James Pethokoukis

Politics and policy from inside Washington

Ryan & Christie, the GOP’s Dynamic Duo

Sep 13, 2010 12:45 UTC

Meet Paul Ryan and Chris Christie, the GOP’s dynamic and dangerous duo. One is the author of “A Roadmap for America’s Future,” a bold blueprint that shows policymakers how they can shrink entitlement spending while also growing the economy. The other is the Garden State’s chief executive and YouTube sensation who’s implementing his own roadmap in a blue state drowning in red ink. Both are fighting back hard against the idea that government spending can’t be cut and thus taxes must be raised in order restore America’s long-term fiscal solvency.

Now this is the worst sort of heresy to the liberal economic intelligentsia — and mainstream media — who all pretty much belong to the cult of Adolph Wagner, a German economist who died in 1917. Wagner’s Law basically says that as a nation gets wealthier, its citizens demand more social services and bigger government. As a result, it’s far easier for government to raise taxes than cut spending. Not surprisingly, Wagnerians are enthusiastic supporters of layering a value-added tax onto the current U.S. income tax system.

Peter Orszag, the just-departed White House budget chief, is an obvious Wagnerian. He told CNN over the weekend that America cannot afford the Bush tax cuts of 2001 and 2003. None of them. Not the ones for the rich (and entrepreneurs and investors). Not the ones for the middle class. They all have to go, every last smidge of them. “We, unfortunately, can’t afford the tax cuts over the medium and long term,” Orszag said on CNN’s “Fareed Zakaria GPS” program. “We face too large a deficit out in 2015, 2018, 2020.”

Really? Really? Now let’s say all the tax cuts were permanently extended — Orszag’s nightmare scenario. According to Orszag’s old pals at the Congressional Budget Office, federal tax revenue would be 18.6 percent of GDP in 2020, 19.2 percent in 2035, 19.8 percent in 2050 and 22 percent in 2080. In other words, even with all the tax cuts extended, government revenue would still rise well above its historical average of roughly 18 percent since World War Two.

Instead, it’s historically unprecedented government spending that’s behind the projected debt explosion. As the CBO itself puts it:

As a result, revenues would grow only slightly faster than the economy, equaling 22 percent of GDP by 2080. Slowly growing revenues combined with sharply rising expenditures would create an explosive fiscal situation. Under the spending and revenue policies incorporated in this scenario, federal debt would surpass 100 percent of GDP in 2023 and exceed 200 percent of GDP by the late 2030s.

And although the Wagnerians think they are marching along with History, they somehow seem to have missed a generation of growing American skepticism about the size and scope of government, beginning with the Reagan Revolution in the 1980s. More recently, there’s been widespread revulsion at the Obama spending orgy and his monstrous deficits, evidenced by tea parties and polls today and perhaps by vote totals in November.

And the political personification of this revolt: Ryan and Christie. But for the Wagner cultists, these heretics just don’t compute. How can they be America’s fastest-rising political stars by preaching such a different truth — a message of smaller government fully in line with America’s deep values of self-reliance, private enterprise and entrepreneurism? For the Wagnerians, however, Ryan and Christie are like a nasty computer virus that threatens to overwrite America’s liberal operating system.

But the two rebels are putting the lie to such dogma. They are lighting a different way forward, one to a more fiscally sustainable and prosperous U.S. economic future.

COMMENT

I find it funny how those who obviously LOATHE Republicans, and for the most part conservative America, never think that the majority of the mainstream media is not obviously seen as biased towards the Democrat and the agenda of the left. I guess that’s why they are doing so well these days.
First point : BOTH PARTIES ARE HISTORICALLY AT FAULT!!! So get off your high horses. Unfortunately every huge entitlement program we have has been initiated by one party, and that would be the Democrats, and THAT is what this article is discussing. The difference is conservatives are advocating a serious change, and the left is advocating more of the same.
What we have here is just a stark contrast of opinions on the best way to get this nation back on track financially.
YOU believe that the more people make, the more government should take in order to fund a massive amount of entitlements to give to other people. That, simply defined, is what the writer was talking about with Wagner’s theory. You all seem to believe this because somewhere along the road you have convinced yourselves that successful people are bad people who live like Scrooge McDuck, and sleep on pillows of money. You also seem to hold some silly notion that poor people exist because rich people have sucked up all the money before other people have gotten a chance to get their shot at it. If the creation of wealth creates poor people, then you also have to believe that the destruction of wealth would make less poor people.
WE (conservatives) believe in the same things the founders believed in, and what the country used to stand for. We believe it is the responsibility of the INDIVIDUAL to pursue their own ambitions to better their lives. Not to have an over powering government distribute the opportunity. Government cannot distribute the “American Dream”, it can only be earned through hard work, risk, and sacrifice! We do not HATE successful people. We do not believe in class warfare, pitting one group against another. We do not believe in a “class system” to keep people in their place. We believe that every person who was born, or legally immigrated to this country, has the same level of opportunity to succeed, and they have the same level of opportunity to be useless bump on a log. It’s their own decision. The only thing that REALLY stands in the way of person’s success is the intrusive overbearing weight of a huge government.

