A Plan to Fix the Budget, or Blind Faith in Fairytales?

The first thing you notice when looking at House Budget Chairman Paul Ryan's (R-Wis.) budget proposal -- "The Path to Prosperity" -- is how great it will be if it passes. The plan promises to balance the budget by 2015 with lower taxes, higher employment, and higher wages, and puts us on a path to eliminate the national debt entirely. It presents pictures like this, which, come on, just makes you want to smile and hug the guy next to you:

Source: Ryan proposal.

"Will this be remembered as the Congress that did nothing as the nation slouched toward a preventable debt crisis and irreversible decline?" the plan asks. "Or will it instead be remembered as the Congress that did the hard work of preventing that crisis -- the one that chose the path to prosperity?"

How do you argue with that? Long live the Path to Prosperity!

Yet dig into the details of the proposal, and you realize that it's an exercise in rosy-eyed forecasting, and what can only be described as a blind faith in fairytales.

The bulk of Ryan's plan rests on two pillars:

  1. A proposal that eliminates Medicare for those turning 65 in or after 2022, replacing it with a voucher program.
  2. The assumption that the economy will recover at a literally unprecedented rate over the next few years, and remain there forever.

An unrealistic rebound
Let's start with the economic recovery. One of the most important variables of any budget forecast is the unemployment rate. When unemployment is low, tax revenue rises as more people pay into the system. When it's high, spending on unemployment benefits and food stamps surges. Today's deficits are largely due to high unemployment, and the surpluses of the early 2000s were largely due to low unemployment. That's how these things work.

Our current unemployment rate is 8.8%. The 60-year average -- what many economists consider close to a "natural" rate of unemployment -- is 5.8%.

Ryan's plan skirts around that average. It assumes that unemployment will fall to 6.4% next year, 4% by 2015, and stunningly, 2.8% by 2021 ... where it will stay forever.

Source: Federal Reserve, Ryan proposal, author's calculations.

The only time in modern history during which unemployment has fallen to 2.8% was an eight-month period in the early 1950s -- a unique time when the U.S. was one of the only major nations not reduced to rubble by World War II. Ryan seems to have looked back at history, found the lowest unemployment rate, and declared it the new normal.

Here's another interesting note about that 2.8% unemployment figure. When the Heritage Foundation, the conservative think tank tasked with calculating and publishing Ryan's proposal, first released documents outlining the unemployment projection, bloggers and journalists went berserk pointing out how unrealistic the assumption was.

A day later, poof. All references to the 2.8% figure vanished from the Heritage Foundation's documents. Gone. The budget forecast figures didn't change, but an explanation of the unemployment projection used to calculate those figures vanished. Several observers (including myself) saved a copy of the original fact sheet, the source of the chart above.

I called the Heritage Foundation to ask why they purged references to the unemployment projections. They said that while the original unemployment projection "seemed OK," they were reviewing their assumptions after receiving several calls and emails questioning the figure.

Perhaps a 2.8% unemployment rate could be justified if you think the drivers of Ryan's proposal -- lower taxes, lower government spending -- will create unprecedented prosperity. But it's hard to see how this argument fits the plan. Under Ryan's proposal, both spending and taxes as a percentage of GDP will remain above average every year from now until 2021 -- the year that Ryan projects unemployment will fall to 2.8%, or almost half the historic average.

Moving on ...
An interesting table appears in a Congressional Budget Office report scoring Ryan's plan. Under current law, the CBO shows that public debt as a percentage of GDP is forecast to hit 67% by 2022. Under Ryan's plan, it would top 70% that year. As Matthew Yglesias of ThinkProgress noted, short-term spending cuts "don't compensate for the tax cuts that Ryan proposes, so relative to current law, debt goes up."

In the long term, Ryan does get serious about reining in spending, putting a bull's-eye on the big budget sinkhole: Medicare.

The plan proposes to tackle Medicare by eliminating it for everyone turning 65 in or after 2022, while keeping it in place for baby boomers. The younger group would instead receive vouchers to pay premiums on private insurance during their golden years. The vouchers would grow at the rate of overall inflation and age, not premium prices. Since health care costs rise faster than overall inflation (and CBO forecasts they will actually grow faster under a voucher system), the vouchers would eventually fall far short of covering premiums. After that, you're on your own.

This would no doubt cure Medicare's fiscal time bomb. But it's miles away from being politically feasible. Think about it. Ryan's plan would create two groups: Baby boombers with lavish Medicare plans, and everyone else, whose retirement health care will largely be paid out of pocket, and whose taxes would largely support the baby boomers' Medicare. David Leonhardt of the New York Times made a great observation here: Ryan's plan "asks for a whole lot of sacrifice from everyone under the age of 55 and little from everyone 55 and over."

Born one year, and you're set. Born the next, and face a retirement of daunting medical bills. There's no chance voters would put up with that. You thought the "keep your government hands off my Medicare" signs were bad under Obamacare? Wait until Ryancare.

Finally, Ryan's plan proposes to cut non-defense discretionary spending from 12% of GDP today to 3.5% by 2050. Everything from the IRS to the Department of Justice would effectively face a 71% budget cut. How would this work in practice? The CBO wonders, too. "The proposal does not specify the changes to government programs that might be made in order to produce that path," it writes.

As one analyst summed up the proposal, "Their cure for this cancer seems to be just, 'less cancer.'"

And, I'd add, a strong belief in fairytales.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Conveniently, there weren't any. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On April 07, 2011, at 5:05 PM, Melaschasm wrote:

    Are government spending cuts (or in this cases, a reduction in the rate of growth) fairytales?

    Probably, but slowing spending is the only possible way to avoid bankruptcy or hyperinflation.

  • Report this Comment On April 07, 2011, at 5:12 PM, gregbledsoe wrote:

    So Motley Fool just lost my respect and Housel made my "ignore" list. If you care why, here:

    Where's your criticism of the proposals that add 1.4 trillion to the debt? Where's your criticism of fighting over scraps of $61 billion, essentially a rounding error in 3.8 trillion? Is he using hyperbole and questionable forecasting? Sure. That's how politicians do things. Cutting $500 billion from Medicaid to make Obama-care a deficit reducer?

    Suuuuure. I got a bridge to sell you too.

    So your solution is to keep on spending more and more? That government *really can* be all things to all people even though that nanny-state model is failing everywhere tried?

    And some land in Florida with that bridge.

  • Report this Comment On April 07, 2011, at 5:17 PM, dapperdelta wrote:

    Its easy to throw grenades. Its hard to build something to have grenades thrown at.

    Ryan's plan isn't the best plan. Its the only plan. What's yours Housel?

  • Report this Comment On April 07, 2011, at 5:21 PM, bigkansasfool wrote:

    It's a nonsensical proposal from a joke of a public servant. It essentially defunds all non-military spending and takes those "savings" and gives it to the wealthy in the form of a massive tax cut to the top income bracket.

    It's so unreal that I started laughing when I was reading it, then then you realize this was produced by someone that holds an important position in the government and it makes you very sad.

    The budget proposal is essentially the anti-robin hood budget, it takes from the poor and average citizens and gives it to the uber wealthy.

  • Report this Comment On April 07, 2011, at 5:28 PM, TMFHousel wrote:

    thanks everyone,

    <<"Where's your criticism of the proposals that add 1.4 trillion to the debt? >>

    Paragraph 13 (under "Moving on ...)

    <<Where's your criticism of fighting over scraps of $61 billion, essentially a rounding error in 3.8 trillion?>>

    I think you're thinking of the plan to keep the govt open for the rest of 2011. This article is about paul ryan's long term plan. Two different topics.

    <<Ryan's plan isn't the best plan. Its the only plan. What's yours Housel?>>

    I'm not the chairman of the house budget committee. Ryan's responsibility to create a realistic plan is larger than mine. But since you ask: http://www.fool.com/investing/general/2010/10/29/how-to-talk...

  • Report this Comment On April 07, 2011, at 5:36 PM, aheacock1 wrote:

    What this article, and parties on both side of the budget debate, completely ignore is that SOMEONE will have to make sacrifices to fix our budget problems.

    Articles such as this one as well as talking-head commentary focus on subjective beliefs about issues in a vacuum, which is not the issue we face. OF COURSE everyone would like to pay less taxes than they currently do. Just like it is obvious that providing government medical, retirement, and unemployment benefits to those who need them is unlikely to draw complaints from anyone who would ever receive them.

    But saying, as this article does, that a plan to fix a runaway debt problem is wrong because "fewer people would get medicaid" does no more to help the situation than say "taxes are bad" or "free healthcare is good." Of course they are.

    The task facing this country is to prioritize and sacrifice, because we can't keep having both tax cuts and increased government programs. Inevitably, every American citizen will have to make sacrifices to climb out of the hole we've dug - just like anyone who finds himself up to his eyeballs in credit card and HELOC debt after a few years of living for the present.

    Our country is in the red every year. Our recent fiscal policy as been to cut revenues and increase expenses, hoping we can use debt as leverage to grow our way out of the problem. On a business website that evaluates stocks, the unsustainability of this plan should be obvious to all.

    To say that Ryan's plan, calculation inconsistencies granted, won't work because it would require Americans to sacrifice by saving for their own healthcare in retirement - 11 years in advance, presupposes the "fairy tale" that fixing our debt problem will be painless. And for those who believe that, their dream that will soon become a nightmare if we don't take action now.

    Since Mr. Housel doesn't think this plan proposes a realistic solution to our debt problem, I would love to hear what solutions he would offer that are better, rather than what he thinks is wrong with the only responsible solution anyone has taken the courage to offer.

  • Report this Comment On April 07, 2011, at 5:39 PM, Gardenpilot wrote:

    So raise taxes on the rich. If turnips are needed, one goes to a turnip farmer. For money, one goes to those who have it. The tax rates in this country are ludicrisly low. And those who complain about civil servants should try doing without them. I like having parks, police, medical and fire departments!

  • Report this Comment On April 07, 2011, at 5:41 PM, TheDumbMoney wrote:

    I very much agree with all of this, except for the following statement:

    "Since health care costs rise faster than overall inflation (and CBO forecasts they will actually grow faster under a voucher system), the vouchers would eventually fall far short of covering premiums. After that, you're on your own."

