James Pethokoukis

Politics and policy from inside Washington

Paul Ryan’s revolution would finish Reagan’s

April 5, 2011

Is Rep. Paul Ryan’s “Path to Prosperity” potentially the most important and necessary piece of economic legislation since President Ronald Reagan’s tax cuts in 1981? Quite likely. The blueprint embraces free markets and individual choice to radically reshape America’s social welfare state for the 21st century and shrink government. Instead of looking for ways to finance an ever-expanding public sector, it would prevent Washington from growing to a projected 45 percent of GDP by 2050 (vs. 24 percent today) and instead reduce it to just under 15 percent by that year. Ryan would downsize government to its smallest size since 1950 and prevent the Europeanization of the American economy. The Ryan Path embraces dynamic growth, not managed decline and stagnation.

But what’s really important is that it affirmatively answers three questions: First, does the Ryan Path put the federal government on a sustainable fiscal path? Second, does it promote more economic growth and higher incomes? Third, is it politically realistic? Let’s take those one at a time:

1) Does the Ryan Path put the federal government on a sustainable fiscal path? Yes. It’s easily superior to President Obama’s 10-year budget plan which would generate average annual deficits of $947 billion and let debt as a share of the economy rise to a dangerous 87.4 percent from 62.1 percent in 2010. And Obama does nothing to alter the long-term fiscal glide path into insolvency.

By contrast, the Ryan Path would see debt-to-GDP peak in 2013 at 74.5 percent and fall to 67.5 percent by 2021, then continue to steadily decline until the entire federal debt is eliminated in the 2050s. Medicaid spending for the poor would be sent to the states in a fixed lump sum indexed for inflation and population growth. Medicare spending for seniors would be transformed into a system where recipients would choose among private plans, aided by a government subsidy that would grow more slowly than healthcare price increases. Indeed, the market-based plan would help lower healthcare inflation.

2) Does the Ryan Path promote more economic growth and higher incomes? Yes. Ryan uses extremely cautious economic growth figures, the same ones employed by the Congressional Budget Office, to arrive at his budget totals. But his plan would almost certainly result in higher growth and more jobs — generating more tax revenue and reducing debt even faster than Ryan estimates. It shifts vast resources from the public sector to the far more productive private sector. It also sharply reduces top federal individual and corporate income tax rates to 25 percent from 35 percent. (The U.S. currently has the highest corporate tax rate among advanced economies.) According to the Heritage Center for Data Analysis, the plan would create nearly a million new private-sector jobs next year and bring unemployment down to 4 percent in 2015. A flat tax on income and consumption would be even better, but Ryan significantly moves the ball forward.

3) Is it politically realistic? The risk is that Paul Ryan has created a plan only Paul Ryan can sell with his passion and deep expertise. He does make political concessions. The plan doesn’t, for instance, cut Medicare spending on current retirees or older workers. But austerity of that sort probably isn’t needed yet. Current trends, though, are leading toward a fiscal crisis that would result in both extreme and immediate benefit cuts and higher taxes.

And that, ultimately, is how the political case is made. The alternative to the Ryan Path isn’t the fiscally unsustainable status quo, but a future of harsh austerity beset by financial crisis, stifled by higher interest rates and marred by a lower standard of living. In short, the death of the American Dream and  the collapse of any social safety net.

But there is a way forward to another American Century and away from that nightmare. And Ryan has found it.

Comments

“Medicare spending for seniors would be transformed into a system where recipients would choose among private plans, aided by a government subsidy that would grow more slowly than healthcare price increases. Indeed, the market-based plan would help lower healthcare inflation.”
This sounds so idyllic, but it doesn’t explain how private insurance companies can be expected to cover the sickest patients now covered by Medicare for an affordable premium. Government subsidies don’t reduce costs and the current model for “private” insurance in the US has failed miserably. Patients try to game the system by putting off coverage until they’re seriously ill; carriers do all they can to drop unprofitable (sick) patients. A market-based system based on lifetime contracts and enough government regulation to make sure that these contracts are enforced would probably work, but I don’t trust people like Ryan to make that work; the Republican party has viewed fraudulent business practices as tolerable, even admirable in recent years (with little objection from the Democrats). Ultimately, we need a system that requires seniors who want to spend the last 5 years of their lives in the ICU to foot some of the bill (sort of a “pick your own death panel” plan); financial constraints will force it eventually. However, I don’t believe either party has the insight or courage to impose the combination of cost limits and regulation to make such a system work in the near future.

