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May 17, 2011

Comment: Paul Ryan's plan is a path to ruin

The line between stupidity and courage is a fine one indeed

In April, Congressman Paul Ryan, chairman of the House Budget Committee, unleashed his ‘Path to Prosperity’ on an awed commentariat, who respectfully intoned words like ‘courage’ and ‘sincerity’ about him – and it. Even The Economist fell into line. ‘It’s the first sign of courage from someone with actual power over the budget,’ the magazine pontificated.

Alas, it is sometimes difficult to tell the difference between stupidity and courage. To propose cutting the deficit by reducing taxes while maintaining record-level defense spending is indeed ‘brave’ – that’s how this column hailed George W Bush’s similar attempt a decade ago to run a couple of wars and reduce taxes simultaneously. But that was ironic: the current grovelers appear to be serious.

Ryan’s ‘path’ uses the intensely ideological Heritage Foundation to justify its claim that tax cuts would bring down unemployment to levels not seen since the Korean War. Wiser commentators recall that when these experiments were tried under Ronald Reagan and Bush the Younger, they led to ballooning deficits and an economic crisis mitigated only by defense-based spending booms, despite Heritage’s predicted new Golden Age.

Indeed, the Congressional Budget Office, often cited by Ryan, noted that continuing the present tax cuts would leave the deficit growing.

In the real world, taxing the affluent at Reagan levels would pay down the deficit quickly. Cutting defense boondoggles and agricultural supports would help further. Lifting the ceiling on social security contributions would ensure solvency pretty much until the Second Coming.

But the Ryan path is not just about numbers; it’s an ideological distillation of what Bush the Elder called ‘voodoo economics’. Its goal is not to balance the budget but to attack government. The savagery of its cuts on ‘non-security’ spending aims to eliminate government as a socioeconomic actor, reducing US society to a Hobbesian state.

In the midst of an economic crisis, this would also eliminate the ability of government to provide the stimulation the country needs, never mind invest in the crumbling public infrastructure that has been so long neglected. Corporate America is awash with cash, but it is neither hiring nor investing. Tax cuts giving it more dollars won’t tempt it.

Ryan et al should be challenged on their attachment to a repeatedly failed ideology. The core premise is that a free market, unhindered by unions and governstiment regulation and relieved of taxes, will make industry more competitive. And so it has – in Germany and South East Asia, where industry is prospering from US mistakes.

Unhampered by Chicago scholastics, they are paying taxes and offering socialized medicine; yet they are both more competitive and managing to increase living standards and productivity simultaneously.

Alienating agriculture, the elderly, unions, educators and others should make this plan the longest suicide note in Republican electoral history. If Ryan still gets a majority, it could be the longest suicide note in a great power’s history since the Romans had the bright idea of letting the Goths do the fighting for them so they could eliminate taxes for the rich.