    I don't even know that I *disagree* with it. I would just point out that, arguably at least, one major reason health care costs rise faster than overall inflation is that medicare creates so few incentives for patients to limit their intake (and doctors to limit prescription of) so many merely-marginally-useful proceedures, particularly near the end of life. And it creates absolutely zero incentive for patients to live healthier lives, which results in fewer procedures down the road. The purchase of private insurance by patients, using vouchers, would allow people to choose, and pay for, their level coverage, which would go a long way to containing costs. And the countrywide knowledge that we won't all be able to rely on Medicare to keep us patched up in our sixties and beyond, no matter how much we abuse our bodies, would arguably have a positive incentive/cost impact as well.

  • Report this Comment On April 07, 2011, at 5:41 PM, TMFHousel wrote:

    <<To say that Ryan's plan, calculation inconsistencies granted, won't work because it would require Americans to sacrifice by saving for their own healthcare in retirement - 11 years in advance, presupposes the "fairy tale" that fixing our debt problem will be painless.>>

    I don't think that's true. Of course the fix will be painful. But proposing a solution that ignores a political dynamic (one group w/ medicare, another w/out) is, I think, a fairytale.

    <<Since Mr. Housel doesn't think this plan proposes a realistic solution to our debt problem, I would love to hear what solutions he would offer that are better>>

    From previous comment: http://www.fool.com/investing/general/2010/10/29/how-to-talk...

  • Report this Comment On April 07, 2011, at 5:42 PM, TheDumbMoney wrote:

    Of course maybe the CBO forecast takes that stuff into account, but some of it, like incentives thirty years down the road, seems pretty hard to model.

  • Report this Comment On April 07, 2011, at 5:43 PM, TMFHousel wrote:

    <<I don't even know that I *disagree* with it. I would just point out that, arguably at least, one major reason health care costs rise faster than overall inflation is that medicare creates so few incentives for patients to limit their intake>>

    I think that was actually CBO's point. It writes:

    "CBO projects that total health care spending for a typical beneficiary covered by the standardized benefit under the proposal would grow faster than such spending for the same beneficiary in traditional Medicare under either of CBO’s longterm scenarios""

  • Report this Comment On April 07, 2011, at 5:51 PM, TheDumbMoney wrote:

    Yar, see my second comment. I usually trust the CBO, I just don't know how you model incentives thirty years down the road, while I do know how the knowledge of having Medicare available has caused older members of my family to behave. I'm usually a pretty big fan of the CBO though, so as much as I'm willing to take anything on faith I'm willing to accept they are making the right call.

  • Report this Comment On April 07, 2011, at 5:53 PM, DukeTG wrote:

    Did any of you actually read Morgan's article? His point was not that we don't have to make sacrifices. Obviously we do. The point was that Ryan's budget proposal is based on ridiculous assumptions and places the onus of sacrifice on young people, while asking nothing of seniors (who just happen to vote more than young people), which means it's not a serious option.

    As a 31 year old, I have zero interest in paying high payroll taxes so my parents can enjoy Medicare as it is, and then get handed a voucher of dubious value when I'm ready to retire (sorry Mom).

  • Report this Comment On April 07, 2011, at 5:59 PM, mikepriz wrote:

    We cannot continue to spend money we don't have. We cannot continue to print money. There are only two ways to stop:

    1. The government must have more money to spend through higher taxes which kill industry and which eventually kills tax income, or more money through a lower tax policy that stimulates growth. It is impossible to cut taxes to the so called "poor" because they do not pay taxes. So cut out the liberal crying about how it will hurt the poor more than the rich.

    2. The government must cut expenditures. If the government cuts expenditures, who will get hurt the most? - the so called "poor" who's votes have been bought and paid for.

    I have an idea. Why doesn't the government quit taking my money to buy me health care and let me buy it myself? Why doesn't the government quit taking my money and let me pay for my own retirement? Why doesn't the government get out of our lives and quit rewarding stupidity? - which is what Ryan is trying to suggest. Housel complains that one's age determines where the cuts are to start. Delaying implementation is is an old political trick. Just like Obamacare will not start until after the next election.

  • Report this Comment On April 07, 2011, at 5:59 PM, TheDumbMoney wrote:

    DukeTG, I'm 31 also. While I think there needs to be shared sacrifice, I also think you should read up on the legal concepts of "reliance" and "estoppel", and then appy those concepts to people who are 60, versus to those who are 30. I have many problems with Ryan's plan, one of which if that if you are going to reduce benefits it has to be scaled gradually, as opposed to having a cut-off date, like he does, but that doesn't mean it is fair to share the pain equally.

    Also everyone should keep in mind that Ryan's stupid plan is not even an actual budget proposal for the House! It is just a budged resolution; it's grandstanding.

    Okay I'm starting to do my usual blowhard thing now so I'll sign off now.

  • Report this Comment On April 07, 2011, at 6:03 PM, xetn wrote:

    Our government, like most others, tax and spend and when they have that power, they will keep doing it as long as the ability lasts. But this is only one of the ways that allow the government to spend, the others being the Feds ability to create money out of thin air and selling treasury debt to any fool who believes they will get their money back (no loss of purchasing power).

    I really don't think anything will fix the current problems with huge debt and huge deficits. There is really no incentive for the government to ever cut spending. As a matter of fact, they continue to believe that the way to prosperity is government spending and inflating the money supply.

    So, the problem will ultimately correct itself when the dollar crashes via hyperinflation. (When the fiat dollar reaches its true intrinsic value of zero).

    Think Zimbabwe.

  • Report this Comment On April 07, 2011, at 6:10 PM, tbird619 wrote:

    The answer has been know for years, and it was offered in a movie. Soylent Green. At some point we are going to have to face the fact that in our declining years we consume more resources than what we produce. Of course, the same could be said for politicians, lawyers, and union leaders.

  • Report this Comment On April 07, 2011, at 6:13 PM, nswanberg wrote:

    It is time to ration health care with a single payer system that we all have to live by or what we are doing will bankrupt the nation.

    Health Care Rules

    I favor a single payer US government health care system financed with a 5% tax on all income. Yes we have to ration health care because if it is free you want as much of it as you can get to extend your life and it will in and of its own right bankrupt the nation. I am a baby boomer and I see this coming. It is a tough choice but we have to make it.

    A single payer system eliminates the cost of paper work and administration and the profit incentive for insurance companies to not meet their obligation coverage. All the government has to do is keep track of how much is collected, distributed and each citizen's account. Your finger prints will set up your health care account.

    The rules.

    You get a maximum of 500 thousand dollars worth of health care in your life time. After that we give you drugs to ease the pain of death if they are needed. This makes you a consumer of health care without government interference or control. You can go to any doctor, dentist, eye doctor, clinic or hospital that will serve you.

    Every year we collect less than we pay out the benefit cap is lowered.

    Protecting against fraud and false medical claims will have to be policed by the scrutiny of a random medical audit task force. No one will ever force you to have a swine flue vaccination.

    No private health care insurance will be allowed. If you have used your benefits you may purchase health care out of pocket. What can be more fair than that?

    Members of Congress and the President will use the same health care system.

    The government will not pay for abortions of convenience.

    Military veterans and their immediate family (wife and natural born children) will receive full benefits for their life time provided they meet the below listed eligibility criteria. (No, I did not serve, but I respect and appreciate those who have!)

    If you are an illegal alien and you show up for health care at a hospital you get sent back to your country of origin.

    If you are injured in an accident and negligence can be proven, you may bring a law suit against the negligent individual and have their remaining health care benefits transferred to your account that are equal to the cost of your treatment required because of the accident.

    If you are of the dippy hippie nicotine fiend generation that finds it cool to use tobacco products you made your choice and your health is not important to you anyways – no health care for you! This will piss a lot of people off but then I never possessed the type of intelligence it takes to engage in that sort of a self destructive habit. Don't ask me to sacrifice for your addictions.

    Alcoholism is not a disease it is a choice. No health care for you!

    If you have THC, cocaine or opiates in your system you are already self medicating – no health care for you!

    If you go the White Castle more than once a week that is just plain being inconsiderate of other patients. No health care for me!

    If you are in a weight range that classifies you as medically obese – no health care for you! You made your choice. Food is more important than your health. All you have to do to lose weight is eat less.

  • Report this Comment On April 07, 2011, at 6:25 PM, ynotc wrote:

    Morgan,

    Great job on exposing the shennanigans.

    Ryan's job is to write a budget now while he is still in office not for 10 years from now.

    I wish these guys (congresspeople who are constitiutionally tasked to do just that) would just put out a budget for the upcoming year and vote up or down on it. The president and senate then have the chance to vote for or against and sign or veto.

    I am sick of all of the political posturing on both sides. In 2005 our budget was 2/3 of what it is now and no elderly or children starved. We should go back to similar levels now and live with the cuts.

    I bet if we cut all departments across the board equally that they would find a way to do what they are tasked to do.

    If we just simplified our tax code to a flat tax with no loopholes we could get rid of significant personnel in the IRS as collections and compliance would soar.

  • Report this Comment On April 07, 2011, at 6:30 PM, Eerkes wrote:

    nswanberg, dumbest thing i have ever heard -- $500,000 cap, really? Talk about heartless

  • Report this Comment On April 07, 2011, at 6:52 PM, dbisc1 wrote:

    Fairytales?, You know you can do better than that

    Fool. Your name being appropriate for your hip pocket judgements! This country is in serious debt and I never see any suggestions from the ones that got us there. I also never see a plan to do anything about it other than continuing to tax & spend, and print monopoly money to pay for it, while it destroyes the dollars value and credit ability! At least he has a plan to do something that will work. Not perfect, and probably needs adjustments in many areas, but a task this big is not simply while trying to please all involved. At least theres a starting point to study.

  • Report this Comment On April 07, 2011, at 6:53 PM, mlgilbert wrote:

    <i>The plan proposes to tackle Medicare by eliminating it for everyone turning 65 after 2022, while keeping it in place for baby boomers.</i>

    Not quite right. It should read everyone turning 65 in 2022 and later.

    Of course, my birthday is in 1957 so unfortunately it is not just semantics.

  • Report this Comment On April 07, 2011, at 6:57 PM, TMFHousel wrote:

    ^ Good catch. We'll get that changed. Thanks!