Posted by PCL1 | Report as abusive
 

Can somebody send a copy of this Ryan plan to Michael Bloomberg? Mr. Bloomberg is the one guy who could beat Mr. Obama in 2012, and he may also be the man who could convincingly sell the Ryan plan to the American public. Any of these other clowns and misfits in the GOP – Pawlenty, Palin, Paul, Romney, you-name-it – have Goldwater written all over their faces, sure-fire losers the lot of them. Which means they couldn’t possibly sell this Ryan plan. Time for the Reps to start working – the Dems already have!

Posted by Elektrobahn | Report as abusive
 

At the end of the day, someone has to pay and there isn’t a free lunch. Ryan embraces reality….a hard cold reality

Before anyone wants to blast this guy, they better put their plan on the table.

This guy has the guts to put his out there first, he doesn’t deserve attacks without a valid response.

So my retort to everyone… WHERE IS YOUR PLAN? If you don’t have one, at least you can join the debate on items in Ryan’s plan, at least he has one.

Posted by Dialla | Report as abusive
 

Wait…. so raising taxes on everyone who makes under 125,000 or so while cutting taxes for everyone who makes over 125,000 (disclamer, my taxes would go down) while privatizing medicare is a plan? Does the author even know why we have medicare? Private insurance was not available for many seniors in the first place, which is why medicare exists.

So basically tax cuts for the rich, and increases for everyone else along with cuts in services.

This is nothing more than feudalism

My grandmother would be dead under this proposal.

Posted by me987654 | Report as abusive
 

Great story until you mentioned high corporate rates which everyone knows is complete baloney. Accountants do graduate programs now, an M.S. (Tax), just in the federal tax law. Kind of like brain surgery. Corporate tax rates mean nothing when there are millions of pages of exemptions, special rules, credits, incentives, and exceptions.

Posted by threeRivers | Report as abusive
 

The 800-lb. gorilla in the room here is immigration.

Current policy (de jure and de facto) built around low-skilled, illegal labor and family reunification is only going to cause further expansions of the welfare state as we continue to allow millions of (primarily Central American) entrants who are dramatically less skilled, less educated, and thus less capable of procuring employment likely to pay a wage allowing an individual to live independently.

Moving toward a Canadian-/Australian-style policy of robust, merit-based immigration is the number one fix to moving the demographic trajectory from greater welfare dependency and a less-skilled/educated workforce toward one of job creation and an improved median level of education/income.

The only way we’ll move away from a welfare state is by ensuring we have a citizenry with the education and skill to live without needing the government’s assistance and fill the high-paying jobs of tomorrow (and today!). The current system is going to continue to explode the Medicaid and welfare rolls with unceasing influxes of workers unemployable at a legal wage. (Another question for amnesty/”comprehensive immigration reform” supporters is what happens when 15 million new citizens lose the one thing that made them attractive to employers — their ability to work for illegally low wages — and suddenly need the “unemployment insurance” for which they will be newly eligible…)

Posted by Humdinger | Report as abusive
 

To prevent patients’ gaming of the system and insurance companies from rejecting/dropping people, how about this? First, repeal Obama Care. Next, pass legislation requiring insurance companies to:

*Take all comers
*Forgo discrimination based on pre-existing medical conditions in determining premiums
*Maintain a patient’s coverage indefinitely (or at least until the policy’s lifetime maximum is hit).

But allowing insurance companies to:

*Require an insured to pay back-premiums all the way to when they last had coverage with any insurance company (insured would be responsible for providing proof of previous coverage and when that coverage ended). This would basically amount to a “fine” for not having insurance that potentially increases the longer one is uninsured. At the same time it would not be a mandate to purchase the insurance – there would be no “fine” for a period of no coverage unless the insurance company which the patient chooses has required back premiums as a condition for coverage.
*Discriminate based on pre-existing medical conditions in determining whether and to what extent they will require back premium payment. I think this would be mitigated to a certain extent by market forces (competition among companies trying to sign up the prospective insured). So, one insurance company might say they want back premiums for the entire no-coverage period; another might want them only for part of the period or none at all. It could be a point on which insurance companies compete.