Posted by EchoMike | Report as abusive

David Brooks vs. Paul Ryan

Jul 30, 2010 14:13 UTC

This bit of David Brooks’ column today jumped out at me:

Paul Ryan, the most intellectually ambitious Republican in Congress … has been promoting a roadmap to comprehensively reform the nation’s tax and welfare system. On the tax side, he would sweep away most of the special-interest-favoring tax credits and subsidies and give people a chance to join a simple tax system with only two rates.

On the welfare-state side, he’d sweep away most subsidies to the middle and upper classes, like the tax exemption on employee health plans. He’d essentially voucherize federal benefits, like health care and Social Security, and increase federal subsidies for people down the income scale. … The weakness of the Brooks and Ryan approach is that their sociology is off a bit. America is not a nation of risk — embracing pioneers. It is a nation of heroic bourgeois families who want to thrive within a secure social order.

Me:  The “risk shift” argument is a phony one. Unsustainable social insurance programs means risk has already been shifted onto American taxpayers. The only question now is how to structure that risk. And the only way to restructure entitlement programs so they don’t bankrupt America or saddle it with sky-high taxes is a plan like that advocated by Ryan.

COMMENT

Strong families increase the risk tolerance of individuals. Conversely, as traditional family life deteriorates, people turn to the nanny state for support. Causation goes in both directions. Any policy that strengthens the family increases support for the Ryan program. Shrinking the role of government in people’s lives strengthens family bonds. The “secure social order” that “heroic bourgeois families” seek is not the welfare state. It is the social conservative agenda: a legal framework for marriage that preserves families, schools that teach traditional values, government restrictions on pornography and the like.

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Paul Ryan and free-market populism

May 20, 2010 18:19 UTC

Over at RealClearPolitics, Rep. Paul Ryan of Wisconsin further fleshes out the emerging “free-market populism” meme beginning to emerge in the GOP:

From an ideological perspective, big government can combine with big business to advance a more progressivist society. For self-described “progressives,” the agenda is straightforward: expand government; co-opt big business; direct the capital markets from Washington to pursue “social justice.” Think Fannie and Freddie by much higher orders of magnitude.

Over the past decade, the thinking has been much less clear for conservatives. Being “pro-market” has been fundamentally confused with “pro-business.” Conservatives who came to Congress to defend and promote free enterprise have often been led to believe that pathway lies in bolstering established firms as they navigate the maze of government regulations and taxes. These instincts are correct, but the implementation is often flawed. All too often, the results of these efforts have been to exacerbate crony capitalism – erecting barriers to entry against potential competitors to firms that are currently on top.

For their part, companies seeking such protection have a right to pursue their narrow self-interest; but when these actions involve reducing open competition and transparency for short term gain, they do so to the detriment of the very free enterprise system that made their success possible.

Me: I can see this manifesting in a number of ways, from attacks on corporate welfare to more explicit calls to diffuse financial power. And it would seem to be in the sweet spot of folks like Marco Rubio, Rand Paul and Pat Toomey. This is also a group that would be willing to call for radical change in the U.S. entitlement system.

Paul Ryan’s budget roadmap is flummoxing Washington

Mar 10, 2010 20:38 UTC

Washington doesn’t know how to handle Rep. Paul Ryan’s outline for how to balance the budget without raising taxes. House Majority Leader Steny Hoyer says the Wisconsin Republican’s plan is “unsustainable.” (Well, it makes Big Government unsustainable.) And an analysis from the Tax Vox blog takes issue with his revenue estimates.

Of course, the issue here is spending, spending, spending. The Washington Consensus is that taxes must go up, that it is not politically possible to cut spending. Ryan is trying to prove that consensus wrong with a little bit math and little bit of moxie.<

COMMENT

Paul Ryan appears to be the only guy in Washington with some common sense and the ability to clearly articulate his views in a non-partisan manner.

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Paul Ryan’s Long (Deficit) Goodbye

Feb 10, 2010 23:07 UTC

Why should Tim Geithner be so confident that America will “never” lose its AAA credit rating? The White House doesn’t currently have a long-term plan to stanch America’s fiscal hemorrhaging. Hoping and wishing for a successful deficit commission does not make a plan. The Treasury secretary’s statement sounds like one of those perfunctory defenses of the dollar.

