"Mitt Romney And Paul Ryan’s Budget"

Simon Johnson:

Mitt Romney And Paul Ryan’s Budget, by Simon Johnson: The conventional wisdom in American presidential politics is that once a candidate has secured a party’s nomination, he tends to move ... toward the political center...

However, in a panel discussion on Tuesday, Vin Weber, a senior adviser to Mr. Romney, indicated that the campaign may be moving toward positions on fiscal policy that are close to those proposed by Representative Paul D. Ryan..., a significant shift toward a much more extreme view on the future of government than many Romney proposals during the primaries...

Mr. Ryan’s proposals would substantially phase out the federal government’s role in providing basic social insurance for older people by massively reducing Medicare and by eliminating almost all nonmilitary discretionary spending. The House Budget Committee is also proposing to remove the only safeguard we have against the failure of another mega-bank. ...

Mr. Ryan’s approach certainly reduces this dimension of government spending over time. But ... according to the C.B.O., this approach would increase total health-care costs as a share of the economy and as paid by you...

Mr. Ryan’s plan would effectively shut down the federal government’s ability to set rules for the economy and to provide essential public services, such as air-traffic control, the monitoring of hurricanes and the provision of disaster relief.

Big private companies will no doubt do well...; there will be less restrictions on what they do (e.g., as the Environmental Protection Agency winds down or food-safety rules go unenforced), and they will be able to increase their market power (as the Department of Justice drops its remaining interest in antitrust issues).

This is bad news for entrepreneurs or anyone seeking to invest in start-up companies. The playing field will become ever more uneven – just as it was when J.P. Morgan and his colleagues were building the original industrial, railroad and energy trusts at the end of the 19th century.

From the perspective of too-big-to-fail banks, the news from Mr. Ryan is even better. The House Republicans are proposing to repeal Title II of Dodd-Frank, which creates the legal authority to wind down large financial institutions in an orderly fashion. Without this, we are back at the situation ... where big banks can blow themselves up, inflict great damage on the economy and also receive large-scale bailouts...

None of these Republican proposals should be dismissed as pure rhetoric. ...