Ryan’s Latest Budget: Wrong Problem, Wrong Solution

Even though Rep. Paul Ryan's newest 10-year spending plan balances the budget, he still doesn't really care about the deficit.

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Paul Ryan, Chairman of the House Budget Committee, joins with other members of the committee as he departs a press conference at the U.S. Capitol where he unveiled his budget plan on March 12, 2013 in Washington, D.C.

If you’re not too interested in budget details, which is to say you’re a normal person, here are the basics of House Budget Chairman Paul Ryan’s latest plan: He wants deep cuts in Medicaid, the health program serving the poor, the near-poor, the disabled, and nursing homes. He wants to transform Medicare from an entitlement for senior citizens into a voucher program, but only starting in 2024, so the changes wouldn’t affect the 55-and-over set that tends to vote Republican. He wants to rein in general spending, except for military spending. And he wants to slash tax rates for wealthy individuals and corporations to 25%, while making up the lost revenue with unspecified “reforms.” If this sounds a lot like the plans Ryan unveiled in 2009 and 2011—with a hint of the Romney-Ryan budget plan from 2012—well, it is. Ryan is under no obligation to revise his plans just because a majority of the electorate rejected them, although it is amusing to see him claim (p. 5) that “most Americans” share his dystopic view of the nation’s current path.

My beef with Ryan 3.0–like my critique of the “radical document” that was Ryan 1.0, and my screeds about the media gushfest over Ryan 2.0– is that it gets the problem wrong and the solution wrong. It would hurt people who need help and helps people who don’t. And while Ryan deserves some credit for taking some political risks, his budget is still brimming with the dishonesty and hypocrisy that often characterizes the modern Republican Party. A few specific examples:

“The Current Mess.” (p. 4) In his introduction, Ryan argues that his plan, designed to balance the federal budget in 10 years, is needed because America is going to hell. He identifies the problem as an out-of-control deficit created by out-of-control spending. If we don’t act now, he says, we’ll have a “debt crisis,” followed by “debasement of our currency,” and a parade of horribles: “Our finances will collapse. The economy will stall. The safety net will unravel.” His budget is “an exit ramp from the current mess.”

(MORE: Dueling Budgets and a Window for a Grand Bargain)

But what mess? On page 13, Ryan helpfully provides a graph (posted below) titled “Spending Is The Problem,” which actually shows that spending has declined as a percentage of GDP since the dark days of socialism began in 2009, and is on track to keep declining throughout the Obama presidency. There’s another fun graph (also posted below) on page 72, a reminder that the deficit, estimated at $1.2 trillion when Obama took office, is now down to $850 billion, and is on track to fall to $400 billion by the end of the president’s second term.

In fact, government spending in the Obama administration has increased at the slowest rate since the Eisenhower administration. And the markets that Ryan normally worships clearly don’t think we’re headed for a debt crisis, because interest rates are at historic lows. Ryan says that this is because “investors have retreated to U.S. securities amid global turmoil”—in other words, they have more confidence in the U.S. than any other issuer of debt—but that “our growing obligations may shake their confidence.” Investors are aware of our obligations. They don’t seem shaken. Our crisis is persistent unemployment, and instant austerity would just make it worse.

“Fundamental Tax Reform.” (p. 24) Ryan is so worried about the gap between Uncle Sam’s inflow and outflow that his first big proposal is…you guessed it…to reduce inflow by slashing corporate and individual tax rates and eliminating the alternative minimum tax. His ambitious tax cuts could reduce federal revenues by $5 trillion over a decade. But never fear: Ryan intends to make up that revenue by well, he doesn’t say. Maybe he wants to gut trillions of dollars worth of tax breaks and popular deductions, but doesn’t want to take the political heat. Maybe he just wants to do the fun side of tax reform, which would be fiscally irresponsible, but would at least provide a bit of stimulus. In any case, he’s very specific about deficit-exploding tax cuts, and curiously silent about the deficit-reducing tax increases that would make reform pay for itself.