  • Report this Comment On April 07, 2011, at 6:58 PM, buddylee59 wrote:

    As someone who is blessed/cursed by being on the "lavish" side of Rep. Ryan's Medicare dividing-line, I would like to submit the following:

    The changes in Medicare have to occur NOW. The demographic bulge of the Baby Boomers is placing an inordinately-onerous burden on the coffers of the US, and will be for the next forty years.

    I understand the congressman's desire to absolve a significant voting bloc of its responsibility, but respectfully decline the offer.

    Unfortunately, the Ryan plan is little more than the 'yang' to ObamaCare's 'yin'; neither addresses the core issue of entitlement reform, which may never be responsibly addressed by individuals clamoring for votes and large sums of cash from interested corporations.

    "When the people discover they can vote themselves money, that will herald the end of the Republic."

    I believe Benjamin Franklin said this, and unfortunately, it appears he may have been correct.

    Who will refuse to accept Medicare when they become eligible? Today, it would be foolish to do so. I agree with Morgan that more serious proposals need to be put forth, but I believe that real change can only come from the bottom up. It's up to us to demand better efforts from our leaders. Simpson-Bowles is the beginning of a serious conversation, but it's only the beginning. Everyone, especially the Baby Boomers, should realize that we need to share the lifting. We've got to refuse to accept pandering cynicsm, even when it's coming from our side of the aisle. That's a viewpoint I am gratified to find at the Motley Fool, and precious few other places.

  • Report this Comment On April 07, 2011, at 7:15 PM, rsmcfaul1971 wrote:

    I believe that we Americans must come to the

    understanding that any and all medical care for

    must and should be paid for by ourselves. Either via insurance (paid for by myself) or out of my own pocket. The more you pay the more coverage you get.

    Now, if we want we can set some base level of

    care coverage for a set fee, that's a smart thing and a reasonably just thing. But...everything else is 'you pay for it'.

    We are living in a fantasy thinking someone else

    will pay for our retirement to death medical costs.

    This means that I must accept that I should probably work longer into older age to get my

    insurance paid for by my employer. If I retire early

    I pay for it myself. Or, I work my butt off (or get lucky) and retire earlier with lots of wealth. Or, I take a chance and stop paying insurance and hope the gods don't look unkindly upon me.

    If I get a low cost / low coverage insurance plan and come down with cancer and need health care that costs a million dollars. I need to come up with that million dollars myself. If I can't...then I die.

    And that is the core of the conflict here. Americans (as do other people) are desperately trying to delay death and think that the more medical care they get the longer they will live.

    In some cases this is true. In others not. Instead of a quick death you get perhaps a slightly slower death but at a significantly higher cost. In other cases medical care does wonders and saves and extends life for a relatively good price.

    I believe once we accept that we are responsible for our own medical costs in full or above some minimum standard the better off we will be. Does that mean life is unjust to the medically unlucky. You bet!

  • Report this Comment On April 07, 2011, at 7:23 PM, NOTvuffett wrote:

    -1

    I expect more from the Fool than this tripe.

    I won't even waste my time to flesh this out.

  • Report this Comment On April 07, 2011, at 7:41 PM, n8larson wrote:

    Good article, but my biggest problem with the Ryan plan is that it cuts taxes on the wealthiest AGAIN--the WRONG direction for revenue in ANY realistic balanced-budget plan. What was so bad about the 39.6% top marginal rate we had for so long? It didn't 'kill business' then, why would it now? Threats of doom and gloom from wealth and business interests ring hollow--they're just trying to keep more of their money than they ever did in the past. I get their motivation, but they're ruining the economy with their greed. Go back to the tax policy in place when the country was prospering and (at least closer to) solvent, THEN talk about spending cuts.

  • Report this Comment On April 07, 2011, at 7:47 PM, CaptainWidget wrote:

    If the US Federal Government were a motley fool rated stock, it'd be 1 star. Massively in debt, losing money every year, producing an inferior product, and losing focus of the core business model.

    I can't believe there's so much optimism, even from the STAFF of TMF, that tweaking a few numbers and shifting around a bit of yearly gross income, that we'll be back up to 5 stars in no time.

    The plan sucks, let's be honest. But it's the only plan going in the right direction. Less spending and more personal responsibility is the only way this country crawls out of the hole. If you honestly think that price indexing SS and rationing medicare is going to fix this country then I'm shorting all future articles written by you.

  • Report this Comment On April 07, 2011, at 7:48 PM, joker1948 wrote:

    Paul Ryan's budget is similar to the Voo Doo budgets of the Reagan adminstration (if you can honestly use that assertion) WHICH REQUIRED 11 tax hikes and yielded a $3.3 million national debt. VOO DOO

  • Report this Comment On April 07, 2011, at 7:51 PM, joker1948 wrote:

    I am sorry $3.3 trillion national debt. My fingers loss their sense of direction

  • Report this Comment On April 07, 2011, at 7:51 PM, TMFRoyal wrote:

    Hi, Morgan,

    Thanks for the rebuttal of Ryan's feckless plan.

    Jim

  • Report this Comment On April 07, 2011, at 7:56 PM, ETFsRule wrote:

    I understand that politicans always exaggerate things, but this took it to a whole new level. Seriously, just look at the projected drop in unemployment for 2012. Come on.

    The numbers were so absurd that instead of defending them, Heritage simply took them down without saying a word, hoping that no one would notice.

    The sad thing is that conservatives seem to be giving them a pass... when in reality, conservatives and republicans are the ones who should be the MOST outraged over this scandal.

    If you agree with the political ideologies of Heritage and Ryan, how can you just accept it when they lie to you and insult your intelligence? Do you really want people like this on your side?

  • Report this Comment On April 07, 2011, at 8:14 PM, richsue3 wrote:

    When I lay out a PLAN to build a room on my house - I have NO FINAL ending needs addressed. It is a plan that I work from and make adjustments as I go along. Some see the Obama Care plan being just that and we are expected to accept it - so why then wouldn't we accept Ryan's plan? Too many people SIDE with their own without looking at the big picture.

  • Report this Comment On April 07, 2011, at 8:15 PM, tobernator1000 wrote:

    Not all taxes are bad. Not all government spending is bad. It is possible to tax a country into oblivion, but it is also possible to not provide the services that keep a country functional.

    Roads are an obvious example. No private company would build the road we have and the roads we need to keep the country running smoothly. Only all of us together, pitching in for the common good even if some would benefit more than others, would build the system of roads we have today.

    The FDA is another great piece of government work. As we saw when the private banks were legitimized by the private credit rating agencies, private entities will not police themselves. The food industry gave us rotten meat and bread, and snake-oil salesmen sold us poison that we could not tell from a legitimate cure. So all of us together, pitching in for the common good even if some would pay more than others, decided we didn't want food producers making us sick anymore and created the FDA to protect us.

    Government work and programs are sometimes more efficient than private work and programs. Medicare spends 2% on administrative costs, and spends 98% on MEDICINE! Private insurers spend on average 15-20% on administrative costs and PROFITS, and only 80-85% on medicine. Yes, we are currently paying too much for procedures that won't work, but when someone tried to fix it people screamed "Death Panels" and went on spending too much.

    The government is not a business. It does not seek profit. Sometimes it is "inefficient" by business standards, but that's a useless judgement, like saying dogs are terrible animals because they can't fly. Government and business are two different animals with two different goals, and thus have two different methods.

    Businesses seek profit, and so they do whatever is necessary to get that. Businesses are necessary for our country to progress and to be competitive, but they don't and can't give us everything we need.

    The government seeks morality and justice. Those things are a lot harder to define than profit, which is why we can argue about WHAT government should do as well as how it does it. The argument can also be made that it's not very good at achieving those things, but that's the fault of the voters, not of the system.

    The government fulfills the moral obligations we have to each other, and taxes are what allow it to do so. The solution that nobody is proposing because of the knee-jerk reaction that taxes and government are inherently bad is to raise revenue. By removing the cap of ~$100,000 on Social Security taxes that program would be solvent forever. By raising taxes on companies making record profits (and not using them to hire anyone or create new products and services) the government could hire people and reduce unemployment. Or it could use that money to offer incentives for new technology, or to retrain all the unemployed real-estate agents. Businesses and CEOs have plenty of money that they're not using to fix our problems, so why do people think that giving them more will make anything better?

  • Report this Comment On April 07, 2011, at 8:40 PM, dapperdelta wrote:

    So let me see if I have this straight. You say in another article that entitlement spending at the levels we do is financial suicide on a national scale - and then the *only plan offered by a politician which deals with it in any kind of serious way you deride as a fairy tale, instead of herald it as the kind of change from political self-interest it will take to keep this country around for another 100 years.

    Ok.

    So were you lying then or are you lying now?

    Or, put better, or *you* suicidal or schizophrenic. I know its fashionable to bash anything that comes from someone with an (R) by their name but you need to listen to your own self interest for a minute and say, "FINALLY! This may not be the answer but it is the kind of answer we need! Lets change it in X Y Z and it'll be closer." I guess that doesn't get as many page views, does it? Maybe your short term self interest is demanding you stir the pot and try to tap into people's angst, no matter the long term cost.

    Congrats. I'm sure you'll get a lot of page views.

  • Report this Comment On April 07, 2011, at 8:49 PM, TMFHousel wrote:

    <<So were you lying then or are you lying now?>>

    Not sure how you see this as lying.

    Here's an example. A house is on fire. You say something has to be done, or else the house will be lost. Someone proposes that we do a rain dance and hope the fire puts itself out. You say this is dumb and won't work.

    Is that lying?

  • Report this Comment On April 07, 2011, at 8:58 PM, dapperdelta wrote:

    Your analogy is off. You are in a burning house. Everyone is suggesting that you should stay inside and pour gas around the room to put it out. You say that won't work. Someone suggests you should try some form of water, maybe pee on it. You say that's dumb and won't work either.

    I say *that* is dumb and won't work.

    If you want to live, you say "YES! We need water, only peeing on it won't work! First we should get out, and then find a source of a lot of water."

    If you are about something that might work that is. Maybe you are busy blogging about it and counting the page views, who knows. As for me, I'm interesting in saving the country and if I have to pee on it then so be it. I'm not too cool for that.