What if an insured doesn’t have the money for the premium (back or normal)? I say have a loan program available with the money from the loan source (which could be the insurance company itself or it could be a bank, credit union, etc.) going directly to the insurance company for paying the premiums (like when you buy a house and your mortgage bank sends funds equal to the amount of your loan directly to the seller). This would be a new type of loan program where the loan source would be guaranteed periodic payment – either from the insured or, if the insured is delinquent, from the government – so anyone would be able to get it (just like the insurance). However, this would be a debt that would be assumed by the government to the extent that the insured is delinquent, that could not be wiped out by bankruptcy (like a student loan), and that would be passed on to the insured’s heirs if he/she were to pass away. Anyone seeing a doctor without insurance would be informed of all this by the doctor’s office (hospital administration or what have you) and thus strongly encouraged to acquire insurance ASAP as it will likely only get more expensive the longer they wait. .

I’d like to see something like this tried, though I don’t know if the federal government would be the place – for constitutional reasons as well as the fact that having the feds run it would make it “one size fits all” ala Obama Care. Rather, I would like to see a state somewhere try this and see how it goes. What I am getting at is that we should want people to take responsibility for there health insurance needs just as they are responsible for their other needs. There must be strong incentive to get people to buy insurance. I’d say combine the above ideas with the simple reform at the federal level of making insurance premiums (and back premiums plus their loan interest) for individuals tax deductible and at the state level of allowing small businesses to pool their employees together to keep premiums down. All together, I think we might have something that reduces the federal government’s role in the insurance business (this could all be applied to Representative Ryan’s approach to medicaid and medicare budgeting), levels the playing field of competition for employees among small and big businesses, and gets people to take control of their insurance needs. The question is, are enough people sufficiently interested in finding a workable (although, of course, imperfect) solution? Or, due to short sighted political/ideological reasons, is the perfect (in whoever’s eye) being the enemy of the good always going to win the day?

Posted by BillyBarty | Report as abusive
 

It’s difficult to do too much in the way of budget scrutiny when it comes to Paul Ryan’s 2012 plan, because he hasn’t published all the relevant data. But he HAS shared his plan with some analysts, who’ve run the numbers. Unfortunately, those analysts work at the Heritage Foundation.

Their economic projections are for growth rates of over 3 percent for the next three years, and the unemployment rate would be reduced to 4 percent in 2015. Wait, it gets better. Heritage also believes the unemployment rate will drop to 2.8% by 2021, just so long as we do exactly what Paul Ryan wants us to do. 2.8%!

An unemployment rate of 2.8% is impossible, and the fantasy of 4% unemployment by 2015, created by a massive effort to take public investment out of the economy, is laughable on its face.

One wonders how these people still get published, let alone elected.

Posted by GetpIaning | Report as abusive
 

Incredulous!

Posted by abbygirl | Report as abusive
 

Maybe finishing the revolution isn’t such a good idea. Massive debts, increase income disparities, lack of corporate oversight…..

Posted by Holytape | Report as abusive
 

Well, my plan is to stop the wars in the Middle East immediately. The military industrial complex has been playing whack-a-mole there for a decade. There’s a few trillion back in our pockets. Then I would institute a single payer system for every American for health insurance. That would end Medicare as we know it. There would be no more fee-for-service medical payments, and the government would invest in, and control the prices of, drug research. While I’m at it, I would legalize and tax marijuana, to start with and go on to other drugs from there. And then I would invest heavily (investment is cheap compared to wars and the bloated medical payment system) in renewable energy like solar and wind and mass transit. Now let’s see, who haven’t I pissed off in the corporate party, I mean the Republican party, so far. And I agree with ginchinchili that Reagan was the start of our national decline. Had we followed Carter’s recommendations we would be in a far different place today. We were the greatest country in the world up until Reagan who simply told us how great we were, and then proceeded to conduct himself like a third world dictator, which is exactly where this country is headed if we follow the Republicans.

