Republican Budget Proposal

[kchoya]

Apr 11, 2011 7:29:08 GMT -5 hoyawatcher said:

I thought the timing of Ryan's plan was bad. I was wrong. It framed the debate of the current long delayed budget and has totally changed the debate in Washington. Since it was labeled as "courageous and straightforward" it has become the centerpiece for discussion and Obama - who was ready to just take pot shots at it and continue the same spending course - has now had to respond with his own new budget plan. I have seen a lot of things but I have never seen a President release a budget and then come back and say - well nevermind here is the budget I really meant. The debate has changed and I fully expect the Prez to say we need an entirely new tax revenue stream via a VAT tax plus some minor spending cuts. Hope so as we can then have a real debate on which way to go.

And after all the comments that we should have ideas that bridge the left/right gap and give something to both sides, I am surprised at the comments about Ryan's Medicare plan. Moves to private health care markets (right) but then says the government contributions are means tested and the wealthy don't get them. That has been a big mantra of the left for a long time and is in essence a big tax increase. I thought some on the left would at least acknowledge that.

As to whether the timing was bad, I think it depends on how you look at it. If you're a Republican, or if you want to see Obama lose next year, this could be very bad timing. A very plausible argument could be made for Obama going the Dick Morris/Bill Clinton triangulation route and advocating something in between Ryan and the liberals, and then claiming that he was able to cut spending and "bridge the gap" and "act like a responsible adult."

Whether he has the stones to do so remains to be seen. I think such an approach (and cutting the spending) goes against his core beliefs, that he may not do it. Clinton, OTOH, had no core beliefs so had no trouble doing what he needed to get reelected.

[hoyawatcher]

FWIW I think the difference between Clinton time and now is the tea party. Back then there really wasn't a consensus that things had to change radically and Clinton was able to school Gingrich in that environment - though I still give Clinton half the credit for balancing the budget back then.

The environment today is very different in terms of radical change. Throw in your statement that Obama really doesn't want to cut spending and he has a strong chance of being swept away in the next election. And in reality this is all about the next election - the radical or material changes are not going to happen until after the next election.

[TC]

Apr 11, 2011 12:42:09 GMT -5 hoyawatcher said:

FWIW I think the difference between Clinton time and now is the tea party. Back then there really wasn't a consensus that things had to change radically and Clinton was able to school Gingrich in that environment....

I'm sorry, but didn't conservative Republicans opposed to the President exist back in the Clinton era? That is all the Tea Party is, except a few of them dress up in goofy costumes.

[EasyEd]

All along President Obama was working on a budget aimed at reducing our deficit but submitted his budget and dared the Republicans to come forward with their own plan first. Ryan and the Republicans took him up on his dare and now the president can come forward with his real plan and use it as a means of saying he doesn't starve seniors or the poor. We'll see if his plan works. It might.

[HoyaNyr320]

Apr 11, 2011 13:39:53 GMT -5 EasyEd said:

All along President Obama was working on a budget aimed at reducing our deficit but submitted his budget and dared the Republicans to come forward with their own plan first. Ryan and the Republicans took him up on his dare and now the president can come forward with his real plan and use it as a means of saying he doesn't starve seniors or the poor. We'll see if his plan works. It might.

Completely agree with this. Also agree it remains to be seen whether it was the right strategy.

[EasyEd]

Apr 11, 2011 13:43:55 GMT -5 HoyaNyr320 said:

Apr 11, 2011 13:39:53 GMT -5 EasyEd said:

All along President Obama was working on a budget aimed at reducing our deficit but submitted his budget and dared the Republicans to come forward with their own plan first. Ryan and the Republicans took him up on his dare and now the president can come forward with his real plan and use it as a means of saying he doesn't starve seniors or the poor. We'll see if his plan works. It might.

Completely agree with this. Also agree it remains to be seen whether it was the right strategy.

If you agree with this, maybe I'll reexamine what I said.

[HoyaNyr320]

Apr 11, 2011 19:01:15 GMT -5 EasyEd said:

Apr 11, 2011 13:43:55 GMT -5 HoyaNyr320 said:

Completely agree with this. Also agree it remains to be seen whether it was the right strategy.

If you agree with this, maybe I'll reexamine what I said.

;D We can agree at least once!

[jerseyhoya34]

I know...this board has turned into a forum for conservative jihadists to spew their deep-seated animosity more than is necessary.

[The Stig]

Whatever, Cuse still sucks.

[Boz]

Apr 11, 2011 21:26:55 GMT -5 The Stig said:

Whatever, Cuse still sucks.

Oh man, thank you for that, Stig. I actually laughed out loud when I saw that & it was definitely needed after a crummy day.

I'll try to remember that next time we vehemently disagree on something. So, you know, tomorrow.