But the so-called “Party of No” does have a plan. And Republicans may have a chance to sell it should they retake Congress. Yet even if the plan works, the financial bleeding wouldn’t stop for decades.

To be accurate, Rep. Paul Ryan has a plan. The Wisconsin Republican is a rising party thinker and odds-on future Budget Committee chairman if Republicans capture the lower chamber. The Ryan plan does eventually put America into the black without raising taxes, according to the Congressional Budget Office. This is critical since growth-killing tax increases will only make budget balancing that much harder.

How does he do it? By sharply cutting future social insurance benefits and partially shifting Americans into private retirement and healthcare plans. The new Obama budget plan forecasts a total debt-to-GDP ratio of 77 percent in 2020 (vs. 53 percent in 2009) with an annual budget gap of around 4 percent (vs. 10 percent in 2009). Talk about a rosy scenario. It assumes brisk economic growth, atypical following financial crises. It also assumes some budget cuts and tax increases that are politically unlikely. An alternative CBO forecast using — by its own admission — more realistic policy assumptions predicts a 2020 budget gap of 7.4 percent and a debt-to-GDP ratio of 87 percent.

The Ryan plan tops both. In 2020, it would have a budget gap of 3.7 percent and a debt-to-GDP ratio of 67 percent. But notice: even a plan created by a conservative budget hawk accepts abnormally high budget deficits a full decade from now. So beware of any politico selling quick fiscal fixes.

The Obama outline ends at 2020, but the CBO and Ryan plans take their forecast decades out. By 2040, Ryan still sees annual deficits of over 4 percent of GDP (and a debt-to-GDP ratio of 99 percent) before a long decline toward annual surpluses in the 2060s as spending eventually dips below tax revenue. Those numbers seem alarmingly high — though not vs. the stunning CBO forecast of a 223 percent debt ratio in 2040 and over 400 percent by the 2060s.

One can quibble about Ryan’s policy choices. Democrats might prefer more taxes and fewer spending cuts. But the essential point is that politicians will, at best, push for a slow departure from massive deficit spending. The question is whether financial markets will be patient enough to allow such a terribly long goodbye.

COMMENT

This is what I heard…last year.

The plan to lower the deficit is simple.
Inflation at 100% over ten years.
The administration is engineering this
as we speak.

Posted by LP | Report as abusive

An interview with Rep. Paul Ryan

Dec 15, 2009 18:51 UTC

I recently had the chance to sit down and chat with Rep. Paul Ryan, a Wisconsin Republican and the ranking GOPer on the House Budget Committee. Ryan’s a rising Republican star (he’ll be just 40 next month), a guy some folks were pushing to be John McCain’s running mate in 2008.  If there’s a young Jack Kemp in today’s Congress, he’s it. And if you’re wondering what the 21st century Republican Party will stand for, many of the ideas will probably come from Ryan. Here are some excerpts from our conversation:

Boosting the economy

I would do whatever I could to keep tax rates low and permanent. I subscribe to the [Milton] Friedman permanent income effect. And I believe in the Kennedy-Mundell-Reagan policy mix of low tax rates and sound money. And that also means getting our debt under control.

Economic outlook

Look what’s going to hit us in 2011. We are going to have a massive tax increase on labor and capital, and the Fed for sure is going to be tight by then. We are doing kind of a cash for clunkers on the whole economy. We are pulling growth from 2011 into 2010. Economic decision makers are looking at the policy climate, and it is horrendous. Then they read the newspapers and see payroll taxes, pay or play, cap-and-trade and this uncertain regulatory environment. It’s the uncertainty tax. There is this enormous uncertainty being injected into the economy, and everybody is sitting on their hands.

Democrats

Our government is led by ideologues, and they are bound and determined to implement a social welfare state, a cradle-to-grave entitlement society, a high-tax, high-government-dependency society. And the countries that have gone down that path have higher unemployment, a lower standard of living and more economic stagnation.

If you listened to the healthcare debate [in the House], the leaders of the Democratic party, they all basically said the same thing: This is the third wave of progressivism, we are finally completing the progressive agenda with passage of this bill. They really believe they can finally transform America into something it’s not.