  • Report this Comment On April 07, 2011, at 9:03 PM, CaptainWidget wrote:

    <<Government work and programs are sometimes more efficient than private work and programs. Medicare spends 2% on administrative costs, and spends 98% on MEDICINE! Private insurers spend on average 15-20% on administrative costs and PROFITS, and only 80-85% on medicine. >>

    Medicare always gives away billions of dollars in fraudulent cases because they failed their due diligence. I'd say that evens out the numbers pretty well

    The government does not do ANYTHING better than private markets. They have no incentive to do so, they're not in direct competition with anyone. Their can (and usually do) either outlaw competition or subsidize their version of service (with your money) until it appears that their government provided service is efficient and useful, when it's really just a money suck.

    Every example you posted can be countered. Private roads exist throughout the country, and are universally better maintained. In Las vegas I'd wager to say that more than half of the roads belong to HOA's and property developers, and the private roads inside of communities are always nicer than than ones maintained by the local government.

    More over, even if the Federal government WAS good at spending, no where in the constitution does empower the Federal government to spend, except for on the 17 specific items delineated in Article 1, section 8 of the constitution.

    I don't know where you pull "morality" out of the US Constitution. No where in the document does it talk about morality or shared burden. It talks a lot about individual liberty however. And taking taxes from one person to pay for a program he abhors is pretty much the antithesis of personal liberty. The constitution, above all else, was written as a method to preserve freedom and prevent the government from getting into your pockets. You have a strange interpretation of that document.

    Raising taxes to buy more stuff is not the fix to this problem. Taxes constitute around 40-50% of the average American's income as it sits. How much more can the American people really come to bear?

  • Report this Comment On April 07, 2011, at 9:04 PM, baldheadeddork wrote:

    Wow, there is so much just here in the comments...

    A couple of big points. First, Ryan's proposal doesn't reduce the deficit or debt. He takes away a trillion or three in spending by privatizing Medicare, but then he gives away those savings with even larger tax cuts for corporations and the upper income brackets.

    All of the debt reduction and economic growth in his plan comes from a Laffer curve on crack. Trillions in tax cuts will cause trillions more in tax revenues thanks to increased economic growth. We've been down this road more than once in the last thirty years and it hasn't worked yet. Reagan's tax cuts in the 80's caused an explosion of the deficit, Bush's was worse for the debt and the economy underperformed in every year of his administration.

    Call this policy of endless tax cuts whatever you want, but if you choose "fiscally conservative" or "pro-growth" - you are lying.

    The other big point is that if Medicare goes away so will the problem of health care costs for seniors. It won't. The costs will shift back to the people who carried the burden before Medicare came along - the adult children of seniors.

    If you're in your twenties and you think eliminating Medicare in 2022 is going to spare you from financial pain, think again. When your parents get sick, it will fall on you to take care of them and pay their medical bills. If it means you can't save for your retirement, well, then it will be your kids' turn to take one for the team.

    The positive economic impact of Social Security and Medicare does not get nearly enough attention. Before they came along, the economic life cycle of a person was to join the workforce, spend most of their income raising children for 20-25 years (depending on how many kids) and immediately shift into financially supporting their aging parents.

    And this was in the good old days, when drugs and medical care were much simpler and less expensive, the typical worker changed jobs two or three times in their entire working life, and had a defined-benefit pension waiting when they retired. Overlay the costs of paying the medical expenses of a senior parent on what the US economy has become for most of us, and people in their 20's now are going to get slaughtered in their 40's and 50's if this goes through.

    It will deeply hurt the economy as a whole, too. Medicare and Social Security have allowed seniors to be economically productive after they stopped working and freed trillions in wealth for their children to use. Take that away and a big part of the US economy goes with it.

  • Report this Comment On April 07, 2011, at 9:14 PM, ETFsRule wrote:

    dapperdelta wrote:

    "...the *only plan offered by a politician which deals with it in any kind of serious way you deride as a fairy tale..."

    Let me try to explain my viewpoint. I don't believe the plan is an honest effort to fix our budget problems.

    First, if you go to the Heritage site they explain how they came up with their numbers:

    http://www.heritage.org/Research/Reports/2011/04/Economic-An...

    The key point I want to make is that they didn't make a bunch of independant estimates for each economic figure. Rather, they ran a "simulation" which was based on all of their fancy models.

    What this means, is that if there was an unrealistic drop in unemployment, this would result in ALL of their other numbers also being inaccurate. Their GDP growth numbers are much too high, and their deficits are much too low, because these numbers are strongly dependant on the unemployment figure (more jobs = more money).

    They have stopped reporting the flawed unemployment number, but the other numbers are still there, and they haven't done anything to address the serious flaws in their economic simulation.

    Whoever is in charge of damage control at Heritage is perpetuating a massive coverup... and if Ryan continues to cite these numbers, then he is no better than they are.

    Frankly, it seems like the whole plan is just a way to pass more tax cuts for the rich. They don't really care about the deficit.

  • Report this Comment On April 07, 2011, at 9:15 PM, Jbay76 wrote:

    Folks,

    1) Housel, good on you..thanks for the synopsis

    2) An interview today on NPR addressed this issue and apparently medicare is more efficient than private health insurance; 20% more for kids, 25% more for adults. They work off admin costs of 3% whereas private insurance companies are between 15 and 25%. It seems a better investment of our money to go with the more efficient system.

    3) We blew our budget on a war that made us less safe, then continued with another one and now that we, and everyone else knows, were broke, we are now getting locked into another one with Libya. Our military is huge, and outdated, unless we go back to the cold war. We have troops in 180 countries, we spend more on military than the rest of the world, yet we're not anymore safer than we were in 911.

    Chertoff and his boys have made a killing on the nude machines, and others have made a killing. My point, cut military spending like the plague, build our infrastructure, tax the upper 1% who have been making a killing, and lets move on.

    To those who say, if you tax the rich, they won't invest in the economy and it'll ruin the recovery, I say they haven't been investing much. In fact, they're hoarding all the money they keep from lowering taxes.

    Wake up

  • Report this Comment On April 07, 2011, at 9:15 PM, CaptainWidget wrote:

    <<The positive economic impact of Social Security and Medicare does not get nearly enough attention. Before they came along, the economic life cycle of a person was to join the workforce, spend most of their income raising children for 20-25 years (depending on how many kids) and immediately shift into financially supporting their aging parents.>>

    Emphasis on family values? Oh no! We'd better stop that.

  • Report this Comment On April 07, 2011, at 9:18 PM, Jbay76 wrote:

    @CaptianWIdget,

    The constitution specifically does not allow for the use of paper currency or anyone other than Congress to control money but woops...we have the Fed Reserve which is above the law and prints dollars on paper. So, this country is a long way off from how the FF intended it to be

  • Report this Comment On April 07, 2011, at 9:24 PM, CaptainWidget wrote:

    I agree. So the question is do you capitulate and let the Federal government run wild, or do you reign it back in and restore order in the Republic?

    This logic is why we're in the situation we're in. Each little breech of the constitution emboldened future leaders, to the point where we're now discussing whether or not the government should take 40% of your salary or 70% of your salary to pay for things you don't believe in.

  • Report this Comment On April 07, 2011, at 9:50 PM, baldheadeddork wrote:

    Also, no one asked but if you really want to make the deficit go away, here's how it's done:

    1) Return tax rates to the level in the 1990's. Why? Because we know it worked. The economy boomed and deficits shrank to their lowest point in decades.

    2) Get serious about creating higher paying jobs in the US. We've had a decade or three of economic policy that puts corporate profits ahead of personal income growth and this is where it's taken us. It is not inevitable that manufacturing jobs go overseas, it is not inevitable that big box stores kill small businesses that have substantially greater economic impact, and it's not inevitable that it is harder for you to rise economically than it was for your parents or grandparents. All of these are the results of economic policies we create.

    3) Get medical costs under control. The US spends more than twice as much per capita and as a share of GDP than any other country, but our life expectancy is 48th. Forget its effect on the government's books. It's killing the private sector, too. Boeing v Airbus is my favorite example. Boeing and its US contractors will, on average, spend twice as much on health care as Airbus and its employees pay. Unless Boeing employees work for less (which reduces their economic contribution) or Boeing sells its planes at a smaller profit (shifting the pain to shareholders), Airbus will have a fairly significant cost advantage on every plane it sells - and its employees are typically healthier and live longer.

  • Report this Comment On April 07, 2011, at 10:00 PM, CaptainWidget wrote:

    <1) Return tax rates to the level in the 1990's. Why? Because we know it worked. The economy boomed and deficits shrank to their lowest point in decades.>

    Congress also instituted, and abided by a "pay-go" policy that mandated all spending be accompanied by equal levels of cuts elsewhere to get a vote. Any level of taxation will balance the budget when a balance budget is a requirement of doing business.

    <<2) Get serious about creating higher paying jobs in the US. We've had a decade or three of economic policy that puts corporate profits ahead of personal income growth and this is where it's taken us. It is not inevitable that manufacturing jobs go overseas, it is not inevitable that big box stores kill small businesses that have substantially greater economic impact, and it's not inevitable that it is harder for you to rise economically than it was for your parents or grandparents. All of these are the results of economic policies we create.>>

    How can you say in the same breath you want higher paying jobs, and then talk about bringing back outsourced manufacturing and supporting inefficient small businesses.

    The highest paying jobs are enabled by outsouring the cheaper, less important manufacturing, overseas. Big Box stores bring lower prices to everyone. This puts small inefficient businesses on their ass. Oh well......if you can't compete, you die.

    <<3) Get medical costs under control. The US spends more than twice as much per capita and as a share of GDP than any other country, but our life expectancy is 48th. Forget its effect on the government's books. It's killing the private sector, too. Boeing v Airbus is my favorite example. Boeing and its US contractors will, on average, spend twice as much on health care as Airbus and its employees pay. Unless Boeing employees work for less (which reduces their economic contribution) or Boeing sells its planes at a smaller profit (shifting the pain to shareholders), Airbus will have a fairly significant cost advantage on every plane it sells - and its employees are typically healthier and live longer.>>

    US Health Care is more expensive precisely because of government intervention. Refer to TMFHousel's recent article on health care, and read my comments refuting his entire article as to confirm that point.

