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Friday, August 06, 2010

Paul Krugman: The Flimflam Man

Paul Ryan's budget plan won't do much, if anything, to help with the deficit, but it does redistribute money upward and it will require "sharp cuts" in social insurance. It also relies upon ideas that have been proposed -- and rejected -- in the past. Why is this considered innovative thinking?:
The Flimflam Man, by Paul Krugman, Commentary, NY Times: One depressing aspect of American politics is the susceptibility of the political and media establishment to charlatans. You might have thought, given past experience, that D.C. insiders would be on their guard against conservatives with grandiose plans. But no: as long as someone on the right claims to have bold new proposals, he’s hailed as an innovative thinker. And nobody checks his arithmetic.
Which brings me to the innovative thinker du jour: Representative Paul Ryan of Wisconsin ... has become the Republican Party’s poster child for new ideas thanks to his “Roadmap for America’s Future,” a plan for a major overhaul of federal spending and taxes. News media coverage has been overwhelmingly favorable... But it’s the audacity of dopes.
Mr. Ryan’s plan calls for steep cuts in both spending and taxes. He’d have you believe that the combined effect would be much lower budget deficits, and, according to [the] Washington Post..., his plan would ... sharply reduce the flow of red ink... But the ... nonpartisan Tax Policy Center ... indicate[s] that the Ryan plan would ...[produce a] deficit in 2020 [of] roughly $1.3 trillion.
And that’s about the same as the ... estimate of the 2020 deficit under the Obama administration’s plans. That is,... even if you believe that his proposed spending cuts are feasible — which you shouldn’t — the Roadmap wouldn’t reduce the deficit. All it would do is cut benefits for the middle class while slashing taxes on the rich.
And I do mean slash. The ... Ryan plan would cut taxes on the richest 1 percent ... in half, giving them 117 percent of the plan’s total tax cuts. That’s not a misprint. Even as it slashed taxes at the top, the plan would raise taxes for 95 percent of the population.
Finally, let’s talk about those spending cuts. In its first decade, most of the alleged savings ... come from assuming zero dollar growth in domestic discretionary spending, which includes everything from energy policy to education to the court system. This would amount to a 25 percent cut once you adjust for inflation and population growth. How would such a severe cut be achieved? What specific programs would be slashed? Mr. Ryan doesn’t say.
After 2020, the main alleged saving would come from sharp cuts in Medicare, achieved by dismantling Medicare as we know it, and instead giving seniors vouchers ... It’s the same plan Newt Gingrich tried to sell in 1995.
And we already know, from experience with the Medicare Advantage program, that a voucher system would have higher, not lower, costs... The only way the Ryan plan could save money would be by making those vouchers too small to pay for adequate coverage. ... In practice, that probably wouldn’t happen: older Americans would be outraged — and they vote. But this means that the supposed budget savings from the Ryan plan are a sham.
So why have so many in Washington, especially in the news media, been taken in by this flimflam? It’s not just inability to do the math, although that’s part of it. There’s also the unwillingness of self-styled centrists to face up to the realities of the modern Republican Party; they want to pretend, in the teeth of overwhelming evidence, that there are still people in the G.O.P. making sense. And last but not least, there’s deference to power — the G.O.P. is a resurgent political force, so one mustn’t point out that its intellectual heroes have no clothes.
But they don’t. The Ryan plan is a fraud that makes no useful contribution to the debate over America’s fiscal future.

    Posted by on Friday, August 6, 2010 at 12:42 AM in Budget Deficit, Economics, Politics | Permalink  Comments (80)


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