Posted by lhathaway | Report as abusive
 

People like Ryan and Obama willfully ignore the unsustainability of spending on the national security state. Current and legacy costs of DoD and national security is $1.2 Trillion, not just the advertised DoD budget.

Ryan and Obama seek to reneg on the commitment of the federal government to repay the Social Security trust fund the trillions that have been squandered on military adventurism, corporate welfare and tax cuts for the rich. This is the true legacy of Reagan and Greenspan’s saving of social security in the 1980s.

Withdraw from all foreign bases, end all foreign occupations by US troops. Shut down the military-industrial complex and its parasites.

If the national security state apparatus is disassembled, the country can avoid bankruptcy. If it continues to run wild while social spending is cut, the US will follow the path of the other superpower, the USSR.

Posted by upstater | Report as abusive
 

Ryan’s plan for Medicare uses the very same plan members of congress and federal workers have. It pays for the insurance plan you pick. If you get sick or are are in a lower income class you get a higher amount to pay for your plan. Bottom line – BETTER coverage than now available on Medicare. Really, does anyone out there really think members of congress have a bad plan?

Posted by IBEW | Report as abusive
 

Does anyone out there not see that we can’t continue to spend the exorbitant prices charged by the medical industry? By far the largest amount of spending on healthcare in this country is by the very people Ryan proposes to put under a private system. If that happens without government controls, the premiums will go through the roof. What we need is not a shifting of the costs from one section of the economy to another, which is just a shell game, we need cost controls on healthcare. The best way to achieve this is through the single payer system, and get away from fee-per-service pricing, which is just floating the bloated healthcare system that we have today. Look at our healthcare! We are a sick nation and the elderly mostly live going from one doctor to the next with endless procedures that make the doctors, pharms and healthcare industry rich. This is a prescription for a third world country that only provides for the elite of it’s population. Without equal healthcare for all, we are doomed to ever escalating prices that only the likes of Ryan can afford.

Posted by lhathaway | Report as abusive
 

Another blind endorsement of the Republican party from Mr. Pethokoukis. Everyone should pay very close attention to the messaging here, and in Ryan’s speeches. It’s very easy to pick out the places where facts are replaced by predictions and predictions are replaced by fantasies. The truth is, Ryan’s plan offers nothing new. It’s more of the same economic theories that got us into this mess. We know now that they don’t work. It’s time to move on.

Posted by TrueIronPatriot | Report as abusive
 

Sounds like a typical Republican deal – - cut taxes for the rich, help increase insurance company profits, decrease services/ raise taxes for everybody else, make the states do the dirty work.

Posted by boblevy99 | Report as abusive
 

DaBear must be with the Tea Party. His statements are comically wrong, and he spells at the third grade level.

Posted by GetpIaning | Report as abusive
 

Paul Ryan’s plan does not finish Reagan, it finishes the middle class. Mission accomplished Senator Ryan. You and your fellow oligarchs can all go home to your gated mansions just be prepared for we serfs to storm the gates.

Posted by seattlesh | Report as abusive
 

Budget is unsustainable. No arguement.

Undertaxation on wealthy, part of the budget shortfalls.

Past taxation at lower levels on wealthy had no proven impact on economic growth. In both instances where we witnessed the Reaganomic theory collapse in the late ’80s and early ’90s and again in ’02-the present, giveing the wealthy the enormous tax breaks has done little to stimulate sustained economic growth.

Reagan lowered taxes and increased government spending. Between he and Bush I they tripled the Deficit. This spending stimulated the economy. Much of it was on hardware investments in the military. This had a stimulative effect, but was also not sustainable.

And now you want Ryan’s redux of Reaganomics to be believed?

Disaster of the last few years economically in part the result of irresponsible regulatory policies which were supported based on the free market principles absent the guiding hand did what to the financial sector? Housing sector?

This collapse presented the additional shortfalls due to people out of work and not earning taxable income.

Privatize social security? So that pension holders in a private system can see their dollars flushed down the toilet with the next economic collapse?

Privatize Medicare so it can go into the hands of the people who are already stealing the American people blind with a ‘free market’ system rigged to ensure they control pricing and services? Health Insurance by its nature is a socialized endeavor. It is not more efficient than the government option as with the private model vast sums of “healthcare dollars” invested as premiums go to share holders as dividends, to CEO’s as inflated salaries and bonuses, and staffers who exist for the sole purpose of denying coverage, not providing care.

