Federal spending projected for the period. And how much does Ryan propose to save? Try the minute sum of $130 billion, which amount to just 0.7% of baseline outlays for these giant entitlements.
The issue here goes far beyond the math. Social Insurance is the greatest single policy error of modern times because it promises benefits to the entire population without proof of need or a means test, and it takes the nation’s wage base hostage on the grounds that a punitive levy of $1 trillion per year in employer/employee payroll taxes is merely an insurance premium.
Self-evidently, it is nothing of the kind. The $3 trillion of so-called “assets” in the Social Security Trust Funds are nothing but accounting confetti—intra-government IOUs which someday will require additional taxes or massive default on promised benefits. In the meantime, the payroll tax is an egregious jobs destroyer. America has priced itself out of the world market already—-so the very last thing we should tax is labor.
Indeed, at Obama’s misguided $10.10 minimum wage on a full year basis, the combined payroll tax levy amounts to $3,000 per year. Stated differently, that is an extra expense which employers in the fiercely completive low-wage markers cannot afford and reduced take-home pay that America’s growing army of part-time and low-end workers desperately need in their pay envelopes.
{adinserter 1} But there no chance that anything will ever be done about the lunacy of these job-destroying payroll taxes—such as a consumption tax. Nor will anything be done about the unseemly reality that there are millions of retirees who have maxed out at $50,000/year in combined Medicare benefits and Social Security payments that should not be getting them. Virtually no one earned benefits at that scale—even if you count the payroll tax as an insurance premium.
But the Ryan Plan says look the other way— when what is needed is a stiff means-test on the social insurance programs and a sweeping reconstruction of the manner in which they are funded. Indeed, social insurance is the fiscal elephant in the room, and by whiffing on it entirely the Ryan Plan precludes any possibility of a conservative alternative to the Welfare State status quo—-a condition that is pushing the nation inexorably toward bankruptcy as 10,000 baby-boomers retire each and every day.
Then Ryan adds insult to injury by actually fattening up the other fiscal elephant in the room—that is, the massively bloated defense budget that bears no rhyme or reason to the reality of the post-Cold War World. Defense and national security outlays, including the so-called war contingency will total $650 billion this year–or about 40% more than spending in constant dollars when the Cold War ended abruptly in 1991. Did Ryan not get the memo?
Even the $5.7 trillion in the CBO baseline for DOD over the next decade is far beyond what can be afforded and what can be justified in a world in which we have no industrial state enemies left, and where we have both failed and been fired from the role as the world’s policeman. But Ryan, restores all the defense sequester cuts and then some, adding nearly $500 billion or 8% to the DOD allowance.
In all, Ryan’s budget gives a pass to $25 trillion of combined Warfare State and Welfare State/social insurance spending during the 10-year horizon. That’s half the budget—and the heart of where massive opportunities exist to actually do something about “Big Government”.
And here’s the thing. Ryan’s math is self-evidently phony, but his dis-service to the conservative cause is even more offensive. There is a valid and populist alternative that says take on the military-industrial complex; renounce an interventionist foreign policy which is obsolete and destructive; and demand that affluent retirees bear their fair share of sacrifice through a means-test on social security and Medicare.
Yes, there is no guarantee that such a program would resonant with the public after so many decades of bipartisan lies about these giant programs at the center of the nation’s fiscal equation. But the truth about the fake Ryan alternative is that it insures there never will be an alternative to Big Government as we now know it, and that the job of Congress for decades to come will be to tax, tax and tax some more to pay for it.
The rest of the Ryan plan amounts to silly kid stuff. The CBO baseline for Medicaid and related low-income health programs is $4.2 trillion—- which is no mean amount, but only a fraction of the big middle class entitlements. Yet here Ryan proposes to cut spending by not 1% but upwards of 17% or $750 billion.
True enough, Medicaid is just one more manifestation of our out-of-control health care system which staggers under the disability of massive third-party re-imbursement, and the near total lack of honest price signals to consumers and providers alike. Medicaid therefore needs thorough-going reform along with the rest of our unspeakably bloated $2.7 trillion health care system. And that should start with a requirement that even poor people bear a meaningful share of their medical expenses on an out-of-pocket basis.
Ryan’s massive Medicaid cuts are not to be achieved through honest reform, however; it all comes from a flat-out gimmick that bears no relationship to reality. In a word, he would simply have Washington punt on the massive dependencies and complexities that have been built into the low-come health care system over decades, including millions of nursing home residents, and provide the states with a drastically short-changed “block grant”.
Needless to say, there is not a remote chance that such a measure could be enacted, but if it were the actual outcome would be worse than the status quo. Block granting what is now a half-trillion dollar medical care system would simply turn 25,000 state and local governors, legislators, mayors and county supervisors into full-time lobbyists—that is, a beltway-based dollar harvesting network that would have no parallel.
In fact, block grants are not only a fiscal cop-out, but they are also not a remotely conservative idea; they are a Richard Nixon political invention that thoroughly contradicts true conservative principles—namely, that government officials which spend the money should also be responsible for raising the taxes to fund it.
Accordingly, most of the other tag ends of the Ryan budget fall to the same disability including the ridiculous idea of block-granting food stamps. Given the growing failure of America’s debt-besotted economy, we need an efficient and effective means-tested safety net more than ever. The EITC and food stamps are now at the heart of that, and provide upward of $150 billion per year–mostly to people who have a genuine call on their fellow citizens. To muck-up this serviceable safety net by delegating it to thousands of local officials who are already swamped in their own fiscal travails is a truly bad idea.
At the end of the day, the Ryan budget is the opposite of what it is advertised to be. It would not stop the drift of America down the path of fiscal bankruptcy, but would actually accelerate it by disabling any semblance of a conservative alternative.
The CBO deficit baseline for the next decade is already $8 trillion and reverts to an annual level in excess of $1 trillion only a few years down the road. But that’s on the basis of Rosy Scenario 2.0— an assumption that real growth averages nearly 3.5 percent per year through 2018, and that thereafter the nation remains at full employment and recession-free for all time to come, world without end!
Just cut and paste the performance of jobs, GDP, wages and the other major economic variables as they have actually panned out over the last 13 years, and remove all the “kick-the-can” assumptions embedded in the baseline with respect to supposedly “expiring” spending programs and tax giveaways that never actually expire in the real world. On that basis, the built in deficit over the next decade is easily $15 trillion; the resulting national debt approaches $35 trillion by the middle of the next decade; and America’s debt-to-GDP ratio approaches 140%—that is to say, Greece.
What does Paul Ryan’s budget do about these dire prospects? Probably not much more than would be accomplished by 10,000 monkeys tapping on their HP’s.
