Archive for March 28th, 2012

March 28, 2012

Paul Ryan, Establishment Delusions and a Simpler Economic Plan

Dick McDonald

Like many Republicans I thought Paul Ryan was a serious financial savior that was going to head the country back to financial sanity.  Today I got a whiff of what he is selling. On Chris Wallace’s Sunday talk Ryan proudly said his plan would balance the budget in 20 years whereas Obama’s plan would never balance the budget.   What? 20 years! Right 20 years of declining deficits meaning no reform of entitlements?  Please spare me.

Parts of his plan were even worse.  It is his plan to annually cut $1 trillion in tax “loopholes” to finance reducing the tax on the rich to 25%.  I had heard this talking point before but never found out which “loopholes” he planned to cut.

He then really startled me. He said that wasn’t his responsibility.  He is the Chairman of the Budget Committee and deciding what specific deductions to cut would be the “future” job of the Ways and Means Committee. That may cut it with you it surely doesn’t cut it with me. Everyone is backing a plan its author is not giving the specifics on. Whew.

Wallace then tried to get him to give us an idea of what loopholes he would cut to generate $1 trillion in annual savings.  Wallace listed the following from the Congressional Research Service:

$164 Billion                  Employer-Provided Health Insurance

$163 Billion                  Employer-Provided Pension

$100 Billion                 Home Mortgage Deductions

$ 71 Billion                   Raising Capital Gains Rates

Ryan agreed that all of these are on the table without endorsing any particular one.  That would be done in open committee hearings with the public invited.

Here are the big problems Republicans are ignoring.  If they cut the deductions for employer-paid benefits – health and [pensions – the employers will terminate those plans which in turn will generate a big “hidden tax” on employees. If they cut home mortgage deductions any more than they already have the ailing real estate business will get measurably worse and activity reduced.  If he raises capital gains taxes he will cut the flow of new investment capital for new ventures that create jobs.

Assuming for a second he could plug these “loopholes” the employers will change their plans and still benefit from the reduced 25% rate. You see tax men have dealt with political changes in the tax code for years.  We just change the way our clients do business to legally avoid burdensome tax bills.

Politicians don’t get it or more probably deceitfully mislead the voters.  They can’t clean up their mess with more of the same. Ryan’s premise doesn’t meet the smell test.  He is going to reduce tax rates to 25% and 10% to “SPREAD OUT THE TAX BASE AND MAKE IT FAIRER

What a pile of manure that is. If we reduce the top rate and still collect the same amount of taxes only an idiot won’t realize that taxes on the middle-class will go up to meet the shortfall. The reference to “make it fairer” is an obvious appeal to those who pay taxes and a slam to the 50% who pay no income tax. The Democrats will scream that Republicans are raising taxes on the poor and middle-class and they will have a propaganda coup with this mistake.

Unfortunately so many conservative pundits and Presidential candidates have been endorsing Ryan’s unspecified and completely blue sky tax reform. I believe the Democrats will have a field day scaring everyone with what Ryan’s plan could do.

On top of that his fantasy about the Ways and Means Committee coming up with $1 trillion in annual tax cuts for “loopholes” is just loopy. If they are bent on committing political suicide expect the voters to reject them in November or in the 2014 at the least.

For several years I have been promoting a way to make the Federal government smaller, stronger and smarter by providing jobs for the many Federal workers who will need them when the bureaucracy is dismantled, immediately create millions of jobs by introducing a $1 trillion a year new capital infusion into the start-up market, ensure an affluent retirement and the best medical care on the planet for the elderly, immediately reduce our over $130 trillion funded and unfunded debt by over $100 trillion as well as make it feasible for women to stay home and rear the kids and still retire with a million-dollar nest egg which in turn will reverse the “global winter” together with fifty other benefits.

The plan I propose has many carrots and few sticks – just what every day Americans need.   If you have any interest, go here.

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