Thursday, April 7, 2011

Paul Ryan's budget

Ben and I discuss it in our Scripps Howard column this week. My take:
Credit Paul Ryan for bravery: He has done what Republicans avoided doing for decades -- show exactly how the party would cut government.

Americans may not like taxes, but they do like government services.

Just don't give Ryan too much credit.

Why? Because his proposal is not entirely honest. Ryan presents cuts to Medicare, Medicaid, food stamps, and Pell Grants as a means to preserve the safety net for America's poorest. But many of Ryan's conservative allies see the proposal as an opening gambit to undo the welfare state entirely and turn the clock back to the 1920s, when the sick and elderly suffered needlessly. Back down, and it won't be long before we're debating whether the programs should exist.

Why? Because Ryan's diagnosis is wrong, treating government spending as though it is the main cause of America's recent financial troubles.

That's wrong: Wall Street went on a gambling spree and finally lost -- threatening to unmake the world financial system when it did so.

Spending on social programs was not the problem.

Why? Because to the extent that a long-term deficit does pose a problem, it's not entirely a spending problem. It's a paying problem: Americans aren't financially supporting the government we get.

Personal income tax rates are among the lowest they've been in 70 years; major corporations like GE pay little or no tax at all. Writer Bruce Bartlett notes that in 2011, federal revenues will only consume 14.4 percent of GDP -- below the postwar average of 18.5 percent, and well below the 20-percent-plus that accompanied the surplus years of the late 1990s.

Ryan's proposal hurts the poor. It benefits the rich. And according to Ryan himself, it doesn't balance the budget until 2040. That's not a path to prosperity for anybody except the already prosperous. This proposal must be defeated.
Ben is more enthusiastic. I think a welfare state should be sustainable, and I think Democrats have real work to do to address that issue. But I think Ryan's budget really begins a discussion that goes all the way back to the 1930s and 1960s—do we really want to have a welfare state at all?

1 comment:

Lou Covey said...

At least it's a start. As you say, the current welfare scheme is not sustainable. Democrats should come back with ending big Agra and oil subsidies. Both are profitable And don't need shoring up. But tax rates are high. What is dropping is tax revenue, which is caused by the ability of large multinationals to funnel revenue through countries with lower tax rates, like th UK. If we maintain parity with the rest of the world, the incentive to offshore revenue will go away. And that will increase tax revenue.