You can drink the Reaganomic Kool-aide if you want, but most of us remember it didn’t do anything more than shink the middle class and increase the number of people below the poverty line.

You want a better plan? Source from the Clinton years. Start with PAYGO and work forward.

Posted by NobleKin | Report as abusive
 

Not all Left…

I do see the merits of lowering tax on corporations, provided American companies agree to move their so-called “headquarters” back to the US and pay their fair share. No loopholes or dodges.

That means you GE, Et al.

I don’t see the merits of lowering tax on the wealthiest wage earners. You can raise their tax 10-20% and it would have little impact on their lifestyles.

Posted by NobleKin | Report as abusive
 

Can you explain why the market based healthcare system is not working today? How does this so called Ryan Plan change that besides forcing more customers on this inefficient and high cost system? Your writeup is devoid of any critical analysis of the plan. Have checked the record of past Heritage projections? If you want to be taken seriously do some serious work and not propagate fake solutions. Ryan is presenting no serious plan. Anybody can solve the fiscal issues with irresponsible solutions based on cooked up numbers just to make a political point. Did you look at the alternative of eliminating the bush tax cuts, reforming the tax code to eliminate the vast corporate welfare and the agricultural subsidies that have long outlived their usefulness. You have a platform that goes with a moral responsibility to be intellectually honest and not just take Ryan’s lies and present them as a fact based plan. It is not. The market based health insurance industry has failed miserably to offer the american people a dependable health care system. There is nothing your review of the Ryan plan will address the industry’s shortcomings. The reason Medicare was created is that the industry fails to offer any solutions for older people. Today young will be also be old and the industry will treat them just as bad and Ryan provides no solution other than shifting cost to Seniors and the States. Is that a solution? Any idiot can suggest that!

Posted by amj | Report as abusive
 

Finish Reagan’s what? Reagan ended his terms with higher spending, higher taxes, and bigger government. He helped corporations move offshore and get a tax deduction for do it. He shifted the tax burden from the rich to the middle class. He allowed the wealthy to increase their wealth at the expense of everyone else. Is that what Ryan is attempting to do? All we have to do is look at 1860 to1930 history to see how that worked out for everyone but the corporations, trusts, and robber barons that benefited from the laissez faire (libertarian) economics. The Supreme Court, millionaire Senators and Congressmen, and conservative Republican Presidents presided over millions who lost their farms to agri-business corporations, allowed children to work in factories (kids are cheap and fast), and ignored criminal behavior by the wealthy in the name of American business. I really look forward to a violent revolution when Ryan’s proposals end up decimating American’s lifestyle.

