I don’t profess to be an economist or anything close to it. Without question, it’s a very complex field of study. The best we can do is try to listen to those who are well-educated on the subject and look for political bias while doing so.
Recently, I posted a sarcastic criticism of Paul Ryan and his latest budget proposal which, as one of its tenets is a repeal of Obamacare. From what I’d been reading, it sounded like the intent was to not just revert to a tax structure that benefits the uber-wealthy as was the case under G.W. Bush, but to take it the madness a few steps further and lower the marginal rate to 25% while paying for it with cuts to entitlements.
This blog being new, I don’t often get a lot of comments yet, but recently I had a thoughtful reply to the post challenging me to get out of the mode of simply launching criticisms at Republicans, and proffer up some of my own solutions. Fair enough.
Not being an economist, it’s not like I’m going to sit down and study the budget line for line and come up with theories about how to fix it. Instead I must rely on what I can learn from credible sources. Since the original post, there have been two compelling articles that caught my attention and seem worth repeating.
The first is an article by E.J. Dionne from the Washington Post. In a nutshell, Ryan proposes reduces the top tax bracket from 39.6% to 25% and pays for it through steep cuts to Medicare and a repeal of Obamacare. In other words, it’s Reagan’s “trickle down” economics on steroids. I’m not sure why this plan would see the light of day given the abysmal failure of the US to control its trillion dollar annual deficits under 12 years of testing this bizarre theory in the form of the Bush Tax cuts. Cutting rates for the top 2% of income earners stimulated some growth in the yacht building industry, but that’s about it. The whole premise was that the to wage earners are the “job creators”, and thusly, if we line their pockets with tax breaks, they will create jobs right and left, morning, noon, and night.
My point is, how much more data do we need? We had 12 years of the Bush tax cuts in place and ended up with unemployment at 9% at the end of the experiment and a shrinking middle class.
Ryan’s budget is paternalistic. He professes to know “what’s best” for the people of this country because his proposal would force many of the poor off of welfare and he reckons they will all go out and find jobs and then send him a thank-you note later on.
The process of creating a budget appears to be approaching some middle ground with the Dems, led by Patty Murray of Washington State having provided a very specific proposal for how to create true job growth and reduce the deficit at the same time. In large part, it’s based on closing tax loop-holes for the top 1% as well as corporations who have gotten away with tax evasion for years. Look no farther than Nike in my home state for a company that threatens to take its jobs outside the state unless it gets huge passes on the tax front.
Another source I follow religiously, Nobel Prize winning author Paul Krugman had an article recently that exposed the cruelty and hypocrisy of the Ryan budget. Krugman frequently points out the real data from the European austerity experiment, which has failed miserably. Ryan’s budget would take us down this same path, completely ignoring what the experts say is a winning approach to improve job growth and get people believing in the economy again — enough to let go of some of their money. Just like it was during the Great Depression, it’s about confidence. This is no different. The New Deal was all about restoring confidence and the government, as FDR knew well, had a key role in restoring confidence. Consequently it stepped in and created public works projects and kept people in the work-force who would otherwise have been out in the cold.
As I mentioned earlier, I rely heavily on the experts is these matters and I’ll take John Maynard Keynes and Paul Krugman (Ph.D in economics) over a self proclaimed policy wonk proffering up the same old Reagan re-tread ideas that have failed us for 30 years.