The American Bear

› Fun Facts About Representative Ryan | Dean Baker

The NYT ran a profile of House Republican Budget Committee Chairman Paul Ryan today. It misrepresented some important features of Representative Ryan’s budget plan.

For example, while it told readers that the plan would, “reduce domestic federal spending to its smallest share of the economy since World War II.” it failed to point out that it would essentially eliminate all areas of the federal government, except Social Security, Medicare and other health care spending, and the military.

The Congressional Budget Office analysis of the Ryan budget, which was done under his direction, shows all non-health care, non-Security Security spending shrinking to 4.5 percent of GDP by 2040 and to 3.75 percent of GDP by 2050. The military budget is currently over 4.0 percent of GDP and has never been less than 3.0 percent of GDP since the start of the Cold War.

Assuming that Ryan keeps military spending in its historic range (he has indicated that he would), this implies the elimination of almost the whole federal government. His budget would leave no room for federal support of education, roads, bridges and other infrastructure, the federal court system, the Food and Drug Administration, the national park system and everything else associated with the federal government. It would have been useful to point this fact out to readers in a lengthy piece that attempted to give readers a sense of Representative Ryan’s vision.

The piece was also misleading when it told readers that:

“he has proposed collapsing today’s six personal income tax rates into two, 10 percent and 25 percent.”

The number of tax brackets is trivial. The more important feature of Representative Ryan’s tax plan is that it would reduce the tax rate faced by the wealthy from 39.6 percent under current law to 25.0 percent. This implies an enormous tax cut for the wealthiest people in the country.

If this tax cut is offset by eliminating tax breaks, as Representative Ryan claims would be the case, then it would imply large increases on middle class families through the elimination of tax breaks such as the mortgage interest deduction and the deduction for employer provided health insurance.

It would have useful to tell readers that Representative Ryan wants to finance large tax cuts for the wealthy with big tax increases on the middle class. That is presumably an important part of his philosophy.

› Paul Ryan Flip Flops on Ayn Rand

This headline is not a description of the sexual cosplay in Paul Ryan’s marriage as I’d assumed.

› Desert Theory and Social Darwinism | Matthew Bruenig

Paul Ryan has never specifically spelled out which conservative economic philosophy, if any, he supports. However, he is an avid Ayn Rand fan and even requires his staff to slog through her comical treatises. I suspect then that Ryan subscribes to a desert theory view (high-productivity people morally deserve higher incomes) as that is the view Rand clumsily puts forward. For Rand, business people are the most productive and intelligent people in the world, and without them the entire economy would fall to pieces. As such, they are deserving of immense compensation. […]

What should we make of the comparison of Ryan’s budget to social Darwinism? Social Darwinism interacts with desert theory as an ultimate, biological explanation of deservedness. One of the problems with buying into conservative desert theory at all is that it supports awarding people according to how much they produce, but it does not take into account what factors affect how productive a person winds up being. Immense amounts of evidence show that where one winds up in life economically has a lot to do with one’s socio-economic background. America is not the beacon of social mobility we like to pretend it is.

That fact seems to cut against the very notion of deservedness because it suggests that people from wealthier households for instance wind up capturing more productive jobs for reasons totally outside their control. When rich kids who do not go to college have a better chance at making a top 20% income than poor kids who do go to college, it sure seems like those rich kids wind up in high-productivity jobs for reasons other than their own merit and hard work.

But the social Darwinist can dismiss those charges. For social Darwinists, rich kids doing better than poor kids can be explained by the rich kids’ superior genes. As Romney adviser Greg Mankiw once wrote “Smart parents make more money and pass those good genes on to their offspring.”

The social Darwinist explanation is also extended to discount race-based inequalities as well. Social Darwinist conservatives like John Derbyshire, an admitted racist, remark simply that Blacks, Hispanics, southeast Asians, and so on wind up poor because they — like poor whites — possess inferior genes.

Social Darwinism represents the biological and racist wing of the desert theory view. It exists for all sorts of sociological reasons to be sure, but it is used within argument to get around the immensely problematic data that shows parental background has way more to do with how much income one pulls down as an adult than any other variable. To the extent that Paul Ryan appears to have desert theory views, Obama’s charge that his budget is driven by social Darwinism is entirely plausible. Not all desert theory conservatives are social Darwinists, but many — like Mankiw and Derbyshire — certainly are.

› You can’t cut spending without cutting spending

However, if he’s not cutting Pell by as much as the White House thinks, he’s cutting other things by more. But he won’t say what. Obama “imposed” the simplest of all assumptions: Equal cuts across-the-board. I think Brooks would agree that it would have been far more unfair for Obama to guess at which programs would have taken a big cut, and which programs would take a small one.

There’s a bottom line here: You can’t cut spending without cutting spending. But Ryan wants to have it both ways: He wants to get the credit for cutting spending, but he doesn’t want to have to propose specific spending cuts. Oh, and he doesn’t want anyone to extrapolate what those cuts would be, either.

Of course, even Ryan’s supporters should see the problem here. If these cuts are too unpopular to detail, then they’re going to be too unpopular to pass. If the only way to defend Ryan’s budget is to beat back any attempts to make it specific, then it’s an empty, useless document.

(Source: azspot)

› Pink Slime Economics and the Most Fraudulent Budget in US History | Paul Krugman

WHEN I say fraudulent, I mean just that. The trouble with the budget devised by Paul Ryan, the chairman of the House Budget Committee, isn’t just its almost inconceivably cruel priorities, the way it slashes taxes for corporations and the rich while drastically cutting food and medical aid to the needy. Even aside from all that, the Ryan budget purports to reduce the deficit — but the alleged deficit reduction depends on the completely unsupported assertion that trillions of dollars in revenue can be found by closing tax loopholes.