“This budget repeals the President’s onerous health-care law.” (p. 33) This may seem like an odd way to eliminate the deficit, since the Congressional Budget Office concluded that Obamacare will substantially reduce the deficit. And of course repeal could never happen while Obama is in office; it’s just a budget gimmick. But it’s a telling gimmick. While Ryan’s budget repeals Obamacare’s benefits, like its expansion of Medicaid to millions of low-income working families, it doesn’t eliminate the revenues raised by Obamacare’s new taxes, because he needs them to achieve balance on paper. Ryan would also eliminate Obamacare’s fledgling efforts to rein in federal health spending, by far the leading driver of long-term federal deficits. Which is more evidence that the alleged “fiscal conservative” who voted for the deficit-exploding Bush tax cuts, the Bush military and security spending binge, the Medicare prescription drug benefit, the bank bailout, and the auto bailout—but against the Bowles-Simpson deficit reduction plan—does not really care about the deficit. No matter how much he talks about it.

(MORE: Does President Obama Really Believe in Deficit Reduction?)

“Safety Net Strengthened.” (p. 27) If by “strengthened,” Ryan means “cut,” then sure, that’s what his budget will do. It trims Pell Grants to low-income students. It achieves two-thirds of its savings by rolling back Medicaid and Obamacare—health care for moderate-to-low-income families. To Ryan’s credit, he endorses Obama’s plan to require higher-income seniors to pay higher Medicare premiums, but in the long term his Medicare reforms will squeeze the benefits of seniors, which is why he didn’t dare propose those reforms for the seniors of today. And if Ryan is serious about keeping tax reform revenue-neutral he’ll have to jack up taxes on the poor and middle class to pay for his tax cuts for corporations and the rich.

“Government spending is no substitute for a true recovery.” (p. 55) The public sector has lost more than half a million jobs in the Obama era, but conservatives like Ryan have to pretend there’s been an unprecedented expansion of Big Government. I get that. And I wasn’t surprised to see Ryan peddling all kinds of bogus information about clean energy and the 2009 stimulus; I’ve called him out his lies on those topics before, but it’s typical from a right-wing Republican lawmaker in the Obama era. What really bugged me was Ryan’s utter failure to go after genuine government excesses and unnecessary programs, which I always thought was the reason God invented right-wing Republicans. But Ryan wants to run for president in 2016, and most Americans who hate “spending” still tend to like the actual stuff government spends money on. So aside from his Medicaid and Medicare reforms, plus a few Tea Party bugaboos like clean energy loans and high-speed rail, Ryan left any specific cuts up to congressional committees. For example, even though there’s broad agreement across the ideological spectrum that U.S. farm subsidies are a national embarrassment, Ryan proposed to cut overall farm spending by a measly $3 billion a year—while allowing the in-the-tank Agriculture Committee to determine where to cut.

If I had to choose the most telling sentence in Ryan’s document, it would probably be this one on page 56: “This budget proposes to reduce the federal auto fleet (excluding the Department of Defense and the U.S. Postal Service) by 20%.” Why on earth would a conservative who cared about the deficit exclude the Pentagon and USPS, which have the largest fleets? Because the defense lobby loves bloated Pentagon spending. Because the rural lobby* loves USPS, which is about as obsolete as the Pony Express. And for the umpteenth time, Paul Ryan doesn’t really care about the deficit.

House Budget

Pg. 13, FY 2014 House Budget Resolution
House Budget
Pg. 72, FY 2014 House Budget Resolution

MORE: Despite Talk of Cuts, Members of Congress Push More Spending

*Correction, 1:30pm.: This post has been changed from “farm lobby” to “rural lobby.” TIME regrets the error.


Ryan's budget is of elementary school standard and it looks the Republicans don't have people with better brains. That is the reason they lost the recent election badly. We have to reflect on today's report by senate banking commitee blasting the misdeeds of J P Morgan chase who are real scammers and who is responsible along with the others responsible for the present economic mess,these are the guys who are championed by the Republican party. Their budget is no budget at all because what it does is to make the government look laughable without any saftey net for people who need it and stash the money with the rich who are not feeling responsible to invest and create jobs.


The core of GOP economic policy is to enrich the wealthy.  The sales pitch for this snake oil is that by doing so, they will be empowered to create jobs.  We've had 33 years of this pitch and it has never happened.  During that time, the wealth in the United States as a whole controlled by the wealthy went from about 65-66% jn 1980 to over 93% today.

So where the HELL are the jobs today?