[kchoya]

Wow. An analysis from Ezra Klein that I actually agree with:

www.washingtonpost.com/blogs/ezra-klein/post/the-white-houses-budget-miscalculation/2011/04/12/AFpw50QD_blog.html

The danger for Obama is that in endorsing Simpson-Bowles at the beginning of a process of compromise, he makes a centrist — at best — proposal the left pole of the debate, with House Budget Committee Chairman Paul Ryan’s budget serving as the right pole. That implies an outcome similar to the shutdown negotiations, where the Democrats ended up arguing for House Speaker John Boehner’s cuts while the Republicans ended up arguing for the tea party’s cuts, and the final deal was somewhere between the two. A debate between center and right will lead to a further right outcome than a debate between left and right.

[hoyawatcher]

Apr 12, 2011 19:32:41 GMT -5 kchoya said:

Wow. An analysis from Ezra Klein that I actually agree with:

www.washingtonpost.com/blogs/ezra-klein/post/the-white-houses-budget-miscalculation/2011/04/12/AFpw50QD_blog.html

The danger for Obama is that in endorsing Simpson-Bowles at the beginning of a process of compromise, he makes a centrist — at best — proposal the left pole of the debate, with House Budget Committee Chairman Paul Ryan’s budget serving as the right pole. That implies an outcome similar to the shutdown negotiations, where the Democrats ended up arguing for House Speaker John Boehner’s cuts while the Republicans ended up arguing for the tea party’s cuts, and the final deal was somewhere between the two. A debate between center and right will lead to a further right outcome than a debate between left and right.

On the other side, if he comes out with a plan or agenda that is too tax increase driven to support levels of spending way out of proportion to historical norms he most likely looses the election unless there is a sea change in public sentiment. Simply taxing the rich doesn't close the gap - to do that he has to tax everyone. And if he goes anywhere near the "People's Budget" levels of taxation he looses the election in Mondale fashion.

[hoyainspirit]

Federal taxes as a percentage of GDP are the lowest they have been in 60 years. There exists much room for revenue growth to help solve the budget/debt issues we face. Despite the Ryan rhetoric, we will never cut our way out of this problem. Cutting programs which disproportionately affect the elderly and the poor, while ignoring the revenue side of the equation, especially as it effects the wealthy, is unconscionable.

[TBird41]

Apr 13, 2011 10:14:56 GMT -5 hoyainspirit said:

Federal taxes as a percentage of GDP are the lowest they have been in 60 years. There exists much room for revenue growth to help solve the budget/debt issues we face. Despite the Ryan rhetoric, we will never cut our way out of this problem. Cutting programs which disproportionately affect the elderly and the poor, while ignoring the revenue side of the equation, especially as it effects the wealthy, is unconscionable.

The solution probably involves both tax increases and spending cuts. But we can't tax our way out of this crisis.

First, unless you let ALL of the Bush tax cuts expire (instead of just the cuts for the people making >$250K), you aren't going to get more than $1 trillion over ten years. And that doesn't take into account that rich people's income is really volatile. Increasing the corporate tax rate isn't going to do much either, since firms will just continue to shift their companies to countries with lower taxes, or, alternatively, find so many loopholes that they pay no taxes at all (hello GE!). If you think we need to comprehensively reform the tax code, well, then I agree with you.

money.cnn.com/2011/04/12/news/economy/national_debt_taxes_obama/index.htm?hpt=C1

Secondly, the amount of tax revenue collected is actually relatively stable. Since the 1950s, we've collected about 15-20% of GDP in taxes w/ the peaks generally when the economy is doing well and the valleys when it's not. It's really low right now (so there is some room for increases in taxes) but even if our tax revenue was at 20% of GDP instead of 15% in 2010, we'd still have had a deficit over $700 billion.

www.deptofnumbers.com/blog/2010/08/tax-revenue-as-a-fraction-of-gdp/

[SirSaxa]

Apr 13, 2011 10:14:56 GMT -5 hoyainspirit said:

Federal taxes as a percentage of GDP are the lowest they have been in 60 years. There exists much room for revenue growth to help solve the budget/debt issues we face. Despite the Ryan rhetoric, we will never cut our way out of this problem. Cutting programs which disproportionately affect the elderly and the poor, while ignoring the revenue side of the equation, especially as it effects the wealthy, is unconscionable.

+1, except Republicans are not "ignoring the revenue side of the equation, especially as it effects the wealthy"... they are STILL actively cutting taxes on the wealthy even further.

And, despite the fact that Corporate taxes as a percentage of GDP are the LOWEST they've been in 60 years too. And the GOP wants to cut those further too.

T-bird, you are right when you say we need both Tax Increases AND Spending Cuts.
BUT, we don't need those cuts right now because they will negatively impact our fragile recovery.
We do need a long range plan to address taxes, spending --- including Defense and Entitlements. Entitlement adjustments should include things like gradually raising ages AND means testing.

Finally, no matter who provides health insurance, SOMEONE will be "rationing" health care -- Insurance companies, government, or both. No one gets unlimited health care benefits at a fixed cost. If it is not "unlimited", it is "Rationed".

