The Republican leadership seem to have listened to Obama’s claim that they mustn’t crash the economy because, you know, we have to pay our bills. The budget is the time to cut costs, not afterwards when the bills come due. As a result of this realization (or at least the realization of the bad political optics of it) they are now claiming that they will tie the Debt Ceiling raise to a plan to balance the budget in ten years.
Before we get to this plan, let’s take a moment to step back and marvel at the ridiculousness of this bit of political theater. They want to be seen as Very Serious. But first and foremost, debt is not a problem—at least not now and not until the economy is doing a lot better. Even if it were, this congress can only budget for this congress. As we learned all too well during the first years of the Bush Jr administration: fiscal restraint from one administration can easily turn into fiscal recklessness from the next.
Paul Ryan’s Budget: a Primer
Now let’s talk about that budget. Let’s talk about Paul Ryan. You see, John Boehner has turned to him to come up with this budget balancing plan. And that, my friends, is high-larious. Paul Ryan was not even able to balance the budget over 30 years. He certainly won’t be able to do it in ten!
I know there was a lot of reporting on the Ryan Plan and how it balanced the budget. But it was all done with fairy dust. Here’s his plan in about as much detail as he provided:
- Cut income tax rates (Very specific!)
- Cut deductions (Vague!)
- Stimulate the economy (Fairy dust!)
- Cut spending (Vague!)
Now I understand that Paul Ryan is a follower of Ayn Rand. And that means he understands important Randian concepts like: X = X. But we normally expect a bit more rigor from our budgets. Ryan’s entire plan comes down to this: “I will balance the budget by cutting spending and stimulating the economy.” And if you’ve ever seen a budget, you know it doesn’t look like that. What Paul Ryan has proposed is a statement of purpose. The problem is that we know for the last 30 years, all Republicans have wanted to do that. We are still waiting for the details.
But even a plan this vague can be shown for the nonsense it is. Total taxes are going to remain the same. Under most circumstances, this would have no effect on the economy. But not in this case! As we saw with Romney’s tax plan, this one can’t help but lower taxes at the top and increase them in the middle. So the people who already have more money than they know what to do with (Why else do you think they are paying the government to hold their money?) will have even more. Meanwhile, people who generally spend all of their money will have less. Thus, Ryan’s tax changes will hurt the economy.
But wait, there’s more! Cutting government spending will also hurt the economy. (Just ask people living in the United Kingdom!) So Ryan’s great idea will cause the economy to tank. And thus there will be less tax revenue. And this will mean that all of his unspecified spending cuts will be partially offset. And thus, he will need even more savage spending cuts. But don’t worry! It is certainly the case than in 20 or 30 or 40 years, the economy will recover.
What They’re All Saying
Political watchers are no more impressed than I am. Jonathan Chait notes that the only way that Ryan could make his budget work is to cut about 90% out of our spending on the poor and sick. But he puts his general thoughts very poetically:
Matt Yglesias questions the very idea of balancing the budget. He gets to the heart of what I was talking about this morning, The End of History. Can it possibly be that we are at exactly the right amount of taxation? Mostly, he’s just poking them to note that they have no reasons for their position on the budget. They just “feel” that certain numbers are right.
But mostly everyone else is still focused on Paul Ryan’s problem yesterday: his claim that he never said that people on Social Security and Medicare were “takers” (or the more common Randian term “moochers”). Mother Jones provided this video to jog his memory:
Update (23 January 2013 5:16 pm)
Ezra Klein has a great article that shows just how much of a charlatan Paul Ryan is, What Happened When I Asked Paul Ryan Why He Hates Taxes. It is very much worth reading.