Ryan’s Time Wasting Titivation

salchowThe latest version of the House GOP budget proposal in Congress looks very much like previous renditions — lower the tax rates for the top 0.1% of American income earners, and replace the current Medicare program with a coupon/voucher plan. [TPM]   “Re-litigation” comes to mind.   The curious part comes as Representative Ryan, who vilified the $716 billion in savings in the Affordable Care Act (Obamacare) during the last presidential election, now incorporates those same savings into his budget proposal — while calling for the repeal of the ACA which contains those savings…  This rhetorical contortion looks less like a 360° turn and more like a quadruple salchow.  [more at Business Insider]

Former House Speaker Rep. Nancy Pelosi, called the scheme “fuzzy math and budget gimmicks.” [TPM] The point of this budget exercise, is not really to address the long term stabilization of U.S. indebtedness — it IS an exercise in sophomoric political economy; simplistic in form and regressive in nature. Ezra Klein nails it:

“Ryan’s budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan’s real point throughout his career.”

Or, more specifically:

“Here is Paul Ryan’s path to a balanced budget in three sentences: He cuts deep into spending on health care for the poor and some combination of education, infrastructure, research, public-safety, and low-income programs. The Affordable Care Act’s Medicare cuts remain, but the military is spared, as is Social Security. There’s a vague individual tax reform plan that leaves only two tax brackets — 10 percent and 25 percent — and will require either huge, deficit-busting tax cuts or increasing taxes on poor and middle-class households, as well as a vague corporate tax reform plan that lowers the rate from 35 percent to 25 percent.”  (emphasis added)

Now, why would those be “vague?”  First, it is much easier to dodge criticism of a proposal when the details aren’t available.  Offering a “vague” proposition allows for the “I didn’t really mean that” rationalization when push comes to the inevitable shove.  Secondly, when the arithmetic is fuzzy the extrapolations, of necessity, must also grow furry. What should give the audience room for some trepidation is that this offering from Representative Ryan isn’t the first time he’s run this flag up the pole.  Why could not more rational, detailed, and precise numbers be provided as the budget plan moves through its various incarnations?

The answer may very well be that he can’t be more precise without (a) offending major segments of the electorate, and/or (b) demonstrating that the numbers simply don’t add up to what he is claiming for his project.

In Representative Ryan’s blinkered vision of America, government is more to be feared than the level of indebtedness [Ezra Klein] but this ideological perspective obfuscates the very real role our government plays in this mixed economy.   Programs which provide automatic stabilizers in the economy to mitigate the impact of business cycle volatility, and those which provide citizens with opportunities to increase their standards of living have an impact across the economic spectrum.

CBPP concludes:

“As policymakers embark on the necessary work of further reducing long-term budget deficits, their approach could have important consequences for tens of millions of low- and moderate-income Americans.  If policymakers take an even-handed approach, one that combines spending cuts with an adequate mix of new revenues, they can reduce deficits without increasing poverty and the ranks of the uninsured or weakening efforts to ensure that children have more opportunity to succeed in the classroom and later in the labor market.  If, however, policymakers cut deeply into programs that assist low-income individuals and families, we will likely see more poverty and hardship as well as fewer paths to opportunity.”

The essential problem with perceiving government as a threat to “freedom” is that those programs which keep people from becoming dependent on government assistance in the long run, are those which the Meat Cleaver Republicans would assert in the first wave of cuts in the short term.

For example,  there are significant omissions in Ryan’s latest offering:

“It won’t create jobs this year, and will likely cost jobs in the years to come by putting the economy on a steep austerity ramp. There’s no housing policy for the millions of families in foreclosure and no way to read Ryan’s budget without assuming massive cuts to student-loans programs. That may mean fewer families watching student loans pile up, but only because they didn’t get any in the first place.” [Klein WaPo]

Jobs?  Jobs generate income, income generates both consumer spending and tax revenue.  The impetus may come from federal spending, but the results would be seen initially in local economies.  Paychecks get spent on housing, clothing, groceries, and transportation.  A family with an income sufficient to support the purchase of an automobile generates not only good numbers for the automobile manufacturers, but pays state sales taxes on the purchase, pays gasoline taxes to keep the beast running, and pays license fees to keep highways operating functionally.

Housing?  The “housing market” is a mid-stream economic activity.  Building a housing unit, whether detached or communal, requires raw materials, manufactured materials, and financing.  In short, housing is in the midst of the economic stream of activity, and as we discovered to our collective horror in 2007 when things start to go badly in this milieu the ripples can become tsunamic.  That there is not even a passing nod given to the issues associated with current housing market fragility and the continuing foreclosure issues in Representative Ryan’s budget ought to be demonstrative of his detachment from real economic forces at work.

Foreclosed properties wreak havoc on the homeowners, bring down housing values in neighborhoods, cause a loss in property tax revenue for local governments, and create law enforcement issues where abandoned properties are all too prevalent.  One might have thought that Representative Ryan would at least given cursory acknowledgement to the issues associated with the housing market in his budget priorities?

Education?  There is a link between income, unemployment, and education.

Educations Pays

If we truly want to move people out of poverty, or up the economic ladder, the graph above from the Bureau of Labor Statistics shows how the rungs of that ladder are constructed.  Note that when the graph was drafted the national unemployment rate was 14.1% for those with less than a high school diploma, but only 6.8% for those with an associates’ degree.  If we look to the more recent numbers the picture doesn’t change much.

The February 2013 unemployment rate for those with a high school diploma stood at 7.9%; for those with an associates’ degree or some college the unemployment rate was 6.7%.  Those holding a college degree experienced an unemployment rate of 3.8%.  [BLS]

Given this information it would seem logical to conclude that if we want to improve the overall health of the American economy it would be seemly to enhance the opportunities for education, especially post-secondary educational programs.  That’s not what Representative Ryan and his Republican colleagues have on offer:

Ryan would stop increasing the size of Pell Grants to adjust for inflation. Instead, they would stay at the current level, $5,645, for 10 years. Ryan would also change the way the government calculates how much a student’s family is expected to pay to make it less generous.”  [Atlantic]  …

Ryan’s proposal doesn’t spend much time on a key reason Pell Grant awards have increased: rising education costs. Average costs for a four-year institution have risen 250% since 1980 and nearly doubled in the last 20 years. Pell Grant allocations have increased rapidly over the last decade — but that increase isn’t tied to the change for education costs.” [Atlantic]

Education is a labor intensive occupation.  The process can be assisted with technology, but since time out of mind the means by which human beings transmit knowledge — vocational, cultural, economic, etc. — is from human being to human being.  As states cut funding to educational institutions the colleges, tech schools, and universities raised tuition and fees to the “customers.”  The greater the increase in fees, the greater the problem for middle class parents who want to see their offspring move up the educational (and economic) ladder.   Young people are asked to take on a staggering amount of indebtedness to earn a degree, which in turn limits their capacity to participate more fully in the economic life of this nation.  Too much student loan debt means more difficulty purchasing a vehicle, or much of anything else.

The bottom line is that Representative Ryan has simply re-cycled his political document, with its ideological baggage and called it a budget.  While it’s an improvement over the Republican budget document which arrived without numbers in 2009, it’s still an homage to Ayn Rand and her Cult of Selfishness…and very little else, except time wasting titivation.

Comments Off on Ryan’s Time Wasting Titivation

Filed under Economy, Federal budget, tax revenue, Taxation

Comments are closed.