The Ryan-Romney Budget

Proponents of smaller government may be unpleasantly surprised.

The burst of attention devoted to Congressman Paul Ryan’s 2013 federal budget seems to have passed, at least momentarily, but don’t be deceived: the plan rolled out last week by the Republican chairman of the House Budget Committee is going to be important for a long time to come.

If Mitt Romney wins the presidential election, the budget, which he endorsed, is a good guide to what he will try to accomplish. If Mr. Romney loses, the budget is a good guide to what Mr. Ryan might try to run on as a Republican presidential contender in 2016. And it’s certain that President Obama and his allies will try to use the plan to attack the Republican candidates in the upcoming election.

For all those reasons, it’s worth going back and taking a careful look at what is actually in the Ryan budget. Proponents of smaller government may be unpleasantly surprised.

For one thing, it doesn’t balance the budget. For those of us who believe that the federal budget ought to be balanced over the course of a business cycle, it’s an unpleasant surprise to see that after ten years of Mr. Ryan’s plan, the federal government would still be running a $287 billion annual deficit. That is what the plan produces in the year 2022.

For a second thing, it doesn’t reduce the national debt. Mr. Ryan’s figures show the national debt held by the public growing to $15 trillion in 2022, up from about $11 trillion this year.

For a third thing, the Ryan budget doesn’t reduce the share of GDP that the government takes from taxpayers. In fact, Mr. Ryan’s numbers show federal government revenue as a share of GDP growing to 18.7% in 2022 from 15.8% this year.

For a fourth thing, the Ryan budget doesn’t reduce government spending. It would increase federal outlays to $4,888 billion in 2022 from $3,624 billion in 2012, an increase of about 35% over ten years.

Voters may be forgiven for deciding that if they are looking for a party that will increase the federal debt and fail to balance the budget while also increasing the federal government’s bite out of the economy, they might as well choose the Democrats, because Mr. Ryan’s plan doesn’t offer a clearly contrasting or attractive alternative.

In Mr. Ryan’s defense, President Obama’s plan is even worse. Also in Mr. Ryan’s defense, it says something about the depths of the fiscal problems America is facing that not even as principled and passionate and intelligent a fiscal conservative as Mr. Ryan can find an attractive way out them.

When Mr. Ryan complains, “the president’s budget calls for more spending and more debt,” it’s technically accurate — the president’s budget does call for more spending and more debt than Mr. Ryan’s budget does. But both the president’s budget and Mr. Ryan’s budget call for more spending, and more debt, than we have now.

Mr. Ryan boasts that his budget “cuts spending by $5 trillion relative to President’s Budget.” That’s like bragging that your dinner has fewer calories and less cholesterol than the quadruple bypass burger at Heart Attack Grill. It’s Washington-style “baseline budgeting” spin, and as Mr. Ryan and Mr. Romney both on some level probably know, Americans are tired of it.

What attracted the most attention in the Ryan budget was his plan to reduce the top individual and corporate income tax rates to 25%, a figure with historical resonance. But at 25%, the corporate tax rate would still be too high to be international competitive. Mr. Ryan himself notes that Canada’s corporate tax rate just went down to 15%. A 25% corporate tax rate in America would be higher than Ireland, higher than South Korea, higher than Switzerland, higher than Hungary, higher than Poland, higher than the Czech Republic.

As for the 25% individual income tax rate, it would come on top of payroll taxes that, in the absence of a “holiday,” take 13.85% of the first $110,100 in wages. And it would apply in addition to state income taxes that also take a hefty bite in states that impose them. Remember, until the 16th Amendment was ratified in 1913, America didn’t have any peacetime federal income tax at all.

And remember, these rates are Republican starting points, which, if history is any guide, would only be negotiated upward in the inevitable compromise with Democrats on the way to getting them passed.

All of this is not to attack Mr. Ryan. He’s one of the best things the Republican Party has going, and if he were left entirely to his own devices rather than having to operate in the context of Speaker Boehner and the rest of the Republican caucus, it’s entirely possible he would come up with a plan more palatable to conservatives, though less likely to pass the House. But, sadly for the country, to say that Mr. Ryan is one of the best things the Republican Party has going these days isn’t saying much.

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life. 

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  • Jeff||

    More like, unpleasantly unsurprised.

  • Joe M||

    Really. Anyone that's paying attention knows there's nothing austere about that mess he barfed up.

  • ||

    JoeM....well said !
    If Ryan makes a run for the presidency in 2016 on this bilge....the weight of the barnacles alone will drag his ship into the deeps. Good riddance.
    Now I know for certain who provides the fodder for most of Boehner's mewly, gutless sound-bytes and appeasement politics... the two of 'em deserve one another...but the American people deserve neither.

  • shrike||

    Ireland? The Celtic 'Tiger' has a 12.5% corporate tax rate, outlaws abortion, and has very few bank regs thus making it a GOP Shangrila.

    And they are a fucking basket case.

  • rather troll alert||

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    Stack", "rather", "White Indian", "rctlfy", and "mstack60". Potential aliases could also include the impersonation of "shrike",

    "o3", and "Tony", but are not confirmed.