  • Report this Comment On April 07, 2011, at 10:11 PM, scavanna wrote:

    You need to study history (i.e. Laffer curve and Reagan like tax rate cuts equal prosperity. and more money for the government) Cut tax rates will balance the budget and you will not be able to hold the economy down.

  • Report this Comment On April 07, 2011, at 10:14 PM, TMFHousel wrote:

    ^ I wasn't aware Reagan balanced the budget.

  • Report this Comment On April 07, 2011, at 10:17 PM, TMFBreakerRob wrote:

    Nice article, Morgan....but next time come up with a subject that will stir up some passion in the readers! ;)

    <On another note, I find myself increasingly discouraged as I look at either side in Washington. I vote that no Congressman can receive their pay or retirement benefits unless they are permanently fitted with a red ball for a nose.>

  • Report this Comment On April 07, 2011, at 10:19 PM, CaptainWidget wrote:

    <<^ I wasn't aware Reagan balanced the budget.>>

    I wasn't aware that Keynesian econ has done anything other than increase debt in the last 100 years.

    The laffer curve is a real phenomenon. Maryland raised taxes and reduced tax receipts. Estonia reduced taxes and increased tax receipts.

    Keynesian economics and it's adherents has done more harm to this country than possibly any other single idea.

  • Report this Comment On April 07, 2011, at 10:23 PM, Stufiat wrote:

    Hats off to Morgan for the article and to Tobernator1000 and n8larson for pointing out how far off the mark proposals like Ryan's are. The wealthy do need incentives to generate activities that produce wages and taxes sure -- but they also need to be taxed if they engage in activities like going on million-dollar junkets to far off places and buying $200,000 imported cars, which do not help the USA one bit. As others have pointed out, we all need to make some sacrifices and the tax code needs to enforce that. Our country's basic services, infrastructure and safety net must indeed be limited in scope, but we must join together across party lines to make sure basic features of our civilization that have been proven important, and that only government can provide, are not completely dismantled.

  • Report this Comment On April 07, 2011, at 10:27 PM, CaptainWidget wrote:

    <<..and that only government can provide, are not completely dismantled...>>

    Like funding your retirement and health care????

    You do know what IRA and HSA stand for, right?

  • Report this Comment On April 07, 2011, at 10:34 PM, ETFsRule wrote:

    "I wasn't aware that Keynesian econ has done anything other than increase debt in the last 100 years."

    It sounds like you need a history lesson. When Keynesian econ was being implemented, it resulted in essentially the golden age of the USA (roughly the 1940's - 1970's). Then came Reagan and the neocon movement, which destroyed the middle class and created massive amounts of debt.

    Here you can see a graph showing the % change in gov't debt as a % of GDP (in the 7th column of the table). So, you tell me... who has a better economic track record, the dems or the so-called conservatives?

    http://en.wikipedia.org/wiki/National_debt_by_U.S._president...

  • Report this Comment On April 07, 2011, at 10:48 PM, CaptainWidget wrote:

    Then YOU need a history lesson. Keynesian economics (or more accurately the precursor to it) was implemented in 1913, the day the Federal Reserve was implemented, and money was turned into a arbitrary piece of paper rather than a physical representation of a commodity.

    Keynesian economics resulted in the great depression, much to the dismay of everyone at the time, including John Maynard Keynes. In 1927 he said, forgotten to history by people like you "we will not have anymore crashed in our time". While at the same time people like Von Mises and Hayek were saying the exact opposite. Who was right in that instance?

    Even Ben Bernanke has gone on record stating that the Federal Reserve caused the great depression.

    The "golden age" you talk about is due to WWII wiping out the rest of the industrial world's production capability, and the US ability to sweep in and provide services to the destroyed countries. This lasted until 1970, when a deflated dollar finally stopped the joy ride. What happened then? 20% interest rates were needed to stop the flow of worthless money, crippling the economy.

    I really can't believe there's people still arguing for Keynesian economics.

  • Report this Comment On April 07, 2011, at 11:00 PM, JacksonAlex wrote:

    I couldn't disagree more Morgan. I would love to hear your alternative. Something has to be done, period. Put something on the table. I'll be watching for your brilliant ideas.

  • Report this Comment On April 07, 2011, at 11:08 PM, ETFsRule wrote:

    "Keynesian economics resulted in the great depression, much to the dismay of everyone at the time, including John Maynard Keynes."

    Completely absurd. Keynesian economics didn't even exist until after the great depression.

    "Even Ben Bernanke has gone on record stating that the Federal Reserve caused the great depression."

    Link please? I would like to see precisely what he said there. Regardless, it has nothing to do with Keynesian economics, which didn't exist at the time and wouldn't be widely accepted for quite some time afterwards.

    "The "golden age" you talk about is due to WWII wiping out the rest of the industrial world's production capability, and the US ability to sweep in and provide services to the destroyed countries."

    I'm sure that explains why we prospered in the 1990's too, right? After the Gulf War we swept in and captured the world's production capability?

    How about this, why don't you analyze the recent financial crisis and tell me which countries are having better economic recoveries: those which increased their gov't spending via stimulus programs, or those which imposed austerity measures?

  • Report this Comment On April 07, 2011, at 11:10 PM, ETFsRule wrote:

    JacksonAlex: Someone already asked that, and Morgan obliged them with a link to his own ideas. It's in the 5th comment.

  • Report this Comment On April 07, 2011, at 11:12 PM, wan2bretired wrote:

    Political bias, not financial should be given on an article that is politically charged. I see no balance in your arguments only your side.

  • Report this Comment On April 07, 2011, at 11:23 PM, jlo3605 wrote:

    I find it mildly amusing that everone is so quick to attack the only serious proposal that anyone has been bold enough to bring forth. It is a true show of courage and leadership, something sorely lacking in this government. Due to all the inevitable demagogery by our elected officials, it is not surprising that no one has previously had to vision to attack the issues head on. I would have to believe that we could afford a bit less military spending and we could also have a flat tax that removes all the loopholes for individuals and business. It is time for the the market to determine the winners and losers and not government propping up their favorite donors.

    The free market will work, but our goverment interventions in markets works only for that curry favor from our elected officails. And finally, this Wall Street, Banking, Fed cabal has to end.

  • Report this Comment On April 07, 2011, at 11:30 PM, TMFHousel wrote:

    <<I find it mildly amusing that everone is so quick to attack the only serious proposal that anyone has been bold enough to bring forth>>

    I commend Ryan for wanting to tackle such a big problem. I just don't think his proposal is serious. Assuming unemployment will fall to 2.8% and stay there forever is not serious.

  • Report this Comment On April 07, 2011, at 11:31 PM, smikey055 wrote:

    The irreversible track. Driven by jealousy, envy, and spite. How much love and respect do you think Obama had for America as a youthful boy and victim of bullying and discrimination? At what point did he forgive, or has he? I don't know the man, but neither do you.

  • Report this Comment On April 07, 2011, at 11:31 PM, TMFHousel wrote:

    <<I couldn't disagree more Morgan>>

    Any reason?

  • Report this Comment On April 07, 2011, at 11:35 PM, TMFHousel wrote:

    <<It is a true show of courage and leadership, something sorely lacking in this government.>>

    I'll only add that purging the unemployment numbers from all documents after they were heavily criticized doesn't strike me as either courage or leadership.

  • Report this Comment On April 07, 2011, at 11:36 PM, Merton123 wrote:

    How long will the Federal Government be able to borrow money at ridiculious low rates? When interest rates go up the goverment has two choices - use inflation to pay our troop overseas or bring our troops back home.

  • Report this Comment On April 07, 2011, at 11:55 PM, RallyCry wrote:

    The Ryan plan would be better served telling us we would balance the budget in three times as long (2020 versus 2015) This would be possible if it assumes more normal unemployment levels in the 6-8% range.

    The Ryan plan would be much more credible if it phased out medicare over a full generation from 2022 to 2042 where the people in the gap could receive a combination of medicare and vouchers.

    The Ryan plan would be more credible if the working paper describing the Ryan plan published at the Heritage Foundation didn't fail to use the word unemployment even 1 time!

    On the other hand....

    The Obama/Bernecke plan is to spend/print our way into growth. This policy is a hyper inflation nightmare. Does anyone truly doubt the end result of these actions is a dollar so devalued that it simply will not matter if you have one dollar or a million dollars because a million will be a drop in the hat?

    In this scenario all basic necessities, food, water, shelter will have to be provided by the gov't.

    Class warfare won't exist when the majority of us who have no idea what is going on will have to pay a hundred dollars for a loaf of bread. We'll have to turn to the gov't to give us bread.

    I could really care less about the personal freedom that comes from paying less taxes, I care about the personal freedon that is lost by not raising taxes and cutting spending at the same time over a realistic time horizon starting now.

    Throw out don't tred on me over taxes. taxes will be a minor inconvenience when we are getting pulverized by an infation freight train!

    Obama and Ryan need to stop insulting our intelligence and start talking about real sacrifices! Failure to act responsibly will only make us more reliant on the gov't when the crap hits the fan!

  • Report this Comment On April 08, 2011, at 12:02 AM, CaptainWidget wrote:

    <<Completely absurd. Keynesian economics didn't even exist until after the great depression.>>

    You need to read "a tract on monetary reform". Keynesian economics, in all it's glory, in 1923 I believe. Just because other people weren't calling it "keynesian" yet, doesn't mean it didn't exist. Print, spend, and avoid taxes if yer lucky was an idea blooming on it's own in the early 1900's. Keynes just put a name on it.

    As to Bernanke admitting fault...why not try...the Federal reserves website...

    http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/200211...

    "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry."

    <<I'm sure that explains why we prospered in the 1990's too, right? After the Gulf War we swept in and captured the world's production capability?

    How about this, why don't you analyze the recent financial crisis and tell me which countries are having better economic recoveries: those which increased their gov't spending via stimulus programs, or those which imposed austerity measures?>>

    The 1990's boom? Could that have been from Bush Sr.'s tax cuts, considering he was the president in the early 1990's? Or could it have been from the absurdly low Fed interest rate until 1995 causing cheap money and increased speculative investing?

