Martin Wolf:
Paul Ryan’s plan for America is not credible: Representative Paul Ryan, Mitt Romney’s new vice-presidential running mate, is, we are told, the man with the deficit-cutting plan. Not for this conservative policy wonk are the phoney figures and evasions of cowardly politicians. He is a man whose integrity his opponents have to respect. Yet this story has one drawback: it is false. Do not take just my word for it. This is what David Stockman, director of the Office of Management and Budget under Ronald Reagan and a true conservative, wrote in the New York Times on August 13: “Mr Ryan’s plan is devoid of credible math or hard policy choices.” This is right, with one exception: Medicare. On that, Mr Ryan does offer a hard choice. But the maths are incredible.
The Ryan plan is the latest example of a consistent line of Republican fiscal policy since movement conservatism displaced traditional balanced-budget Republicanism some three decades ago. The priorities have been clear: first, tax cuts benefiting rich “wealth-creators”; second, cuts in spending, predominantly on the poor; and, last and least, reducing deficits….
The [financial] crisis, which occurred on George W. Bush’s watch, is far and away the most important explanation for today’s huge deficits. But it came after unfunded tax cuts, unfunded wars and the unfunded prescription drug benefit (Medicare D). The fiscal mess the Republicans bequeathed made it difficult – indeed, given Republican opposition, impossible – for the Obama administration to implement a stimulus plan on the scale needed…. Not that Republicans have anything against stimulus, provided it takes the form of unfunded tax cuts.
In all, the idea that Republicans care about the deficit does not pass the laugh test. Mr Ryan, however, is supposed to be different: he is a conservative, but an honest one.
Really? As Heidi Przybyla notes in a report for Bloomberg, Mr Ryan was pivotal in killing the Bowles-Simpson agreement, which, for all its faults, was (and is) the only politically realistic long-term fiscal solution. Moreover, the Congressional Budget Office’s meticulous analysis of the initial Ryan plan demonstrated that it is smoke and mirrors. He is what the economist Paul Krugman calls a “chicken hawk”.
As usual in any contemporary Republican plan, Mr Ryan’s offers upfront unfunded tax cuts, with the top marginal tax rate slashed from 35 per cent to 25 per cent. These cuts are to be offset by deliberately unspecified reductions in “tax expenditures”….
Would this plan improve the deficit picture over the next decade? No, not really. The CBO projects that, under current law, which includes expiration of the unfunded and unaffordable Bush tax cuts, the deficit would be 2¾ per cent of GDP in 2022 and the debt held by the public would be 67 per cent of GDP. Under the Ryan plan, if implemented (which is close to inconceivable), the deficit would be – wait for it – 1¾ per cent of GDP, while debt held by the public would be higher, at 70 per cent of GDP….
Over the next decade, the Ryan plan is inadequate and incomplete. Over the long run, it is incredible. It may be good politics. It is bad policy.
And The Economist:
Mr Ryan proposes to scrap the six different rates of income tax and replace them with just two bands. He says that his tax reforms will be revenue-neutral, because he will sweep away exemptions…. [T]here is a worrying gap in Mr Ryan’s plan. His blueprint does not begin to spell out which exemptions will go, which will stay and which will be means-tested; and exemptions are notoriously hard to get rid of. Until he is more specific, the fear must remain that the Republicans will deliver the spoonful of sugar but not the medicine, as they did under George W. Bush. If that happened, the deficit would balloon, just as it did under Mr Bush. And, with the top rate of income tax falling from 35% to 25%, the rich would benefit while spending cuts hit the poor disproportionately.
Mr Ryan was also wrong to vote against the proposals of the Bowles-Simpson deficit commission, which he did on the grounds that it wanted to close the deficit partly through an increase in tax revenues. He believes that the gap should be closed wholly through spending cuts. Because Mr Ryan, in true Republican fashion, wants to increase spending on defence, everything else—poverty relief, transport infrastructure, environmental protection and education, for instance—will have to be squeezed intolerably….
But although his thinking is open to much criticism, his clarity is a virtue, and increases the chances that voters will be presented with a proper choice on the central issue of this November’s presidential election: how big America’s government should be.
But the remarkable thing is that if you jump back from the end of the Economist editorial quoted above to its beginning, you get this:
Paul Ryan: The man with the plan: BY PICKING Paul Ryan, an athletic and brainy young congressman from Wisconsin, as his running-mate Mitt Romney has delighted Republicans and Democrats in equal measure…. [N]o one can accuse Mr Romney any longer of being unclear about what he will do if he makes it to the White House.
There is much to like about the personable Mr Ryan. He is a brave man: he was the first politician to produce a budget with a plausible plan for closing the deficit, which he did in April last year. He constantly reminds America that deficit reduction is a necessity not a luxury; and since Barack Obama has failed to do this, his persistence is especially welcome. He has said publicly and clearly that Medicare, the government-run health-insurance scheme for the elderly, is unaffordable and will, if left unreformed, go bankrupt; and persuaded his party to accept this. He has devised a plausible alternative to the current open-ended, state-financed system: government-funded vouchers toward buying insurance. He has already shown that he can work on this issue in a pragmatic and bipartisan way…
That is the wrong opening to those backbone paragraphs. The right opening is:
Each year for the past thirty-three years now this magazine has watched Republican politicians come forward with bold plans to cut taxes and reduce the deficit. Each year the plans have been frauds--programs that simply do not add up at an arithmetic level. Fool me once, shame on you. Fool me thirty-three times, shame on me.
For thirty-two years, the editors of this magazine--over the protests of many of their intelligent staff--have given a credulous welcome to these mendacious Republican politicians.
No more: Let us say it clearly: Paul Ryan's and Mitt Romney's plans do not add up at the level of simple arithmetic. Until and unless Republican politicians do emerge with plans that meet the consistency test of elementary addition and subtraction, we urge our American cousins in the strongest possible terms to vote against Republican candidates for office.
Why John Micklethwait does not read the backbone paragraphs of his own editorials remains a mystery. The only half-coherent explanation I have heard is that Micklethwait believes that the Economist can only survive if it attracts the kind of people who subscribe to the Wall Street Journal, and that editorials detached from American reality are an essential part of attracting such people.
Why oh why can't we have a better press corps?
