Ryan’s Budget Plan Won’t Save Romney

By Peter Lindfield, published in the Telegraph-Journal 14th August 2012

When Mitt Romney named Wisconsin congressman Paul Ryan to the Republican White House ticket, he chose a House Republican who shares his commitment to the proposition that additional tax cuts will somehow conjure up a stronger economy.

On the face of it, Ryan is a good choice for Romney. During his tenure as House Budget Committee chairman, Ryan was characterized by supporters as a reformer who is working hard to change the country’s financial state of affairs. Ryan will help to restore “the dreams and greatness of this country” Romney said on Saturday. In turn, Ryan promised that the new “comeback team” on the Republican ticket will “turn around the country’s economy by embracing, not avoiding, the tough challenges.”

On the conservative right, the response to Ryan has ranged from cautiously enthusiastic to borderline hysterical. Fox News Radio host Bill Hemmer said that Ryan’s budget plan, “is going to go down as the single most important event in government history in our lifetimes.” Ryan has been called a genius, courageous and “the adult in the room.”

So why do so many economic analysts and policy-makers think that Ryan’s budget plan is irresponsible economic policy?

Robert McIntyre, director of Citizens For Tax Justice, wrote in the Washington Post that the Ryan budget plan is “all smoke and mirrors and no deficit reduction.” By McIntyre’s calculations, the Ryan budget cuts spending by $4.2 trillion over 10 years and reduces taxes by $4.3 trillion over the same period.

Tax Policy Center co-director William Gale said that Ryan’s fiscal year 2013 budget plan is “essentially an effort to have low- and middle-class households bear the entire burden of closing the fiscal gap and bear the costs of financing an additional tax cut for high-income households.”

Gale, who served as senior staff economist for the Council of Economic Advisers under President George H.W. Bush, simulated the effects of reducing ordinary income tax rates to 10 and 25 per cent. According to him, Ryan’s budget proposals would cost about $3.2 trillion over ten years. This would be in addition to the “$300 million lost from repealing taxes enacted to pay for the Affordable Care Act, the $1.1 trillion lost from Ryan’s desired reduction in the corporate tax rate, and the $5.4 trillion lost from extending the Bush-Obama tax cuts”.

Economic Policy Institute senior policy analyst Ethan Pollack wrote earlier this year that Ryan’s House Budget Committee plan rehashes the same failed priorities that were met with widespread criticism in 2011. In this budget, he would cut $3.3 trillion from low-income programs over the next decade.

Pollack wrote that, “Ryan’s proposed cuts to Medicare, Medicaid, and food assistance would all fall heavily on seniors, the disabled, and children. Ryan’s budget is doubly bad for children because his proposed cuts to public investments (mostly infrastructure and education) would cause children to inherit a country with crumbling roads and bridges and to enter the labour market with fewer skills.”

The non-partisan Center for Budget and Policy Priorities agrees that the biggest cuts would be in Medicaid, which provides health care for the nation’s poor. The cuts outlined in Ryan’s budget plan would force states to eliminate Medicaid coverage altogether for up to 28 million low-income people.

Conspicuously absent from Ryan’s budget plan is any sense that its profound budget cutting would promote economic growth. In fact, it has been more than twenty years since anyone in the U.S. has tried to defend deep tax cuts for the wealthy as a way to generate jobs and prosperity. The reason for that is simple: Trickle-down economics is a failure both in theory and in practice. Ryan’s contemporary version will only worsen America’s fiscal problems while creating hardship for millions.

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Filed under Economics, Tax policy, U.S. Election 2012

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