Five Problems with the Romney-Ryan Budget

Robert Reich has a new video out on YouTube with the super-fast cartoon drawing technique that has become so popular these days. Reich, if you don’t know him, is a Professor of Public Policy at UC Berkeley and the former Secretary of Labor in the Clinton administration. He was named by Time magazine as one of the top ten cabinet secretaries of the twentieth century. The video breaks down the Paul Ryan budget plan, now known as the Romney-Ryan budget plan, point by point, explaining why it would be, in short, a disaster for this country. First, says Reich, the plan would boost unemployment, “because it slashes public spending for next year and the year after, when the economy is likely to need a boost, not a fiscal drag.” He likens it to the austerity programs that have been so unsuccessful in Europe. The result would be 4.1 million less jobs created over the next two years, thus derailing any hope of economic recovery. This idea is, of course, contentious, with conservatives who love to go on about how slow the recovery has been (without mentioning their role in causing the meltdown), how inefficient the government is at distributing prosperity, and, with their typical blame-the-victim mentality, how the whole thing was the fault of excessive borrowing by the middle class, rather than the greedy transgressions of a dysfunctionally deregulated Wall Street. Private sector companies might have some efficiency advantage over government agencies, but much of that advantage ends up being converted into executive bonuses and stock dividends. Far more important is the fact that private companies have no explicit interest in the public well-being, which is the government’s core mission. The result of that shift in priority towards self-serving, short term, annual-report-driven interests should be apparent to anyone who hasn’t slept through the past couple of decades. Reich makes a powerful case in his book Aftershock, that a primary cause of the recession was rooted in the fact that the American middle class earnings have not kept pace with other indicators of economic growth, largely due to government policies that are skewed towards the wealthy. To a certain extent, the growth we have seen, in corporate earnings and stock prices has come at the expense of the middle class, who have seen wages stagnate or their jobs shipped overseas. As a result, the middle class has now exhausted the coping mechanisms of: first, sending women out to work, then, working more hours, and finally, borrowing to the hilt. Now that the borrowing bubble has burst, the only option remaining is to cut back on the kinds of discretionary purchasing that an economic recovery depends on. Second, “the Ryan plan would take from lower income Americans and give to the rich, who already have the greatest share of total income and wealth in almost a century.” His plan would raise taxes by $500 annually for middle class families earning $30-40,000 while reducing taxes for hyper-earners by as much as $500,000. Not only is this patently unfair, but, as Reich points out in Aftershock, it is highly damaging to the economy. Why? Because, while middle class folks tend to spend most if not all of their after-tax income, thereby stimulating the economy, super-rich folks can only buy so many luxury homes, yachts and private jets. After a while, a big chunk of their fortunes end up in tax-sheltered foreign investments, where the money stagnates, doing nothing for our economy, which depends on the flow of capital to grow the economy. Third, Ryan wants to replace Medicare with a voucher system. These would provide a lump sum to seniors, regardless of their medical needs or increases in health care costs. In other words, the risk is shifted from insurers onto the people in need, and what used to be a form of security for the elderly and disabled, will become a like-it-or-not high stakes gambling game in which there are sure to be some big losers. Fourth, Romney wants to increase funding for the military while cutting support for education, infrastructure and basic R&D. Not clear why, with two wars ending, we need to increase defense when we already spend more than just about everyone else combined. Is that just something that all Republicans automatically do, regardless of what kind of shape the economy is in? Or was that item inserted by the Neocons, who have been waiting in the wings for the past four years, licking their chops at the thought of a Romney victory so that can move back in and immediately provoke a war with Iran? Finally, this supposed masterpiece of fiscal conservatism won’t even reduce the deficit. The non-partisan Center for Budget and Policy Priorities estimates that Ryan’s budget, in which low-income families would bear the brunt of the cuts, would actually increase our national debt to 175 percent of GDP by the year 2050 (it is around 100 percent now). By that time, the continued willful ignorance about climate change on the part of politicians like these two will have just about done us in anyway, but that’s another story. In summary, these are Reich's reasons why this budget plan must be avoided at all costs. I do not believe this is mere partisan zealotry on Reich’s part, but rather genuine fear for what these two men, if elected, would do to our country. One final note: given his disdain for all forms of government spending (with a few exceptions), Paul Ryan, if asked about his hometown of Janesville, Wisconsin, might find himself in a difficult position. You see, Janesville, after being beaten down like all the rest of Middle America, is thriving once again thanks to generous federal stimulus funds. A new innovation center, a medical technology center and a massive highway project, all heavily government subsidized, are creating jobs and helping this town get back on its feet, revealing the lie of Ryan’s position while reinforcing everything Reich said in his video. People might be frustrated with the way things have gone these past few years and want a change. But not all change is for the better. And if the only alternative to our current administration is a return to the kind of economic policy that created the recession in the first place, then perhaps this would be a good time for people to vote with their heads and not their tempers. Otherwise, we could end up with a budget like this one, which, unless you're a billionaire, is not going to make things better for you. Watch the video here: http://youtu.be/cO1F7EcGFAc [Image credit: patentboy: Flickr Creative Commons] RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle. Follow RP Siegel on Twitter.