    As to comparing countries, let's try the US vs Singapore. US unemployment is at 10% vs 3% in Singapore. The US is trying to spend their way out of the depression, while Singapore is alloweing companies to fire as many people as they wanted, and get this, lined up police officers to bust up any potential protests. Ya.....the "tighten your belt" economies are doing much, much better. Out of the SEA Tigers, not a single one has higher unemployment than 6%.

    Anything else?

  • Report this Comment On April 08, 2011, at 12:09 AM, dave665 wrote:

    I agree to a certain extent, although maybe not in the way that this author meant. Ryan's plan is sure an improvement over the status quo but it doesn't go far enough. It will still leave us broke and hurting in the long run. For one thing, consequences of our welfare state and government-run charities are not only financial, but social as well. Look at the government-enabled breakdown of the family in America. Look at our rates of promiscuity, drug use, child abuse and neglect, etc. These things are all aggravated (not caused, but helped along) by government handouts. Helping those in need is essential in a free society but ultimately does not work well when the government does it. Not only this, but we have core economic problems involving trade imbalances, excessive red tape and regulation, etc that make us non-competitive globally. Not to mention a failing education system and a drug trade/ open border problem. I hate to have to say this, but all these things need to be dealt with right away. No amount of budget cutting by itself will get us out of the hole at this point.

  • Report this Comment On April 08, 2011, at 1:27 AM, Tangoko wrote:

    Together with your earlier article, http://www.fool.com/investing/general/2010/10/29/how-to-talk... and this, I am totally with you on this Mr. Housel. Rationingly, Thanks!

  • Report this Comment On April 08, 2011, at 2:19 AM, PaintItBlue wrote:

    He has got it wrong. IMO what is unsustainable in the US budget is militarism. It is truly throwing money down a rat hole.

  • Report this Comment On April 08, 2011, at 2:27 AM, morpheusmill wrote:

    I agree with Morgan House on this article.

    Very well written.

    People should read and understand it for it is, a critique of a plan based on a rosy picture of the world, all of us investors know how that goes.

    Too bad that everyone seems to be sticking to their narrow partisan thinking.

  • Report this Comment On April 08, 2011, at 8:02 AM, rtekosky wrote:

    8 Years Clinton - Dow went from 3,300 to 10,500, averaged well over 300,000 new jobs a month and back to balanced budgets.

    8 years Bush? 10,500 to 8,000 and lost well over 100,000 jobs and fell into deficit.

    What's the point?

    Supply side economics doesn't work - unless you are rich. GDP is 70%? consumer spending, make the middle class poor and take away banking regs = Hoover Depression and a Bush recession.

    We're still having the same argument.

  • Report this Comment On April 08, 2011, at 8:43 AM, dapperdelta wrote:

    I see. "Its just not fair." Its not fair for the successful to keep too much of what they earn and the wealth they create. Its fair to take from the producers to give to the non-producers.

    I've seen this definition of fairness before. I find it quite strange. Particularly when when people making less than 40,000 make a profit on income taxes. When the top 1% pays more in taxes than the bottom 95%, even though the bottom 95% earns 90% of the wages. When the Bush tax cuts made the percentage of the tax revenue paid by the top 1 and 2 percent go up, not down.

    This philosophy is like saying you should shoot yourself in the foot because its too good at walking. Well good luck getting anywhere. Where do you think, captain economist, that the capital to fund new ventures, business expansions, and new jobs comes from? And what do you think happens when you take that potential capital away from them? Geez, why is this so hard to understand.

    What you propose in the name of fairness is patently unfair and what's more, "that's dumb and won't work." It achieves exactly the opposite effect you seek. Every time. Don't let that deter you. Reality and national survival shouldn't stand in the way of your "fairness." My passport is up to date and I don't think I would like to live in the America you envision where the more successful I am, the more my property is confiscated by the government and distributed to those less able and motivated.

  • Report this Comment On April 08, 2011, at 9:04 AM, TMFPhilB wrote:

    Great article, Morgan.

    When I first heard about Ryan's plan, I was really encouraged that we finally had a Congressman willing to tackle the subject, but it's disappointing to read your critique of his plan.

    You know that even the most fiscally sound plan was going to come under tremendous pressure from whichever of our two morally bankrupt political parties did not propose it. It's disppointing to hear that Ryan's plan has such unrealistic assumptions--it won't be hard for the Democrats to pick it apart.

    Frankly, any plan that does not tackle military spending and Social Security, is a weak attempt at restoring our country's fiscal health.

  • Report this Comment On April 08, 2011, at 9:14 AM, coatails wrote:

    in the name of that great american, rodney king, why can't we just do some pcp and get along?

    well i changed his quote to fit my point, seems the truth is fixing the problems of our country won't come without pain and everyone wants that pain not to be theirs. there is enough blame to go around and our political leaders couldn't care less who gets shafted as long as they get reelected.

    don't like what gets written, fine, want to waste your time telling everyone what won't work, great....me i'm just an old guy trying to make a few bucks in the market. sure i would like to see the problems of our nation solved and i've been hearing about the same problems for 60 years. well now i'm tired, in my "golden years" and it is the next generations chance to save the world, our country and the american way of life.....me i just want to go fly fishing. hope everyone has a nice day, week, month or year as they want. it still the same old song and rock'n roll will be the downfall of our society......rock on.

  • Report this Comment On April 08, 2011, at 9:25 AM, gregbledsoe wrote:

    Unrealistic assumptions are part and parcel of getting anything through in Washington. You've heard of Obamacare?

    The point is that the proposed budget slows spending and starts cutting. The only problem is it doesn't go far enough soon enough, precisely because they fear they can't sell it. But its do it or die time. Don't just knock it down. What do you want to see instead? Add to it, don't just call it a fairy tale. Everything that's come out of Washington for the past Century has been a fairly tale leading us to ruin. If you want to change it then don't just knock down what is, again, *the only plan that seriously deals with the problem of overspending.*

  • Report this Comment On April 08, 2011, at 9:36 AM, TMFHousel wrote:

    Thanks for all the comments folks.

    I've posted this in previous comments, but feel the need to do so again only because it keeps coming up. I agree that criticism without proposing alternatives is weak. Here are some I've discussed in the past:

    http://www.fool.com/investing/general/2010/10/29/how-to-talk...

    -Morgan

  • Report this Comment On April 08, 2011, at 9:48 AM, Haslett69 wrote:

    Wow. What an interesting read. First the article and then the comments. Thank you for the article. As for the comments, well, overall they clarify my opinion of the American people. That is not comforting.

    One point that I have never seen addressed is this:

    What would Medicare, Social Security and the Federal budget look like if companies did not send all those jobs overseas in the past decade or two?

    Would we even be having this budget crisis?

  • Report this Comment On April 08, 2011, at 10:12 AM, Tygered wrote:

    It is good to read that someone has the guts to say just how incredibly stupid Ryan's plan is. Like all Republicans he cares about one thing, helping the rich to get richer while the rest of us are left to the wolves. It is indeed a fairy tale to think that any Republican is about helping the workers of this country. And don't for one minute think this is the road to prosperity. This will only shovel more money into the hands of insurance companies and other corporations while the nation as a whole sinks deeper into Third World nationhood. At best, America is now second rate, but we're working hard to make it a third rate nation. I'm so afraid of the future my children and grandchildren face under a Republican regime. They will be slaves to the corporate state and have nothing even remotely resembling the American Dream of my youth. I only hope Obama and the Democrats can turn this fate around, but I fear not.

  • Report this Comment On April 08, 2011, at 10:12 AM, David369 wrote:

    No wonder Congress can't agree on a budget. Everyone has a plan and everyone else's plan is bad.

  • Report this Comment On April 08, 2011, at 10:25 AM, markzzzzzz wrote:

    At least Ryan has a plan of cutting the deficit instead of the adding to it as the idiots Obama,pelosi,and reid.

    Obama wants to ruin this country and turn it into a one world order.Btw the bible has predicted this one world order for over 2000 years now.

    George Sorrells is helping obama achieve it.

    My advice is for all of you to listen to the one the

    government media claims is a total nut job.

    His name is Glenn Beck and guys this guy is the only one speaking out that actually gets it .

    He's always right ,his predictions like them or not

    come true.He deals with his faith and looks at what is happening in the world today and the people running it.That's why I beleive he not only gets it ,but is right on the mark.jmho

  • Report this Comment On April 08, 2011, at 10:29 AM, dlomax77 wrote:

    Ryan's budget is not a serious proposal. It triples the effective corporate tax rate yet claims to be wildly effective in creating jobs. And it still fails to produce surpluses 20 years out. Proposing that the only roles for government are war and Social Security is not serious.

  • Report this Comment On April 08, 2011, at 10:30 AM, plange01 wrote:

    until obama can be removed from office the next best thing is to shut down the government and end his incredible spending.....

  • Report this Comment On April 08, 2011, at 10:30 AM, markzzzzzz wrote:

    At least Ryan has a plan of cutting the deficit instead of the adding to it as the idiots Obama,pelosi,and reid.

    Obama wants to ruin this country and turn it into a one world order.Btw the bible has predicted this one world order for over 2000 years now.

    George Sorrells is helping obama achieve it.

    My advice is for all of you to listen to the one the

    government media claims is a total nut job.

    His name is Glenn Beck and guys this guy is the only one speaking out that actually gets it .

    He's always right ,his predictions like them or not

    come true.He deals with his faith and looks at what is happening in the world today and the people running it.That's why I beleive he not only gets it ,but is right on the mark.jmho

  • Report this Comment On April 08, 2011, at 10:33 AM, TMFHousel wrote:

    <<At least Ryan has a plan of cutting the deficit instead of the adding to it as the idiots Obama,pelosi,and reid.>>

    As noted in the article, cited from CBOs analysis, Ryan's plan creates a larger deficit from now until 2022 compared against current law.

    Morgan

  • Report this Comment On April 08, 2011, at 11:27 AM, baldheadeddork wrote:

    @ CaptainWidget: "Then YOU need a history lesson. Keynesian economics (or more accurately the precursor to it) was implemented in 1913,"

    Later...

    "You need to read "a tract on monetary reform". Keynesian economics, in all it's glory, in 1923 I believe."

    1913...1923...one decade or another, right? (And you're asserting the entire world shifted to Keynesian policy as soon as Tract on Monetary Reform was published, right?)