And we’re talking about a lot of loophole-closing. As Howard Gleckman of the nonpartisan Tax Policy Center points out, to make his numbers work Mr. Ryan would, by 2022, have to close enough loopholes to yield an extra $700 billion in revenue every year. That’s a lot of money, even in an economy as big as ours. So which specific loopholes has Mr. Ryan, who issued a 98-page manifesto on behalf of his budget, said he would close?

None. Not one. He has, however, categorically ruled out any move to close the major loophole that benefits the rich, namely the ultra-low tax rates on income from capital. (That’s the loophole that lets Mitt Romney pay only 14 percent of his income in taxes, a lower tax rate than that faced by many middle-class families.)

Read the rest →

› Media Blackout: Progressive Budget vs. Paul Ryan (Again) | Common Dreams

› Representative Ryan Calls for Eliminating Park Service, FDA, Justice Department, and Just About Every Thing Else in Government and Media Don't Notice | Dean Baker

House Budget Committee Chairman Paul Ryan is supposed to be a brave and serious thinker. That’s how the Washington punditry treats him. Last year, the Peter Peterson gang gave Ryan a “Fiscy Award” for “leading the way in promoting fiscal responsibility and government accountability.” Politico made Representative Ryan its “health care policymaker of the year.” Ryan is a regular guest on the Sunday talk shows and he can always count on a warm reception from the very serious people.

For this reason when Representative Ryan again proposed a budget that would shrink non-defense spending outside of Social Security and health care programs to zero by 2050 the proposal deserves real attention. According to the projections of the Congressional Budget Office (Table 2), Representative Ryan’s budget would shrink the category of defense and non-defense discretionary spending, plus non-health entitlements to 3.75 percent of GDP by 2050.

Since Representative Ryan has said that he wants to keep military spending near its current level of 4.0 percent of GDP, this would leave no money to pay for the Justice Department, the Food and Drug Administration, Education, the National Institutes of Health or anything else that the government does.

› When Medicare Isn't Medicare | Wendell Potter

Former CIGNA VP cum whistleblower, Wendel Potter, on the Politifact “Lie of the Year”:

[Representative Paul] Ryan’s [healthcare] plan would be a continuation of what Yale professor Jacob Hacker wrote about in his 2006 book, The Great Risk Shift. As Hacker pointed out, big corporations, aided and abetted by their political allies, have been methodically shifting more and more of the risk of providing benefits from them to us. Ryan’s plan would accelerate the trend and take it a major step further by gradually shifting much of the financial obligation of paying for benefits from the government to Medicare beneficiaries. Under Ryan’s blueprint, the government would be doing just what big corporations have been doing for several years now: off-loading risk.

The corporate world started doing this when big banks and multi-line insurance companies with financial services divisions persuaded them to phase out their pension plans and replace them with 401(k)s, so-called because of the section of the federal law that authorized their creation.

[…]

Transitioning from pensions to 401(k)s meant that employers would have much more money available to reward shareholders because they would be paying less in revenues over time to retired employees. The winners consequently have been the wealthy individuals and institutions who own today’s corporations, while the losers have been the ones who work for them.

[…]

Ryan’s Medicare scheme would replicate what 401(k)s have done to the rank and file. The vouchers the government would provide beneficiaries are the equivalent of a defined contribution. And the vouchers invariably would become less valuable over time as the cost of insurance increased. The wealthy among us wouldn’t be nearly as disadvantaged when that occurred as low- and middle-income earners who would have to dig deeper into their own pockets to buy health care coverage from private insurers. And undoubtedly, they would find that the only plans they could afford would be those with high deductibles.

If backers of Ryan’s plan would drop the word “Medicare” and name it something with a bunch of numbers and a letter or two in parenthesis, that would be far more honest than calling it Medicare or anything similar. At least the proponents of the great risk shift didn’t have the audacity to call 401(k)s pensions. They’re entirely different creations…That ain’t no lie, PolitFact.

› Representative Paul Ryan Tries the Old Generational War Trick to Divert Attention from His Side's Class War | Dean Baker

Representative Ryan is seriously wrong when he says:

“The primary means by which government policy directly affects income inequality is through the redistribution of wealth via taxes and transfer programs such as Social Security, Medicare, and Medicaid.”

This is not true. The government has pursued a wide range of policies over the last three decades that have had the predicted and actual effect of redistributing income upward. For example, it has adopted a trade policy that drives down the wages of much of the working population by putting U.S. manufacturing workers in direct competition with low-paid workers in Mexico and China and other developing countries. By contrast, the most highly paid professionals, like doctors and lawyers, are still largely protected from the same sort of competition.

The government’s policy on labor-management relations has been one-sided pro-management. Management side violations of labor laws are routinely ignored or at worst punished with a slap on the wrist. By contrast, when unions violate labor laws (for example staging a secondary strike) their assets are typically impounded and their leaders are thrown in jail.

The government has hugely increased the strength of copyright and patent monopolies over the last three decades, both of which hugely benefit the wealthy. Patent protection on prescription drugs raises their price by more than $250 billion a year compared with the free market price, this is roughly five times as much money as is at stake with President Bush’s tax cuts for the wealthy.

In short, the rise in inequality over the last three decades can be traced to a long list of deliberate government policies. The head of the House Budget Committee should know this fact.