Value-added Tax

The VAT is coming. They just know they can’t do it before the election. My fear is that the credit markets blow up on us again, we’ll get some shot across the bow by the bond market one of these days. And if the Democrats are still in power, that will bring us the VAT. They will say they have no choice but to do it to save the creditworthiness of the government. It will kind of be like another TARP weekend where the Treasury Secretary and the Fed chairman come to Capitol Hill hyperventilating and out of that comes a VAT. Our government is premeditating a moment like that. But there is another way with real entitlement reform, real tax reform, fulfilling health and retirement security but also paying off our debts and making our economy really competitive.

A deficit commission

I think we should just do our jobs. The way this commission is going to be stacked, I fear, will be for a slow moderation in spending but a big increase in taxes. To really fix this problem, what you’ve got to do is have a defined benefits safety net with a defined contribution system on top. You could design this in different flavors, but that is the gist of what you have to do to wipe these unfunded liabilities off the books.

Financial reform

What I think we are doing here is enshrining “too big to fail” in our system and making a permanent crony capitalist system.

COMMENT

always touching to see an ideologue accuse everyone but himself of being an ideologue

that guy pontificates on fiscal responsibility at every turn without suggesting a single measure to reduce spending whilst advocating cutting taxes

does he have any actual proposals?

Posted by Chi Democrat | Report as abusive

Paul Ryan and the future of the GOP

Dec 14, 2009 15:19 UTC

This  commentary from  GOP thought leader Rep. Paul Ryan of Wisconsin really sets the intellectual and political framework for where the GOP might be headed.  He goes after Crony Capitalism, the melding of Big Money, Big  Business and Big Goverment. This is what’s next. Here are some important bits:

1)  Since bringing us back from the precipice however, the Troubled Asset Relief Program [TARP] has morphed into crony capitalism at its worst. … No longer concerned with preserving overall financial market stability, Treasury’s walking around money continues to be deployed to reward the market’s Goliaths while letting its Davids suffer.

2) Washington is working hard to nationalize other sectors of our economy too. The House Finance Committee is pushing a massive financial “reform” bill, effectively creating banking utility companies. The Treasury Department has effectively nationalized the housing finance sector, with Fannie Mae & Freddie Mac demonstrating how fast big businesses, through a federally blessed and backed oligopoly, can fall. Now, on both ends of Pennsylvania Avenue, health care and energy lobbyists continue to fall over themselves to cut their deals–knowing that if they aren’t at the table, they’ll be on the menu.

3) Big businesses’ frenzied political dealings are not driven by party or ideology, but rather by zero-sum thinking in which their gain must come from a competitor’s loss. Erecting barriers to competition is a key to maintaining advantage and market share. With Washington leading the way, it makes sense for the big boys to redirect their resources to their lobbying shop and government affairs office. They’re far less interested in expanding the economic pie than with making certain that they get their slice.

4) For every encroachment into the market by the federal government–under the guise of “reform”–there exist pro-market alternatives that Republicans must articulate and passionately defend. University of Chicago’s Luigi Zingales, who has written extensively on the issue of crony capitalism, reminds policymakers that the path forward requires “adopting a pro-market, rather than pro-business, approach.”

COMMENT

If Ryan ever regretted the vote on Medicare Part D, he must have a short memory. The difference between he and the Democrats in root philosophy in health care is zero. That is why they both put forth Health Care bills. Why? They both believe in the unconstitutional interference in health care by the government using taxes, tax credits to one group so that another benefits. Sounds like a statist to me. Does Ryan’s bill have surface differences. Sure it does. But once you allow an unconstitutional interference, it will end up growing ever larger.

To those who think that the GOP must start somewhere. How about with constitutional laws? If both parties, including Ryan, continually ignore the Constitution, in time human nature leads you to the same place. That we “must start somewhere” and “not be too picky about voting records” has been a hallmark call for the GOP for decades. Where did it get the country? What percent of of GOP in Senate and House voted for Medicare Act of 1965? Two shy of 50%. That is dangerously close to a majority. And over 40 years ago. On a bill often decried by GOP apologists as one-sided vote. When again did the GOP lose its small constitutional government compass? A Republican, incidently from Wisconsin, even helped write the Medicare 1965 bill.

from an AMA article on it see below excerpt: http://www.ama-assn.org/ama1/pub/upload/ mm/369/medicare.pdf

The Byrnes Bill
In contrast to the largely Democrat-backed King-Anderson bill, Republicans in Congress lent their general support to the Byrnes bill. “The bill was submitted by Congressman Thomas W. Byrnes of Wisconsin. Like Eldercare, it called for coverage of hospital and physician services for the aged through the purchase of private insurance. Administration, however, was to be federal. Financing was to come two-thirds from general revenues and one third from deductions on the individual pension checks of those who voluntarily chose to
participate in the program.” (Campion 274)

Posted by Wisconstitutionalist | Report as abusive
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