Oh, that's right.  The wealthy don't actually create jobs.  They invest.  Okay, so the theory is that investment creates jobs because it gives companies the capital they need to produce cheaper goods and services for people who will then buy it and stimulate economic growth through spending.

So why aren't we spending?

Oh, that's right, the wealthy have all the damn money.

Anyone ELSE seeing a pattern here?

Bottom up spending is what drives a capitalist economy, but it's basically a pyramid scheme  The money doesn't circulate down as fast as it goes up the food chain to the wealthy.  Eventually, it all goes up and stays there because the wealthy don't spend enough money in enough places by themselves to keep the economy going.  It takes time, but in today's money, based on the percentages of wealth controlled by Americans today, there is 40 TRILLION dollars LESS money (in today's value) circulating in the economy today than there was in 1980.  That was the money driving the roaring 90's.  It's not out there now.  Bottom up spending CAN'T happen simply because there's not enough money circulating down to increase spending, creating increased demand and stimulating the economy.

One-time give-aways won't do it.  We need the INVERSE of Ryan's budget plan.  CUT the taxes on the poor and increase them - drastically - on the wealthy.  Shift the burden of the debt back onto those who can most afford it and take if off of the backs of those who can least afford it.  The funny thing about doing that is that by stimulating the economy, increasing the flow of money back DOWN, the rich can get wealthier, albeit slower than in times past.

Money needs to be put into the system on a reliable, consistent basis to generate spending (and improve the attitudes of spenders toward the economy as a whole).  There is only one way to peacefully do that: Taxes to shift the burden almost exclusively onto the backs of the wealthy.

This isn't based on political ideology, by the way.  Shifting taxes away from the poor isn't a "handout" (because the GOP's been shifting taxes away from the wealthy for decades and they don't call it a handout").  People still have to work, to earn an income, in order to benefit from lowered taxes.  Despite the doomsayers saying people won't have an incentive to get "rich", the fact is if someone earns 100 grand on a million dollars of income, they're getting rich, albeit slower than they were in the past.  And taking home 100 grand is a hell of a lot better than only taking home 50 grand or 10 grand.  So it's not a hand-out.  And it's not an increase in the entitlements for the non-working poor, either.  Shifting the tax burden merely changes the sources of tax revenue.  Not the amount.

But, oddly, taxing and spending is a more sound fiscal policy than spending without taxing (which is what the GOP has done in the last fifteen years by not providing long-term tax revenue for their wars to the tune of 10 trillion dollars, and their FDIC increases and JUST BEFORE the S&L fiasco as well as the banking crisis in the late 2000's which has already cost upwards of 32 trillion dollars - both at a time when the average covered account held 5 grand OR LESS.)  From a political point of view, it's high time the wealthy started paying the country back for their continuing prosperity.  It's not like they'll EVER miss any means, be put out of their homes, wonder if they'll be able to clothe themselves or have to take public transportation to work like many of the rest of us have to endure.

Capitalism is still a pyramid scheme as long as more money goes up the food chain than comes back down.  This is hard, economic law. It needs to balance out and keep enough money circulating to keep jobs from closing and to open new ones as population increases (assuming it keeps increasing).  And you have to have ENOUGH jobs for everyone or attitudes will plummet, and so will spending, seizing up the engine of the economy along the way.

The only OTHER way to shift the wealth (and yes, we'll call a spade a spade; this is wealth redistribution), is through revolution.  The thing about capitalism and the pyramid scheme it's become here in America is that the players of the game will eventually get tired of being sucked dry by the people running it.  And they won't be gentle about expressing their displeasure.



Thank you for removing posts where I called Kevin 'words that should and cannot be mentioned'. I'm sure that rates higher than outing someones real name. Or contacting peoples employers. Or telling people to contact a person using a dummy account. Or calling reporters 'tinkerbell'.

I apologize for my offense. I know what I did and what I wrote. If there's a consequence outside getting my post removed I will take it without a single protest. But I find it funny that THAT was over the line but that Kevin can continue to grief people here.

I guess as long as we make sure to let people know who they are in real life and to keep our threats veiled we can continue posting. But if we use 'words that should and cannot be mentioned' it'll be removed.

Unlike Forgottenlords excellent inquiry in the MMR thread I will keep this shorter.