Ludicrous and Cruel

By Paul Krugman

Many commentators swooned earlier this week after House Republicans, led by the Budget Committee chairman, Paul Ryan, unveiled their budget proposals. They lavished praise on Mr. Ryan, asserting that his plan set a new standard of fiscal seriousness.

Well, they should have waited until people who know how to read budget numbers had a chance to study the proposal. For the G.O.P. plan turns out not to be serious at all. Instead, it’s simultaneously ridiculous and heartless.

How ridiculous is it? Let me count the ways — or rather a few of the ways, because there are more howlers in the plan than I can cover in one column.

First, Republicans have once again gone all in for voodoo economics — the claim, refuted by experience, that tax cuts pay for themselves.

Specifically, the 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.

In particular, the original voodoo proposition — the claim that lower taxes mean higher revenue — is still very much there. The Heritage Foundation projection has large tax cuts actually increasing revenue by almost $600 billion over the next 10 years.

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.

And about those spending cuts: leave health care on one side for a moment and focus on the rest of the proposal. It turns out that Mr. Ryan and his colleagues are assuming drastic cuts in nonhealth spending without explaining how that is supposed to happen.

How drastic? 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.

And then there’s the much-ballyhooed proposal to abolish Medicare and replace it with vouchers that can be used to buy private health insurance.

The point here is that privatizing 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. So the plan would deprive many and probably most seniors of adequate health care.

And that neither should nor will happen. Mr. Ryan and his colleagues can write down whatever numbers they like, but seniors vote. And when they find that their health-care vouchers are grossly inadequate, they’ll demand and get bigger vouchers — wiping out the plan’s supposed savings.

In short, this plan isn’t remotely serious; on the contrary, it’s ludicrous.

And it’s also cruel.

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. And by repealing last year’s health reform, without any replacement, the plan would also deprive an estimated 34 million nonelderly Americans of health insurance.

So the pundits who praised this proposal when it was released were punked. 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.

Source: The New York Times, Apr 9 2011

About Michaela

I am a wanderer and a wonderer, like you are. I love our journey and to walk in the company of friends – to learn, experience, share, laugh, cry and above all I simply love this marvelous, magical, mysterious life. I have no plan (cannot believe I am saying this) and my only intention is to be truthful to myself and others.
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5 Responses to Ludicrous and Cruel

  1. Michaela says:

    I have been watching Paul Krugman getting angry over the past few weeks. And I can understand his frustration – what are governments doing ? Trying to hold on to a massive illusion, using tax money to keeping up appearances ?

    It is so obvious what is happening. And to some extent I can understand that people would turn a blind eye to the unthinkable – the collapse of capitalism.

    Its just – its dead already….

  2. johanna11 says:

    So, Michaela, why do you thinbk capitalism is dead? In the past, it was found that the rich do quite well during a depression…

    • Michaela says:

      I wrote another post about this. Capitalism is dead because the very idea to operate for profit does not work. Capitalism is based on competition, greed and recklessness and it creates – competition, greed and recklessness. Just look at the completely elusive value that has been created by the stock-market – and how it disappeared again. And now we are waking up to the negative aspects of a system that has created wealth and progress, but also enormous inequalities, destroyed nature and wasted resources.

      Communism by the way, is dead too. We are finally ready for something else now.

  3. fatima says:

    Yes to this. “They” talk about cultural East vs West battles, religious battles but the real battle is going to be here between the Ayn Rand capitalistic vision of the world (up with individualism meaning ruthless arrogance of the few) and a new world where Selfseeking selfishness is not the business model.

    This is Sekem, a broardbased Egyptian business that has been working quietly in Egypt for the last 40 or so years, not for political change but for broad social and economic change. It is a fascinating and amazing success story….so far.

    http://www.sekem.com/english/PR/press/default.aspx

    I was unable to access the English statement but the German one is still up. I hope that you can read the statement about what has just happened in Egypt.

    For people like us……I believe that those of us who are out in the world….living our ordinary lives it behooves us to participate with if nothing else, our conscious support of any glimmer of life affirming initiatives even as ordinary imperfection is perceived …an Oprah, a Barak Obama, Sekem, Micro banking and even multinational companies like Dannon Yogurt whose CEO supports these efforts.

    Thank you again for this amazing broad based magazine, our personal NPR. lol
    Hope you find this interesting….if the URL has not been completely dismantled.

    Fatima

  4. Michaela says:

    Oh, thank you for that link Fatima ! Sekem….Really interesting.

    Well, we all do what we can…

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