Posted by Actually4 | Report as abusive
 

Everyone mocking the statement “Paul Ryan’s revolution would finish Reagan’s” with swipes at Reaganomics, here’s how I remember things going. Please correct me where I am wrong and show me the evidence for the “Reaganomic theory collapse”….. Ronald Reagan worked with congress to lower the top marginal tax rate from 70% to 50% (phased in over 1981 thru 1983) and then from 50% to 28% (1986 tax reform act) while closing loopholes. The economy and tax revenue nearly doubled (in nominal terms), unemployment was cut in half, and the inflation rate was more than halved from 1982 thru 1989. Then Bush I and Clinton fumbled around and raised taxes. Clinton’s finest hour came in 1993 (as well as Al Gore’s – remember when he debated Perot on Larry King? Gore absolutely smoked Perot.) was the passage of NAFTA – in effect a tax cut (in the form of cooperative tariff reductions). Nonetheless – the economy receded (briefly) and then limped along from 1990 thru most of Clinton’s first 2 years. Things only returned to the 1982 thru 1989 trend in 1994 when Hillarycare was killed, increased activity in the export economy began to kick in, and Republicans took control of congress (providing a vehicle for sitting on Clinton for the remaining six years of his presidency). Clinton subsequently signed welfare reform, went along with a capital gains tax cut, reappointed Alan Greenspan (again), and worked with House Republicans to bring some sanity to the budget. The economy boomed pretty much from the point where Hillarycare looked dead all the way through 2000. Next came the dot-com bust. Bush II got his first round of (modest) tax cuts in the first half of 2001 while Democrats screamed that he was “talking down the economy” to build support. Of course, it turned out Bush II was correct and the economy was indeed weak. Then came 9/11 and chaos pretty much erupted in the economy for a few weeks. The net effect of the dot-com bust, 9/11, and the insufficient 2001 tax cuts for the economy was that it again receded (ever so briefly) and then limped along thru 2002. Then came a slightly strengthened Republican House majority and a Senate swing back to Republican control and Bush II got the 2003 (more growth inducing) tax cuts through congress – further marginal income tax rate reductions, capital gains tax cut, and a dividends tax cut. The economy grew solidly from 2003 thru most of 2007 and even went on a record string of consecutive months of job creation – this against the back-drop of two (mismanaged) wars, an ill-advised expansion of Medicare, and Hurricane Katrina. Circa 2007, congress and the Bush administration failed (or failed to convince the newly Democratic congress) to get a handle on Fannie and Freddie and the whole sub-prime mortgage mess in time to forestall the debacle of 2008. So there was a pretty good string of prosperity from about 1982 thru 2007 bookended by calamitous recessions – neither of which can credibly be hung on Supply Side Economics. Furthermore, think of all the momentous events that happened during this period – massive defense build-up, collapse of the Soviet Union and communism, the Iran-Contra scandal, the 1987 stock market crash, the savings and loan debacle, the Persian Gulf War, Hurricane Andrew, the specter (and defeat) of Hillarycare, an impeached president, war in the Balkans, a contested presidential election, the dot-com bust, 9/11, war in Afghanistan, war in Iraq, Hurricane Katrina, the Senate changing hands 5 times (1986, 1994, 2001, 2002, 2006), the House changing hands twice (1994, 2006). Through all this, the economy managed to give us the rise of the personal computer; transitions from LP to CD and VHS to DVD to Blu-ray, from expensive analog cell/car-phones to cheap digital hand-held smart-phones, from dial-in computer bulletin boards to high-speed wireless internet access, from analog tube TV to digital, flat screen HDTV; and plenty of people prosperous enough to partake of all of this. All of this happened during a period of relatively low tax rates. So again I ask you… Where is the failure due to Reaganomics?

