Glitter and Unicorns

Crossposted from The Stars Hollow Gazette

Ludicrous and Cruel

By PAUL KRUGMAN, The New York Times

Published: April 7, 2011

(T)he Ryan proposal trumpets the results of an economic projection from the Heritage Foundation, which claims that the plan’s tax cuts would set off a gigantic boom. Indeed, the foundation initially predicted that the G.O.P. plan would bring the unemployment rate down to 2.8 percent – a number we haven’t achieved since the Korean War. After widespread jeering, the unemployment projection vanished from the Heritage Foundation’s Web site, but voodoo still permeates the rest of the analysis.

A more sober assessment from the nonpartisan Congressional Budget Office tells a different story. It finds that a large part of the supposed savings from spending cuts would go, not to reduce the deficit, but to pay for tax cuts. In fact, the budget office finds that over the next decade the plan would lead to bigger deficits and more debt than current law.

According to the budget office, which analyzed the plan using assumptions dictated by House Republicans, the proposal calls for spending on items other than Social Security, Medicare and Medicaid – but including defense – to fall from 12 percent of G.D.P. last year to 6 percent of G.D.P. in 2022, and just 3.5 percent of G.D.P. in the long run.

That last number is less than we currently spend on defense alone; it’s not much bigger than federal spending when Calvin Coolidge was president, and the United States, among other things, had only a tiny military establishment. How could such a drastic shrinking of government take place without crippling essential public functions? The plan doesn’t say.

(P)rivatizing Medicare does nothing, in itself, to limit health-care costs. In fact, it almost surely raises them by adding a layer of middlemen. Yet the House plan assumes that we can cut health-care spending as a percentage of G.D.P. despite an aging population and rising health care costs.

The only way that can happen is if those vouchers are worth much less than the cost of health insurance. In fact, the Congressional Budget Office estimates that by 2030 the value of a voucher would cover only a third of the cost of a private insurance policy equivalent to Medicare as we know it.

In the past, Mr. Ryan has talked a good game about taking care of those in need. But as the Center on Budget and Policy Priorities points out, of the $4 trillion in spending cuts he proposes over the next decade, two-thirds involve cutting programs that mainly serve low-income Americans.

The G.O.P. budget plan isn’t a good-faith effort to put America’s fiscal house in order; it’s voodoo economics, with an extra dose of fantasy, and a large helping of mean-spiritedness.

A little bit more-

Ryan and Taxes

By PAUL KRUGMAN, The New York Times

April 8, 2011, 9:48 am

The Ryan plan calls for cutting the top marginal rate to 25 percent – lower than it has been at any time in the past 80 years. That in itself should tell you that this is a deeply unserious proposal: anyone who tells you that we have to face hard truths, that everyone must sacrifice, and by the way, rich people will pay lower taxes than they have at any time since the 1930s, is just engaged in a power grab.


  1. Fiat currencies such as the US$ derive their legitimacy, in part, from the fact that the Federal Government requires its taxes to be paid in the fiat currency. The portion of total income and total wealth held by the top 1% increases apace and, as that income is increasingly protected from taxation we are tending towards a situation which, at the limit, would have the top 1% with all the money and no taxes. This would undermine the legitimacy of the US$ and, arguably, already has begun to do so. After all currencies do not simply go from good to worthless in one step, but on a continuum. It might be interesting to plot the value of the dollar WRT a basket of goods along with a plot of the effective tax collected from the top 1% over the last 70 years.

    At the very least, such a claim should be at least as true as the drivel put out by The Heritage Foundation and could serve as a useful bit of rhetoric in the ongoing battle.  

  2. …their job creating brilliance. They are holding back now because of “uncertainty”……

    Good people I know, I guess you could call them liberals, who don’t delve too deeply into what is going on, have a sorta shrug attitude; “well the rich are always going to get richer” mentality.

    Without realizing it they have bought into the pervasive propaganda.

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