[Boz]

Seems no one is really interested in taking Ryan at his word in their criticisms of his plan.

OH MY GOD, HE WANTS CORPORATIONS TO PAY EVEN LESS MONEY IN TAXES!!! (also he wants to kill old people, women, and probably puppies!!!)

Well, no, actually. That is not what his plan envisions at all.

(And how do you pay less than zero anyway? Well, actually, come to think of it....but that's another discussion we can have with Jeffrey Immelt sometime later).

Yes, it proposes lowering the corporate tax rate. But tax rates ≠ tax revenues. Never have.

What is important is that Ryan proposes comprehensive tax reform -- eliminating subsidies, exclusions and other maneuverings -- so that corporations will actually have to PAY that lower rate, instead of paying nothing. In effect, a tax increase.

I believe the plan also addresses similar tax reform for individuals. There's a reason Warren Buffet pays less taxes than his secretary, but that reason is not a tax rate problem. It is a tax code problem.

Now, if you want to say that Ryan will not be able to achieve the tax reform that he proposes, well OK. That is a reasonable discussion to have.

But to dismissively say that Ryan's plan aims to lower taxes on corporations and "the rich" even more, merely shows that you're really just not paying attention.

[hoyainspirit]

The reduction in tax rates, combined with the elimination of certain deductions (the "reform") reduces revenue by almost $1 trillion over the next decade.

[kchoya]

Apr 13, 2011 12:00:45 GMT -5 Boz said:

Seems no one is really interested in taking Ryan at his word in their criticisms of his plan.

OH MY GOD, HE WANTS CORPORATIONS TO PAY EVEN LESS MONEY IN TAXES!!! (also he wants to kill old people, women, and probably puppies!!!)

Well, no, actually. That is not what his plan envisions at all.

(And how do you pay less than zero anyway? Well, actually, come to think of it....but that's another discussion we can have with Jeffrey Immelt sometime later).

Yes, it proposes lowering the corporate tax rate. But tax rates ≠ tax revenues. Never have.

What is important is that Ryan proposes comprehensive tax reform -- eliminating subsidies, exclusions and other maneuverings -- so that corporations will actually have to PAY that lower rate, instead of paying nothing. In effect, a tax increase.

I believe the plan also addresses similar tax reform for individuals. There's a reason Warren Buffet pays less taxes than his secretary, but that reason is not a tax rate problem. It is a tax code problem.

Now, if you want to say that Ryan will not be able to achieve the tax reform that he proposes, well OK. That is a reasonable discussion to have.

But to dismissively say that Ryan's plan aims to lower taxes on corporations and "the rich" even more, merely shows that you're really just not paying attention.

Did we have these same "favoring the rich/Wall Street" complaints when the 1986 reform was being debated?

[TC]

Apr 13, 2011 12:00:45 GMT -5 Boz said:

I believe the plan also addresses similar tax reform for individuals. There's a reason Warren Buffet pays less taxes than his secretary, but that reason is not a tax rate problem. It is a tax code problem.

Now, if you want to say that Ryan will not be able to achieve the tax reform that he proposes, well OK. That is a reasonable discussion to have.

But to dismissively say that Ryan's plan aims to lower taxes on corporations and "the rich" even more, merely shows that you're really just not paying attention.

This seems like an I-want-my-cake-and-I-want-to-eat-it-too argument. The plan cuts taxes, but you don't want to admit where it lowers taxes.

The revenue stuff in this plan is absurd, but that's kinda what I expect from a Republican budget guy, the thing that burns me up about it is best spelled out in Leonhardt's criticism :

www.nytimes.com/2011/04/06/business/06leonhardt.html?hp

It asks for a whole lot of sacrifice from everyone under the age of 55 and little from everyone 55 and over.

[Buckets]

My major issue with Ryan's plan is that all of the savings are achieved more than ten years down the road and increases national debt more than the CBO baseline over that timespan. This makes for pretty looking graphs on a century-long horizon, but doesn't do much for this "crushing burden of debt and deficits" that he keeps talking about. This is strictly about a very large segment of the voting population getting benefits, not paying taxes, and sticking younger generations with the bill. Considering how long Ryan plans on running a deficit for, some of the people who will be paying for that aren't even born yet. I do admire his ability to say other plans "kick the can" with a straight face, however.


Here's a CBO analysis from 2001:

"In the absence of significant legislative changes and assuming that the economy follows the path described in this report, the Congressional Budget Office (CBO) projects that the total surplus will reach $281 billion in 2001. Such surpluses are projected to rise in the future, approaching $889 billion in 2011 and accumulating to $5.6 trillion over the 2002-2011 period."

So that didn't quite come to fruition. "Significant legislative chages" and economic changes happen, so I don't know why Ryan gets so much credit for proposing something that only does good things for the deficit and consequently debt on extraordinarily long time horizons.

I wish the standard for "bold reform" was not "exacerbating the debt problem over the next ten years" and "shared sacrifice" extended to those over the age of 55.