    More fail:

    'As to Bernanke admitting fault...why not try...the Federal reserves website...

    http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/200211...

    "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry." "

    The Federal Reserve was not run by Keynesians during the beginning of the great depression. What Bernanke was talking about the Fed did not step in with emergency lending to keep banks solvent, which caused bank failures and then runs on healthy banks that put them under. The Fed also didn't step in to provide liquidity to the capital markets when they froze up. Businesses couldn't get operating loans, which caused more failures and put us in a deflationary tailspin.

    Part of the reason the Fed couldn't step in was ideological. Contrary to what you think, economic policy leaders in the 1920's were almost universally laissez faire. But another part was the gold standard. By law, the Federal Reserve had to back at least 40% of the value of the currency it held with gold reserves.

    All of this should sound a little familiar - it's exactly what the pig-ignorant blowhards on the right have criticized the Fed for not doing in 2008 and 2009.

    Quit reading websites and take an actual economics or history class.

  • Report this Comment On April 08, 2011, at 11:52 AM, TMFGreenwave wrote:

    +1000 for baldheadeddork. Great post. (Even though you took me to task on my GM article last week, haha).

    Morgan, awesome article. I like that you noted Ryan's tax cuts, but I think specifying that it calls for the top tax rate to plunge to 25% (lowest level in 80 years) would have further strengthened the point that he isn't serious about fixing the budget.

  • Report this Comment On April 08, 2011, at 12:14 PM, DJDynamicNC wrote:

    Funny how the conservatives respond to the criticism of Ryan's budget with "well Obama is bad!"

    That was never the issue. Even if Obama is terrible - and you're free to believe that for any reason you like - it has nothing to do with how effective Ryan's budget will be.

    This article is a good breakdown of the extremely serious flaws in Ryan's "plan." What are the defenses? I don't know - all anybody can offer is "well at least he's not Obama." That's completely unhelpful - and unfortunately unsurprising.

    Tax rates were MUCH HIGHER during the 50s and 60s and these were some of the most consistently prosperous years in human history. I think it's important to keep that in mind.

  • Report this Comment On April 08, 2011, at 12:15 PM, DJDynamicNC wrote:

    Here's a plan - let's create a full employment agency like the CCC. I'd be very interested in seeing how much of the deficit evaporates when people are employed again. I'm quite certain it would be a very large chunk, if not all of it.

  • Report this Comment On April 08, 2011, at 12:18 PM, gregbledsoe wrote:

    So again, Housel, what do you think could actually be sold to voters? And remember, these are the voters:

    http://www.youtube.com/watch?v=P36x8rTb3jI

    Its nice to say, "We have to start with entitlements" but that aint gonna happen in a meaningful way just yet. We have to move the bar gradually. What do you think could actually get done? Ryan's proposal is about the best we can do. For now. BUT WE HAVE TO START RIGHT NOW. TODAY.

  • Report this Comment On April 08, 2011, at 12:23 PM, DJDynamicNC wrote:

    Again, sorry to soapbox but I just can't get my head around this obsession with cutting spending. We are an incredibly wealthy society. If we had Bank of America and GE paying their share of taxes instead of paying, well, zero... if we taxed capital gains appropriately... if we were willign to spend a larger share of GDP on providing services for the public and a lower share on providing bombs... why would that be a bad thing?

    I mean sure, you could cut services. But why is that the default answer? I'm willing to support my fellow Americans and be a part of the greatest nation on Earth, and I'm willing to pay what it takes to do that. I don't understand this greedy attitude that's taken hold of screwing over fellow Americans. It makes no sense. I'm damn proud of this country, and more than almost any other country, this nation of immigrants is a country of PEOPLE. People worth supporting and building a community with.

  • Report this Comment On April 08, 2011, at 12:26 PM, mtf00l wrote:

    dapperdelta,

    "When the top 1% pays more in taxes than the bottom 95%, even though the bottom 95% earns 90% of the wages."

    Are you sure?

  • Report this Comment On April 08, 2011, at 12:28 PM, ETFsRule wrote:

    + another 1000 for baldheadeddork

    CaptainWidget apparently believes that everything the Fed has ever done is an example of Keynesian policy in action.

    It's absurd to claim that decades of economic prosperity can be explained solely by WW2... especially when you consider that our economy was already growing at a high rate, starting in 1934.

    It's equally misleading to compare our economy to southeast Asia. Why not compare us to some developed countries which are more similar to the US, and were similarly affected by the economic crisis?

    What was the effect of austerity measures in Ireland, Greece, Portugal, etc? How did the bond markets react to these austerity measures?

    What happened in Germany, where they increased their government spending as a response to the crisis?

    Lastly, you try to credit the 90's boom entirely to the Bush Sr tax cuts (which of course is wrong)... but at the same time, you said nothing about the effects of the Reagan tax cuts or the Bush Jr tax cuts on our national debt. I wonder why?

  • Report this Comment On April 08, 2011, at 12:37 PM, gregbledsoe wrote:

    Some of these comments are I think the inevitable consequence of the failure of our educational system to teach basic math. We are wealthy therefore we can pay for everything for everybody.

    Ask the former USSR about that.

    Ask China, which had to implement free market reforms, about that.

    Ask Greece about that.

    You cannot raise taxes enough to do it. The overhead of running the systems eventually eats all availalble resources. The best way to raise revenue is lower rates and eliminate loopholes. In other words, simplify. The tax code is more than 10,000 pages of obscurity for tax lawyers to pick over for ways to legally cheat. Suspend reality and assume best case scenario the government can suck 30% of GDP out of the economy without slowing it down. This doesn't solve the problem. You can always spend more.

    As anyone who ever got a raise or a new job knows, it doesn't matter how much you make, you can always find new luxuries to spend it on. Our elected representatives have been finding new handouts to offer for votes since 1900 and the bill is coming due. Frugality is the path to wealth for individuals and nations. Unless we find it in the national character to do some belt tightenting we are going to go bankrupt. Its economic gravity.

    At some point the chinese will not find buying our debt appealing - then we have no choice but to print money to pay for all these entitlements we think everyone is owed. As the currency devalues everything costs more and more and the standard of living falls.

    You can never construct a society where no one ever gets boned. You can only bone everyone trying. This is what the spoiled nanny-state western world is learning. Personally, I think we are doomed. Especially when someone tries to deal with the problem and the people who understand that this is what the problem is just smack it down out of hand.

  • Report this Comment On April 08, 2011, at 1:00 PM, Risky88 wrote:

    I think the author is correct.

    To me this is just POLITICS. They put it out there and say it. There is a large majority of people that will believe what is told to them because they dont want to read the fine print (just like on their mortgage).

    Politicians want to stand out in a way that says im doing what the people want me to do even if they're not.

  • Report this Comment On April 08, 2011, at 1:13 PM, Clint35 wrote:

    I agree with Morgan completely. This plan is a total fairytale. He's doing what most politicians do. Patting himself on the back and trying to make himself look good to ensure he gets re-elected. But in reality he hasn't accomplished a thing. A real plan to solve our budget problems would have to seriously cut programs like medicare and social security. Cut back on whatever it is the Government spends the most on, which I've heard is military spending. Do away with subsidies completely. Increase taxes on everybody especially the wealthy. Cut a lot of spending the government does when they supposedly "run things" including their pay and benefits. What Ryan's doing is sort of like what a lying doctor might do. He's saying, "Don't worry I can fix your leg. You'll be fine and it won't hurt a bit." An honest doctor would say "I'm sorry we'll have to amputate your leg. If we don't you'll die."

  • Report this Comment On April 08, 2011, at 1:26 PM, TMFKopp wrote:

    Morgan, your an idiet and obviously just dont get it. St. Ryan has heroically done what few have been willing to and has addressed the debt problem. Its like when I provided a solution for the world hunger problem: Start turning deserts into farmland. Simple right? Well nobody listened but it was an idea. Same with St. Ryan. We need to listen to good ideas like this. Besides wouldnt you want 2.8% unemployment?

  • Report this Comment On April 08, 2011, at 1:46 PM, IIcx wrote:

    House Budget Chairman Paul Ryan's plan is a great start. A flat tax for citizens and business will stimulate the economy and create jobs. It also potentially eliminates an absurdly complex tax code which will streamline the filing process and the IRS. Unfortunately, the proposed tax reform will take 2 years and we need to address the budget problem NOW.

    The Ryan budget plan doesn't go far enough for immediate relief from the irresponsible fiscal policies in Washington. It also appears to overlook defense spending cuts, revenue growth, and necessary reorganization of entitlement programs.

    Chairman Ryan is one of the few who has stepped forward with a plan so good for him! It also speaks volumes about the tragic 111th Congress and useless Obama administration.

    Just a thought, why not institute the flat tax and eliminate the Social Security Administration by turning over retirement savings to individual Treasury accounts administered by the IRS. The interest on the debt could then be paid forward to future generations and the IRS could finally eliminate the SS Card problems.

    Who knows, take the cap off of contributions and it could cover retirement and Medical. The best part, Congress could never again Raid the taxpayer Trust Fund.

    The American people need to see a plan with some major overhauls to these antiquated programs. If they do, the 7 Trillion of sidelined cash might just start flowing back into equities.

  • Report this Comment On April 08, 2011, at 2:09 PM, DJDynamicNC wrote:

    You know what happens when somebody proposes streamlining the tax code and closing the loopholes? It gets heralded as a tax increase, which it is (on the businesses in question). That's why it never gets done. I'm as tired as anyone else of seeing bankers at Wall Street make millions and pay nothing in taxes all while moaning about high tax rates, but those people have millions of dollars, which is enough to buy, apparently, the entire Republican party and half the Democrats, so this never gets fixed.

    I've seen some decent progressive proposals for a flat tax and I'm open to the idea with the proper protections.

    I'd like to point out, llcx, that you didn't address a single one of the author's points about the flaws in Ryan's plan. You just arbitrarily claimed it was a "great start" and then launched into your own plans. I approve of proposing ideas for a solution, but you failed to back up your initial claim that Ryan's plan is a great start.

  • Report this Comment On April 08, 2011, at 2:35 PM, DJDynamicNC wrote:

    Oh, and while we're on the topic, another stupid trope that catches on easily - "frugality is the path to wealth."