    Please do not reply to posts made by this person or attempt to engage in debate.

    Characteristics of postings by this person include use of bold and italics, cutting and pasting of

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  • Jeff||

    God, I love this.

  • shrike||

    Who are you? Fucking Eric Rudolf? Fuck yourself hard.

  • Appalachian Australian||

    My identity is easily ascertained and I don't run around impersonating others.

  • ||

    MY IDENTITY IS NOT MARY STACK

  • Bingo||

    lol

  • Mary Stack is Angry||

    Bitter and Sad her game is up.

  • thirtyandseven||

    shrike may be a shameless TEAM BLUE cheerleader, but I'm pretty sure he's not the primitard.

  • ||

    Should we reply to any alias? I have always used my real name. Why doesn't everybody? No pride in their messages?

  • ||

    Ireland is in much better shape than the U.S. They just took their lumps when their giant real estate bubble popped. Now they are recovering and we aren't.

  • ||

    The Irish have this weird idea that you should pay your debts and if the value of your house goes down that is bad for you not everyone else.

  • Cytotoxic||

    Unfortunately that's not true. They bailed out their banks and were on a huge spending spree before that. The Euro has made things worse. The 'austerity' much talked about is just spending not increasing very much. Still, they are much better off than the other PIIGS and America for that matter.

  • shrike||

    By what measure is Ireland in "better shape" than the USA?

  • rather troll alert||

    Sorry for being so late on the draw on this one.

    The above post appears to have been made by an individual who assumes multiple identities, including, but not limited to, "Mary Stack", "rather", "White Indian", "rctlfy", and "mstack60". Potential aliases could also include the impersonation of "shrike", "o3", and "Tony", but are not confirmed.

    Please do not reply to posts made by this person or attempt to engage in debate.

    Characteristics of postings by this person include use of bold and italics, cutting and pasting of writings by Jason Godesky (who appears to not be involved), debating in bad faith, impersonating others, using inciteful language, and making large quantities of posts 24/7.

    Thank you for your cooperation.

  • shrike||

    Fuck off, dipshit.

  • Cytotoxic||

    Follow your own advice.

  • shrike||

    Ireland slips into another recession (March 2012)

    Ireland is seeking to renegotiate a 2010 agreement that requires Ireland to pay out more than €47 billion to creditors of two failed nationalized banks, Anglo Irish Bank and Irish Nationwide, in annual installments concluding in 2031. Noonan says Ireland wants the ECB to let Ireland avoid this year's payment by instead accepting an Irish government bond as collateral.

    Since early 2011, the Irish government has paid its bills thanks only to a €67.5 billion ($90 billion) credit line supplied by the European Union, ECB and International Monetary Fund. Ireland hopes to restore its credit rating and resume normal borrowing from bond markets before its bailout funds run dry in late 2013.

    http://abcnews.go.com/Business.....3DYJtWbIu0

  • Cytotoxic||

    Still better off than most.

  • rather troll alert||

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  • T||

    the depths of the fiscal problems America is facing that not even as principled and passionate and intelligent a fiscal conservative as Mr. Ryan can find an attractive way out them.

    There is no attractive way. Pain now or more pain later.

    We've obviously decided more pain later is the approach we'll be taking.

  • shrike||

    That is why Ryan sucks ass. He wants to fix Medicare -- in 2023. If Romney were to win by some miracle nothing would change until some arbitrary future date several presidents from now.

  • rather troll alert||

    The above post appears to have been made by an individual who assumes multiple identities, including, but not limited to, "Mary Stack", "rather", "White Indian", "rctlfy", and "mstack60". Potential aliases could also include the impersonation of "shrike", "o3", and "Tony", but are not confirmed.

    Please do not reply to posts made by this person or attempt to engage in debate.

    Characteristics of postings by this person include use of bold and italics, cutting and pasting of writings by Jason Godesky (who appears to not be involved), debating in bad faith, impersonating others, using inciteful language, and making large quantities of posts 24/7.

    Thank you for your cooperation.

  • ||

    HI I AM NOT SHRIKE

  • not rather troll alert||

    I'm not rather troll alert. You can tell because my tongue doesn't smell just like Ryan's asshole.

  • ||

    That is why Ryan sucks ass. He wants to fix Medicare -- in 2023.

    Much better to never fix it.

    Just like the fact that it takes 3 - 5 years to go from oil exploration to production means there's no reason to bother with oil exploration.

  • BelowTheRim||

    Excellent Artilce (Other than 1 particularly poor paragraph in which Ira stumbles over his phrasing).

    Ryan spoke at my College Graduation in '09. I respect him and admire the fact the he is the ONLY one to submit a budget.

    Like Stoll said, the Ryan budges has Fucking John Boehner's prints all over it and Boehner is no conservative at all. Just remember the "Get your ass in line" bs that he tried to pull when he basically lied about the debt increase and acted like he is this brilliant solver of problems.

    We need radical cuts to the budget. Not Boehner baseline cuts that republicans have been "championing" along with dems for the past 10-12 years.

  • ||

    HI THERE I LOVE COCK

  • Mary Mary Mary||

    Calling people gay is not going to get you out of this.

