Ryan’s Budget and the 2012 Election

 Dan Wasserman sums up the Ryan Budget.


President Obama called the Ryan Budget “Social Darwinism” quoting that wise Republican, Newt Gingrich.  Mitt Romney called it “marvelous”.  Paul Krugman calls it “Pink Slime Economics”

Here is Krugman

And when I say fraudulent, I mean just that. The trouble with the budget devised by Paul Ryan, the chairman of the House Budget Committee, isn’t just its almost inconceivably cruel priorities, the way it slashes taxes for corporations and the rich while drastically cutting food and medical aid to the needy. Even aside from all that, the Ryan budget purports to reduce the deficit — but the alleged deficit reduction depends on the completely unsupported assertion that trillions of dollars in revenue can be found by closing tax loopholes.

And we’re talking about a lot of loophole-closing. As Howard Gleckman of the nonpartisan Tax Policy Center points out, to make his numbers work Mr. Ryan would, by 2022, have to close enough loopholes to yield an extra $700 billion in revenue every year. That’s a lot of money, even in an economy as big as ours. So which specific loopholes has Mr. Ryan, who issued a 98-page manifesto on behalf of his budget, said he would close?

None. Not one. He has, however, categorically ruled out any move to close the major loophole that benefits the rich, namely the ultra-low tax rates on income from capital. (That’s the loophole that lets Mitt Romney pay only 14 percent of his income in taxes, a lower tax rate than that faced by many middle-class families.)

This budget fight and the election to come are about what we want the country to be.  The Republicans have that much right.  Will we become a country with the rich hiding in gated communities and getting richer or will we a a country where everyone has a chance to succeed, where the less fortunate get help, and where there is a robust middle class?  Democracies thrive in countries with an educated middle class.  Look at the driving forces behind the Arab Spring.  The choices this election will be clear. 

The budget fight is also about whether or not a deficit is important right now.  Yes, we can’t continue to grow the deficit indefinitely, but it seems to this non-economist, that the way to deal with the deficit is not through draconian cuts to the domestic budget, but spend on things that result in jobs.  When people work they pay taxes and the deficit can begin to come down.  But cutting food stamps, unemployment insurance, job retaining programs, aid to education, are all key to growing jobs or helping those who can’t find them.

Andrew Rosenthal put it better in today’s New York Times.

He ticked off some of the budget’s most near-sighted assaults: financial aid cuts to nearly 10 million college students; 1,600 fewer medical grants; 4,000 fewer scientific research grants. Starting in 2014, it would cut around 200,000 children from the Head Start program and 2 million mothers and their young children from a food assistance program. “We wouldn’t have the capacity to enforce the laws that protect the air we breathe, the water we drink or the food that we eat,” he said.

Medicaid would be gutted, Medicare would be turned into a voucher program – but the Republicans would still cut taxes by $4.6 trillion over the next decade. The cuts, as usual, would mostly benefit the wealthy.

Mr. Obama noted that the stated purpose of the Republican budget is to reduce the federal budget deficit, but he called it a Trojan horse and “thinly veiled social Darwinism.” The real purpose is to cripple government. And he said, because it guts “the very things we need to grow an economy that’s built to last – education and training, research and development, our infrastructure – it is a prescription for decline.”

The Republican response to Mr. Obama – that the nation is in a debt crisis and the president doesn’t get it – just made his point for him. We don’t have a debt crisis. We have a medium- to long-term budget problem, driven largely by rising health costs combined with an aging population. Health care reform is an honest attempt to deal with that. Letting the Bush tax cuts expire, starting with the high-end ones, would be an honest attempt to deal with that. Then there’s our lack of jobs, lack of income growth, diminishing prospects and dwindling opportunities.

And we shouldn’t forget that George W. Bush told us we didn’t need to raise taxes to pay for the war in Iraq because it would pay for itself through oil revenue.  He cut taxes for the 1% instead and created a deficit.  This probably wouldn’t have been so catastrophic except that the economy collapsed in 2008.  Here is a link to a nice chart.

So the Ryan Budget will be at the heart of the election this fall – especially if Paul Ryan is Romney’s VP.  It will be interesting.