Opinion

The Great Debate

Paul Ryan: a VP with a mandate

The New Yorker’s Ryan Lizza rightly called Mitt Romney’s bold selection of Representative Paul Ryan (R-Wisconsin) as his running mate, “the most daring decision of his political career.”

Until this weekend, most observers expected Romney to proceed cautiously by selecting a vice-presidential nominee who would neither shake up the race nor introduce new risk into the campaign.

Mitt Romney, we hardly knew ye.

This is the most consequential presidential election in a generation. It deserves a campaign on big ideas and contrasting visions, not petty personal attacks, small ball and obfuscation.

To date, the Obama-Biden campaign has said embarrassingly little about what a second term would entail. Republicans expect that it would include an effort to legalize millions of undocumented workers, fully implement Obamacare, raise taxes, expand government and push climate change legislation. But President Obama hasn’t had the courage to say it. And so if, in a war of attrition, Obama ekes out a narrow victory in November, it will be hollow, as no mandate for these legislative goals will be granted.

Likewise, until now Romney’s argument that Obama deserves firing was not enough to provide a legislative mandate, even if he were to win.

Paul Ryan and the rich man’s burden

Mitt Romney’s decision to name Representative Paul Ryan of Wisconsin as his running mate says quite a lot about what Romney thinks about America and its workers, and none of it is good. In recent years, Ryan has earned a reputation as the intellectual of the conservative movement. He’s a gutsy guy who has been willing to transparently share his vision for America through a detailed budget proposal that leads inescapably to this conclusion: He believes that American workers are slackers and freeloaders.

Ryan hasn’t written a book, but his defining work is “A Roadmap For America’s Future,” where he was admirably honest about his plans for dealing with the long aftermath of the 2008 financial crisis.

But his diagnosis of the problem should make taxpayers who go to work every day wonder what the potential vice-president of the United States really thinks about them. Summing up the problem, he writes:

Ryan’s budget frames 2012 election around Medicare

This week, House Budget Committee Chairman Paul Ryan released what amounts to the most substantive roadmap for fiscal policy that any Republican is likely to offer in 2012. Many political pundits and policy analysts, especially those on the left, are eager to dig into the details to alert the public about the potential (negative) impacts of a budget that slices off $5 trillion in total federal spending compared with the plan offered by President Obama in February.

Providing 100 pages of budget and policy detail in an election year is considered political suicide by many. Democrats fully intend to use the plan to campaign against Republicans in the fall, hoping to gain an advantage not only in select House or Senate races but also in the presidential contest.

Ryan, though, sees this as the only responsible path forward: So what if his plan won’t get enacted into law this year. Should Ryan’s House colleagues, or the candidates for president, avoid taking a detailed position on our country’s fiscal future? As Ryan explains: “If we simply operate based on political fear, nothing is ever going to get done.”

Paul Ryan’s weak case for a strong defense

One aspect of Paul Ryan’s new budget that hasn’t drawn much attention is that it is a big love letter to the Pentagon. Ryan rejects the idea that budgetary pressures should have any effect on defense spending, which he argues should be dictated purely by “strategic” calculations. Among other things, the Ryan budget would reverse $55 billion in defense cuts mandated for 2013 by the “trigger” agreed to in last year’s budget ceiling deal – and cut this same amount from domestic programs instead.

Ryan says we shouldn’t worry about military spending, even amid a supposed fiscal emergency, because such outlays are “shrinking as a share of government spending and as a share of the national economy.” America may have a spending problem, Ryan and the House Budget Committee believe, but the Pentagon is not part of that problem: “This category of spending is clearly not driving the unsustainable fiscal trajectory that is threatening the nation’s future.”

That’s strange to hear, since soaring security costs since 9/11 have been a key driver of deficits – accounting for about $1.4 trillion in new debt since 2001 by one widely cited non-partisan estimate. And, looking ahead, it’s hard to see a path to fiscal discipline that doesn’t include sharp cuts to the defense budget, which constitutes over half of all discretionary federal spending.

Will conservatives embrace a consumption tax?

Headlines over the past couple of weeks have been dominated by reactions to President Obama’s new proposal for corporate tax reform. The optimism stems from the realization that practically all the major plans by Democrats and Republicans would move the U.S. tax code in the direction of a territorial-based system (in which a corporation is taxed on domestic, not foreign, income). Moreover, these plans all accept the premise that to make the U.S. code more competitive globally, the tax base must be broadened, and that means cutting deductions and preferences in exchange for lowering the top-line rate (i.e., down to between 25 percent and 28 percent from today’s 35 percent rate).

Even with this apparent consensus, however, it seems inevitable that actual reform will not occur until 2013. Perhaps more important, the way these issues play out in the coming months could very well shift the reform discussion from how to tax income to how to tax consumption for both individuals and corporations. Here are three developments to watch.

The politics require more “tax winners.” To get the corporate tax rate down to the new target range, Congress might have to cut both accelerated depreciation and the expensing of research and development. The difficult truth is that any revenue-neutral tax reform proposal would likely create as many (and maybe even more) losers than winners. In essence, a rate reduction to 28 percent might help a few industries, but slashing the deductions for capital spending or investment could end up raising the effective tax rate for even more companies.  The net effect could be a slightly smaller economy relative to its full potential, as new investment and the growth of the available capital stock could be restrained. In an effort to broaden the coalition and create more winners, Congress will probably have to consider cutting the top rate even further, then redefining what’s actually counted as corporate income.

A simpler way to pay taxes

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, dfr@hudson.org, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own.  –

It’s April 15, and you’ve finished the arduous task of filing your taxes. You’ve found your W-2 form from your employer, your pennies of interest income from your checking account. If you itemize, you’ve tracked down the acknowledgement of your charitable contributions to the church, the Sierra Club, and the local anti-poverty organization.

The system is so complex that it may have contributed to the tax delinquencies of four Cabinet-level Obama appointees (or their spouses) who had to pay up to win Senate confirmation. At least two other Obama choices withdrew because of their tax problems.

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