  • ||

    YOU ARE GAY

  • rather troll alert||

    The above post appears to have been made by an individual well-known as rather who assumes multiple identities, such as Mary STACK, shrike, and o3. Aliases include impersonation of both fellow bad-faith trolls and good-faith thread participants.

    Do not reply to posts made by rather. If a regular thread participant appears to be engaging in out-of-character behaviour, such as incitement to commit illegal acts of harassment, the participant is most likely being impersonated by rather. Known victims of this defamation include John and sloopyinca.

    Other characteristics of postings by this person debating in bad faith, using inciteful language, and unusually frequent posting volume regardless of time of day.

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  • ||

    How many presidencies away from constitutionalist governance are we? 150,002,104, or 150,002,105?

  • ||

    Yes.

  • ||

    The thing that's REALLY distressing is that Democrats have successfully campaigned on the idea that Ryan's budget is a severely draconian slashing of government expenditures to pre-New Deal levels that will take away everybody's free candy. Americans, who demand fiscal discipline while simultaneously rioting in the streets for more free candy, are consequently shitting bricks over non-existent "cuts" that are really just decreases in the rate of spending growth, and are eager to give Democrats the opportunity to run the free candy factory for a while, lest its output be reduced.

    In other words, this budget plan is a sham, and even it is too "extreme" for the public to handle. American public finances are irrevocably fucked.

  • Appalachian Australian||

    In actual one-on-one conversations I have had with people of all political stripes, they agree with me that government spending needs reduced, albeit in a variety of areas: defence, entitlements, no-bid contracts, highway constructions, and so forth.

    But the public as a whole seems to believe the narrative that the Ryan budget involves "drastic cuts". The truth that the Ryan budget involves spending increases is simply not a fact the public at large knows.

  • shrike||

    A.B.U.

  • Thomas O.||

    And here I thought Paul Ryan was serious about getting rid of the deficit and slashing the national debt. How bad does it have to get before Congress actually does something significant about this? Hyperinflation like in Zimbabwe, with people carting wheelbarrows of "One Billion Dollar" bills around? Half of Americans out of work because no one can afford anything anymore? S&P dropping the Treasury rating to F minus? A full-scale riot in Washington?

    It's so fucking simple. Get spending to where it's less than the revenue you take in. As for that revenue, don't tax so much that productivity declines (resulting in less revenue). The Laffer Curve is real, folks. And as long as we've got a debt more than the peak of that curve can handle, we're in deep shit.

  • ||

    Time for complete reform of both taxes and all those transfer payments, many known by the misnomer "entitlements". Let's have a tax plan to replace all this special interest nonsense with a flat tax on income over and above: 1. A generous personal exemption, scaled back for those under 21 and scaled up for those over 65. 2. All educational expense. 3. All health care expense. 4. Unlimited IRA-like savings. Beats the hidden taxes on sales like what you're paying at the pump. Sure, this requires a high tax rate to balance out, but these exemptions mean a high percentage of our health care and education are offset by reduced taxes. For the poor, calculate payments equal to the rate times deductions minus income. Fair to all.

  • ||

    and end all other federal taxes... estate, "death", corporate (which we the consumers of corporate products pay anyway) and myriad others hidden from view. they are like death from a thousand cuts.

  • Thomas O.||

    "Let's have a tax plan to replace all this special interest nonsense with a flat tax on income over and above: 1. A generous personal exemption, scaled back for those under 21 and scaled up for those over 65. 2. All educational expense. 3. All health care expense. 4. Unlimited IRA-like savings."

    With all due respect, I’d rather call that a “fair tax”. To me, a “flat tax” is: One percentage rate, EVERYONE pays it, no exemptions, no deductions, no loopholes. And that’s what I’d prefer… in fact, if we can get it to where our income tax, a fixed percentage rate as determined by Congress, is automatically sent to the IRS for each pay period - utilizing businesses’ current setup of deducting money from paychecks for the purpose of paying that tax at year’s end - we could save a lot of money & headaches, as well as eliminating a huge chunk of IRS overhead.

  • ||

    It needs to be point out that Ryan's budget is used with "static" scoring which is what congress and the executive branch use. Mr. Ryan has stated that if it was scored using "dynamic" scoring which takes into effect the changes in economic behavior that would accompany a simplification of the tax code (i.e economic growth) that the budget would be balanced much much sooner.

  • ||

    It is unbelievable that both parties plan to run up the debt and deficit even more. Who cares that one party plans on doing less?

    Just recently the CBO reported that if laws remain unchanged the federal budget deficit for this year will be $1.1 trillion (http://1.usa.gov/xju6K9). That is in addition to total debt over $15 Trillion and projections that by 2021 federal debt will be over $20 trillion (http://1.usa.gov/wt4DPi).

  • Stewart||

    it's so sad that people take skewed disingenuous BS like this article at face value. Ryan's plan even states that it doesn't start to take effect until 2022 and we won't see real results until 2050. But at least we will eventually SEE results. Unlike every other plan that has no real results.. ever.

    Source:
    http://en.wikipedia.org/wiki/T.....Prosperity

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