Paul Ryan Most Overrated Politician?
The media has anointed him a policy wonk. But none of his numbers add up.
In the fall of 2010 the Federal Reserve was considering another round of “quantitative easing,” a mechanism intended to boost the economy out of the Great Recession. By then the interest rates were as low as they could go and the Fed had no other tool to prime the pump. And so it injected another $600 billion of new money into the economy by buying up long-term debt.
This brought a protest from Republican congressman Paul Ryan, reported by the Milwaukee Journal Sentinel. As the story noted, the Fed’s actions were likely to be particularly helpful to district’s like Ryan’s, which “includes three of the highest unemployment areas in the state, all with 10% unemployment or higher: Racine; Kenosha, where Chrysler shut an engine plant last month; and Ryan’s hometown of Janesville, where General Motors shuttered an assembly plant two years ago. The state’s only metro area with higher unemployment is Beloit, at 14.4%, which borders Ryan’s district.”
“I won’t dispute that a cheaper dollar can help boost exports in the short term,” Ryan said. “But I don’t think it’s a good tradeoff to do so at the expense of inflation…Inflation is a killer of wealth. It wipes out the middle class.”
Inflation? Ryan was actually worried about inflation? He was speaking not long after the nation had its lowest level of inflation in more than half a century. The rate had actually been negative in 2009, at -0.34 percent.
As for the horrible impact that would come from quantitative easing, since the Fed began this technique in 2008, the rate of inflation has risen by an average of 1.6 percent in 2009-2012 and so far has been continuing at the same rate in 2013.
The Fed’s actions didn’t cause anything near to an inflation problem and probably helped lower unemployment and bring jobs to cities like Kenosha and Racine. So did anyone in the media get back to Ryan and ask about his doomsaying in 2010?
Nope. Because the consensus narrative in the mainstream media is that Ryan is a “policy wonk,” as he’s typically described, a “serious-minded policy expert,” as USA Today has dubbed him, a “top wonk and budget tutor” (Associated Press), a policy “man of ideas” (Wall Street Journal editorial page editor and Green Bay native Paul Gigot), with “budget ideas that are thoughtful and serious” (Time magazine), and “the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes” (New York Times columnist David Brooks)
Is it something about Ryan’s pedigree, is he perhaps a Harvard Business School grad? Nope, he has a bachelor’s degree in political science and economics from Miami University in Ohio. Has he authored some highly technical bills that have refashioned our economy? Nope.
Partly the reputation may have arisen from reporters who have bought Ryan’s description of himself as more a policy man than a politician. But mainly he’s won this wonkish repute for his economic “road map” for the future, released a couple years ago, and re-released recently with few changes, with the title, “The Path to Prosperity.”
In theory, Ryan’s proposal is intended to provide a solution to an alleged long-term debt problem the nation faces. The notion itself is debatable, since the debt, as a percentage of the Gross Domestic Product, is not that high by historical standards. “What we’re talking about is a debt-service burden roughly comparable to that under the first President Bush,” columnist and Nobel Prize winning economist Paul Krugman has noted. “How many of the people now warning about the impossible burden of currently projected debt were issuing similar warnings back in 1992? Not many, I’d guess.”
But if the idea is to cut the debt, Ryan goes about it an odd way. He does propose spending cuts, but as an analysis by the Center on Budget and Policy Priorities has found, Ryan also proposes a series of huge tax cuts “that would cost nearly $6 trillion in lost federal revenue over the next decade.” That includes cutting the top individual tax rate to 25 percent from 39.6 percent, repealing the Alternative Minimum Tax (designed to ensure that high-income people pay at least a minimum level of tax) and cutting the corporate tax rate to 25 percent (from 35 percent) and taxes on corporations’ foreign profits.
A wonk or even slightly serious man would surely explain where this $5.7 trillion would come from. Ryan does suggest revenue can be gained from closing tax loopholes, but offers not one example. The biggest loopholes, in terms of potential revenue to be gained, are the deductions for mortgage interest and charitable donations, but they are politically popular, and unlikely to be eliminated. But even if they were, how much money could thus be raised, and what would be the impact on the economy? Those are important questions, but this serious man of ideas can’t be bothered to address them.
There is nothing subtle about this proposal. As a story in Investors.com notes, “the entirety of federal spending outside of Social Security and interest on the debt… would shrink to 11.2% of GDP, a level not seen since 1948 — before ObamaCare, Medicare, Medicaid, NASA, the interstate highway system and almost before the first baby boomers were born. That is nearly 25% below the 14.6% of GDP average over the past 64 years.”
It goes without saying that this, too, is completely impractical politically and will never be supported by the American people or Congress. But that’s almost beside the point as Ryan never goes through the countless programs in the federal budget, itemizes the costs and proposed cuts and considers their practical impact. He gives us no reason to think these cuts are anything but a fantasy.
As Washington Post columnist Ezra Klein (who, as it happens, writes the Wonkblog) has noted, “fully 59 percent of Ryan’s savings come from new cuts to Medicare, Medicaid, Obamacare or other health-care programs… The nonpartisan Kaiser Family Foundation estimates that cuts on the order of what Ryan is proposing will mean around 35 million people lose their health-care coverage.”
Typically two things happen when people don’t have health care coverage: they get ill (and sometimes die). And they also show up at emergency hospital departments, resulting in the most costly care possible. How exactly does this save money on the cost of medical care?
Then there is the fact that Ryan’s plan eliminates Obamacare but claims the $716 million in savings it generates. That slippery style of budgeting was criticized by Democrats, the media and even some conservatives during the recent presidential election, but an undaunted Ryan once again included it in his latest budget plan.
If this is a “road map,” it is one that’s missing most of the cities, highways and exit numbers. If this was a college research paper, it might win a grade of “incomplete.”
It is not a serious budget proposal, but a rhetorical document, a work of ideological zealotry. As many have noted, the tax and spending cuts would create a massive income shift of money from the middle and lower classes to the upper class and corporations. Ryan can perhaps be praised for the courage of his convictions, but not for producing a serious budget proposal.