If Paul Ryan Is Ronald Reagan, We're All In Trouble
The response to last week's release of Rep. Paul Ryan's "Path to Prosperity" budget was entirely too predictable for the commentary it generated. On the left were the typical pejoratives about the plan being "cruel" and too geared toward "smaller government", while the bouquets thrown from the right seemed to coalesce around "Reaganesque", and irony of ironies, a budget geared toward "smaller government."
Both sides should have their heads examined. Indeed, "cruel" and "Reaganesque" are insidery Washington adjectives for a budget proposal that will at best slow the continued expansion of our federal government. Some kind of transformation, and it should be said that Ryan's budget is only Reaganesque insofar as Reagan too failed to rein in Leviathan.
First up is spending. Far from a major reduction in the size and scope of government, Ryan's alleged lurch to fiscal sanity involves returning us to 2008 levels of spending; the very levels that so angered a less organized Republican base not long ago such that they handed the keys to the Democrats. So while the falling dollar since 2001 and the certain cruelty the latter foists on the vast majority of Americans (Ryan, quite unlike Reagan, made no mention of the dollar in his Wall Street Journal piece promoting the plan) remains the unsung factor when it comes to an unhappy electorate, high levels of spending loom large, and a return to 2008 levels reveals a Republican leadership still well out of touch with the an increasingly skeptical base.
But if we move away from spending for now, it should be noted that seemingly like all other Republicans who've made promises of fiscal prudence ahead of large advances in government, Ryan is committing the fatal error of bringing deficit reduction talk into a discussion that shouldn't include it. To mention deficits is to implicitly suggest a problem of revenues, but there's no such problem. We have deficits because Republicans (including Ryan) and Democrats have been spending way too much for way too long.
In talking up deficit reduction Ryan gives the Democrats the opening they need to bring "revenue enhancers" into the discussion; meaning marginal tax rate increases. Of course if we must talk about deficits, it should be said that while President Obama has proposed $46 trillion in spending over the next 10 years on the way to major deficits, Ryan's allegedly "ambitious blueprint" has the federal government consuming (wasting?) $40 trillion over the next decade on the way to similarly large deficits.
Back to spending, rather than a budget meant to abolish the welfare state (all is preserved with the exception of Obamacare), Ryan's budget at best slows its growth, and not by much. The Tea Party helped put an undeserving GOP back in power based on the naïve belief that constitutional governance of the 10th Amendment variety would finally have its day, but to read Ryan's summary of what the federal government should do is to read about the perpetuation of myriad programs that have no constitutional basis.
Basically Ryan pays insulting lip service to constitutionally limited government with his line about making sure "government spends and taxes only as much as it needs to fulfill its constitutional prescribed roles", but then proposes a budget that reveals a great deal of contempt for the Constitution's limiting features. More to the point, Ryan essentially tells the Tea Party to drop dead.
On taxes, Ryan proposes a simpler 25% flat rate which, while an improvement, is still far too high for a nation founded on limited government, and then he commits his second fatal error by virtue of talking up the tax cut's alleged "revenue-neutral" attributes. Whatever the revenue impact of lower marginal rates (history says revenues will actually rise if the tax penalty is reduced per Ryan's plan), it's long past time that the Republicans cease their worship of rising federal receipts.
Indeed, as the late Warren Brookes along ago observed in The Economy In Mind, "politicians tend to spend whatever they can get in revenue whether that spending is worth it or not." In short, reduced revenues should be the goal of any tax plan so that politicians have less money to spend on needless programs. To talk about taxes in terms of their revenue impact is once again for politicians of Ryan's ilk to give the impression that our nation's deficits actually have something to do with a lack of revenues. That is wrong, and it wrecks the debate.
Ryan cheerleaders, and there are many on the right, will trot out the usual clichés about how "politics is the art of the possible", that myriad special interests make an actual reduction in the size of government very difficult, and that Ryan should be cheered for being a less greedy tax collector for the welfare state. All that may well be true, but it also misses the point. Politics is also about negotiation, so rather than ask for very little in order to get much less, Ryan might have asked for massive reductions as a way of achieving substantial ones.
After that, it's time for Republicans who talk up limited government with great flourish to start believing in their rhetoric. If a reduction in the growth of government on the order of $6 trillion is the path to prosperity, then it must be true that a $20 or $30 trillion reduction would be a rocket-ship to riches.
Rather than talk about the supposed pain and sacrifice of budget cuts, Republicans must mention constitutional principles first that necessitate major spending cuts, and then they must remind voters that the real pain and suffering is the work they put in to support an expensive and overbearing government. An actual reduction of that spending burden, far from an economic retardant, would release tens of trillions of financial capital into the productive sector, not to mention human capital suddenly needful of work that free markets might actually support.
Paul Ryan is presently the man of the moment, loved or hated depending on one's ideology, and the extreme feelings about him don't speak to major change as much they expose just how silly the policy debate has come. Ryan putted six inches when he needed five feet, and for doing so, the only certainty that this pointless debate in budget control ensures is that ten years down the line we'll be having the same debate.