Posted by BillyBarty | Report as abusive
 

@BillyBarty
I must admit that I’m impressed at your efforts and knowledge of history. As far as content, well, other than getting many of the critical “facts” wrong and making comically oversimplified assertions of cause and effect, everything else looks ok to me.
“Ronald Reagan worked with congress to lower the top marginal tax rate from 70% to 50% (phased in over 1981 thru 1983) and then from 50% to 28% (1986 tax reform act) while closing loopholes. The economy and tax revenue nearly doubled (in nominal terms), unemployment was cut in half, and the inflation rate was more than halved from 1982 thru 1989.”
Well the tax code changes sound right but I’m not sure where you’re getting your data for the resultant claims.
The economy “nearly doubled” from 1982 thru 1989? By whose numbers? According to the U.S. Bureau of Economic Analysis (www.bea.gov) U.S. GDP was $3.25T in 1982 and $5.48T in 1989 and according to my calculations that’s a 67% increase. I’d say “nearly doubled” is more than a bit of a stretch for a 67% increase. Increased by more than two thirds would’ve been good, even nearly 70% would be fine but calling a 67% increase nearly doubled is off to a pretty bad start. Unfortunately, it only gets worse from there. Let’s take a look at tax revenue. According to the OMB total tax revenues in 1982 were $618B and in 1989 they were $991B. Some fairly simple math tells us that’s a 60% increase. That’s an interesting definition of nearly doubled. Let’s take a closer look at tax revenue. Revenue from individual income taxes (where the cuts you mentioned occurred) was $298B in ’82 and $446B in ’89 for a 50% increase, half way to doubling anyway. But wait, it gets even worse. The greatest increases in revenue (percentage wise) during that period actually came from corporate and social insurance taxes which increased by 110% and 78% respectively. Only problem (for Reaganomics, that is) is that these increases in revenue came along with increases in the effective tax rate (the only realistic way to measure the ludicrously complex taxes in the U.S.) in both categories. Effective corporate rates increased from 1.8% to 2.3% and effective social insurance rates went from 7.5% to 8.1%, it’s also interesting to note that both of these are typically viewed as regressive taxes.
And now on to unemployment. Unemployment was 9.7% in ’83 and 5.5% in ’89 for a 45% reduction. “Cut in half”? well, not quite. Am I being a little picky about that measly 5% additional reduction needed to get the full 50% to be technically “cut in half”? Well, look at it this way: half of 9.7% is 4.85%, I’m guessing that most people would consider 4.85% unemployment significantly better than 5.5%. We didn’t see 4.85% unemployment until ’97, after those top marginal tax rates had been increased to 39.6% (just figured I’d throw in some of my own cause and effect voodoo to demonstrate how easy it is).
According to my numbers (actually, they’re the Bureau of Labor Statistics’ numbers) CPI-U inflation was 3.7% in ’82 and 4.6% in ’89. I have no idea how that translates to “more than halved” since it actually increased by 0.9%. Keep that up and you’ll probably be getting a job offer from the folks at the Cato institute, or maybe that’s where you’re getting your figures from to begin with.
I guess you just overlooked one number, you know the one that everyone’s talking about these days. In 1982 the national debt stood at $1.14T and by ’89 it was $2.86T. Now there’s something that actually doubled – and then some. That’s actually a 151% increase, a new 8 year record since before WWII, but one that the proponents of Reaganomics always seem to overlook. To put this in a little better perspective the debt was 32% of GDP in ’81 when Reagan took office, the lowest it had been since before WWII after which it skyrocketed to over 120% of GDP to support the war effort. In Reagan’s last year in office the debt had risen to 51% of GDP, well on it’s way to the 60% level that many economists consider dangerous. It would actually surpass 60% in just two years. I could go on, but do I really need to? Suffice it to say that it’s much easier to believe in fantasy ideologies if you create fantasy facts to support them. In closing, I could really care less about Democrats or Republicans, I think they’ve both managed to do pretty lousy jobs, but the real travesty here is the disservice Reuters does to it’s readers by publishing Pethokoukis’ pathetic partisan dribble. I can get this trash on Fox, try journalism for a change.

Posted by jtfane | Report as abusive
 

Wasn’t the last “American Century” bloody and repressive enough?—please, not another one! Just pour lime on its rotting culture and air out the planet.

Posted by mustafaspeaks | Report as abusive
 

This is hilarious! Is it April 1 still?

Reagan’s economic hacks destroyed both the budget and the American economy. The deficit skyrocketted, unemployment, rates of homelessness and poverty also increased while wealth concentrated. Bush I couldn’t get re-elected because none of his hacks worked to fix anything (even after breaking his ‘no new taxes’ campaign chant).

The only reason the economy rose under Dubya was because of the giant Ponzi scheme that was home mortgages allowed lenders to report massive profits, even though those profits relied on very unsound lending practices that had been illegal until they were deregulated; this Ponzi scheme was bound to rise fast and crash hard because it was unsustainable, and that is exactly what happened.

The country cannot afford another trickle down failure. It didn’t work under Reagan, it didn’t work under Dubya. What kind of reporter or politician would keep trying the same thing and expect different results?

Posted by Chibiabos | Report as abusive
 

Ryan’s plan is magical fairy dust. Any projections more than two years old are bogus. Yhr unemployment of 2.8% is a lie. And Raygun took money from the young and gave it to old people, while Ryan wants to the opposite. Preety bad article James, you usually do better.

Posted by dcrimso | Report as abusive
 

Purely partisan foolishness. To suggest that Ryan’s plan somehow restores “free markets” is a spectacular insult to the intelligence of anyone with enough education to be barely literate and enough sense to look one level deeper than the TMZ headline of the day.

Ryan’s plan cements the corporate cronyism that has driven our economy into the turf. What’s needed is a REAL return to free markets, and this plan doesn’t even scratch that surface.

Pethokoukis, you’re nothing more than a partisan shill. My dog could eat an inkjet cartridge and defecate a better-reasoned column than this.

Posted by JackMack | Report as abusive
 

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