    Frugality isn't a bad idea, but anyone who is posting on this site knows that the path to wealth is spending your money on investments that will yield strong returns - that is NOT frugality. That is targeted and intelligent spending. you're not "saving money in a stock account," you're BUYING securities by SPENDING money.

    Saying you can save your way to wealth is like trying to get rich by cutting back on morning coffee. Sure it'll save you money; but it won't make you rich. Investing wisely with targeted and intelligent expenditures - that's what will do it. As anyone on this site self-evidently knows because that's the entire point of this site.

    And I can't think of any better investment than the American people.

  • Report this Comment On April 08, 2011, at 2:51 PM, trin6810 wrote:

    I think the repulicans just lost the complete 53- 55 vote - if I could only stop laughing - I'd add more

  • Report this Comment On April 08, 2011, at 3:11 PM, tobernator1000 wrote:

    I think the biggest problem with taxes in America is that people see them as stealing. This usually seems to stem from the belief that people have earned everything they get. Let me attempt to dispel that illusion.

    The first, and I think most obvious, case is inherited wealth and position. Children who have inherited enough wealth to never have to work or be competent have only acquired their wealth by random chance. Nobody chooses who their parents are, and to suggest that children have earned their parents wealth is quite frankly ridiculous. I once had a wealthy friend ask me why the government gets to take 50% of her money when her parents die, and the look of shock on her face when I said "It's not your money, it's your parent's money, and they don't need it anymore. Why do you deserve it more than anyone else?" suggested that she never contemplated that being born rich didn't entitle her to wealth. A parent's right to give their child money can be debated, but let's stop pretending the children earned it.

    Slightly more subtle is inherited privilege. For males, your father's income accounts for about 60% of your future income. That means that 60% of the difference in my salary and your salary can be accounted for by comparing my father's salary and your father's salary. As before, we don't choose our parents, so this is basically a win through chance, rather than merit.

    If we want to live in a real meritocracy, which I think most of us do, we should take into account how much randomly determined situations affect our entire lives. If two people are equally skilled but grow up with completely different opportunities they will have completely different levels of success. Distribution of wealth doesn't have to mean communism. If we focus on equality of opportunity (and not equality of results, as most anti-government arguments seem to assume) we can still reward those who are truly great, rather than punishing those who are merely unlucky.

    Finally, no man is a island. If you were the only person on Earth you would have probably died many times over. If you lived in a society that didn't cooperate you would likely have been killed by the existing establishment for being a threat. Even so-called self-made men depend on other people and the resources of a society to rise to where they are. I can only make a salary programming computers because someone else is working at farm to feed me, freeing my time to do other work. I can only get to work because generations before me build roads for me to drive on. I can walk down the streets without fear because there are police who keep us safe. I didn't have to spend my time reinventing calculus because people banded together to pay for a school for me to go to.

    People don't come to America because we're giving away free stuff. People come to America because our society enables opportunities. Bill Gates could not have build Microsoft if he had been hauling water from a stream 5 miles away, and suffering from dysentery because the water wasn't regulated. Goldman Sachs couldn't make money if they had to personally see to the education of each of their traders, rather than just plucking the best and the brightest from our publicly funded institutions.

    Rather than thinking the government is stealing your money, why don't you look around at all the things you didn't do. Tally up the things you don't have to worry about because someone else is looking out for you. Think about what other people have done to get you where you are today. Take a deep breath and realize you don't have to wear a mask over your face like in China because "anti-business special interests" have legislated clean air. Write down all of those things, and then write down how much you would pay for them on the free market. You will probably discover that for your tax dollars, you're getting a pretty good deal.

  • Report this Comment On April 08, 2011, at 3:21 PM, TMFDiogenes wrote:

    +1 tobernator1000

  • Report this Comment On April 08, 2011, at 3:38 PM, mhendley100 wrote:

    People that work and accumulate wealth for their families have a RIGHT to keep it.....the state doesn't deserve it, nor do others who have done nothing to create it. The argument that when people die their children don't deserve to inherit their parents'/families wealth is not only ludicrous but indeed, yes, it is a communist idea....

    there is no logic or reason to it save another ideological grab of something that belongs to someone else. I say make your own way, create your own career, family, life....stop sucking up to the government as a means to take away from others.

  • Report this Comment On April 08, 2011, at 3:50 PM, mtf00l wrote:

    I am inclined to agree with tobernator1000 and am reminded of the quote;

    "ask not what your country can do for you; ask instead what you can do for your country."

    That said, I still feel there is excess and bloat in our current government that we can all afford to lose.

  • Report this Comment On April 08, 2011, at 3:59 PM, pastreet wrote:

    What happened to the debt reduction panel's recommendations. This non-partisan group came up with a long term, sustainable plan to reduce the deficit and stabilize our debt as a percent of GDP within a short time span.

    Pat

    www.compoundingreturns.com

  • Report this Comment On April 08, 2011, at 4:04 PM, tobernator1000 wrote:

    mhendley100, my point isn't that parents haven't done anything to create wealth, and indeed, the right to spend your wealth as you want is fundamental.

    My point is that the children who are inheriting haven't done any more than anyone else to "earn" their parent's wealth, and by a meritocratic argument, they don't "deserve" that wealth any more than anyone else. For them to inherit uses the same logic that says princes become kings because their fathers were kings, and we rejected that when we set up a republic rather than a monarchy.

    Indeed, what we're seeing is an inherited monarchy (or oligarchy or whatever you want to call it) forming in the United States. Income inequality is pretty stark these days (top 20% of people make 59% of income and all that has been belabored in other threads), but what's even more shocking is net worth. The top 20% of people have 85% of all net worth. If that net worth is passed down to their children without any redistribution we're probably about two generations away from having landed nobility in this country.

    Not to make it personal, but statistically speaking the estate tax doesn't apply to you. Back in the "crazy liberal" days the estate tax still ignored the first $1,000,000 you were giving to your little dukes and duchesses, which is more than most people will see in a lifetime. Only AFTER that first $1 million were you taxed at 50%. Now it's $5 million and the rest taxed at 35%. If you have five children and are subject to the estate tax, they are all still millionaires, having done nothing to earn that money.

  • Report this Comment On April 08, 2011, at 4:09 PM, clayman14 wrote:

    Good article, I think Ryan falls way short of what this country needs but heck atleast he is trying.

    tobernator, guess what? I've earned everything I've got as do most people in America. I think I should get to choose what charities, family members, and friends benefit from my lifes hard work when I die... As for the comment about parental income and personal income correlation doesn't imply causation so your out their on that one. All to try and justify stealing... Typical.

  • Report this Comment On April 08, 2011, at 4:14 PM, tobernator1000 wrote:

    mtf00l, I think everyone can agree that the government has some fat to trim, but in reality the kind of fat we're usually arguing about (NASA, PBS, the EPA) is insignificant when compared with social security, medicare/medicaid, and defense spending which make up 2/3 of our budget.

    Those programs definitely need to be fixed, and I'm all for making existing, necessary services more efficient, and for cutting unnecessary services like billion dollar aircraft carriers. There are lots of ways to do that, but the same "deficit hawks" who want to kick the needy to the curb are the same people who cry "death panels", "anti-competitive", "inefficient", and "socialism" every time we try.

    Most people also completely ignore the revenue side of the equation, and only focus on cuts, which aren't going to be enough. We need to both raise taxes AND reduce costs if we're going to make this thing work.

  • Report this Comment On April 08, 2011, at 4:23 PM, tobernator1000 wrote:

    clayman14, did you read my post all the way to the end? If so, I would love for you to tell me which roads you personally built and paid for that allow you to commute to work. Do you blow your own glass for light bulbs, or are you making your own candles from rendered hog's fat from the animals you raised and slaughtered yourself? In fact, your ability to build a working computer from minerals you mined from the earth and processed at home, along with the clean-lab you used to make the processor for the computer you're using to post impresses me the most. Well, maybe not more than your ability to survive without being cared for by an adult since you were born and abandoned as a baby in the wilderness by your parents. It's a tough call.

    Nobody has earned everything they have.

  • Report this Comment On April 08, 2011, at 4:27 PM, DJDynamicNC wrote:

    Clayman, you completely failed to address any of tobernator's points. Your argument basically amounted to "nuh-uh."

    I will accord your response all the consideration it deserves.

    I will agree that there is waste in government. There will ALWAYS be waste in government - just as there is waste at your phone company, which you then pay for when you take advantage of their services. The argument you seem to be making is "this system isn't perfect, therefore END IT." Which is, to use appropriate scientific terminology, stupid.

    On top of that, I'm willing to bet (and correct me if I'm wrong) that some of the things you consider "waste" I would consider "vital economic programs" and vice versa. For example - conservatives decry spending money on foreign aid, but have no problem spending money on blowing other countries up and THEN pumping money into rebuilding them, which if you ask me is extremely wasteful (let's just build them up without first spending billions destroying them). So don't hide behind "waste."

    I'm in favour of making government more efficient, but just cutting it because it's not perfectly efficient doesn't make any sense, and is apt to destroy what makes this country great. Or did you think you made your money in a vacuum, not benefiting in the slightest from any of the many services provided by this nation?

    And if that's true, and government is so oppressive and so stifling of opportunity, then why are you still here?

  • Report this Comment On April 08, 2011, at 4:32 PM, TMFDiogenes wrote:

    I don't mean to sound ideological or partisan, just to answer a couple questions raised:

    "People that work and accumulate wealth for their families have a RIGHT to keep it.....the state doesn't deserve it, nor do others who have done nothing to create it. yes, it is a communist idea...."

    Yes, the state does have the right to tax to provide for common welfare, according to out much-lauded Constitution: http://www.usconstitution.net/const.html#Am16

    "At least Ryan has a plan of cutting the deficit instead of the adding to it as the idiots Obama,pelosi,and reid."

    Whereas Ryan's proposal doesn't make sense, the people you mentioned have actually passed a law to control health care costs -- "Obamacare". Lots of people don't like the law, but it's at least it's been objectively scored to save money, whereas Ryan's has been objectively scored to raise health care costs and depends on fairytale figures. For details, see below:

    http://www.washingtonpost.com/blogs/ezra-klein/post/the_demo...

    Again, not trying to be partisan, but since people keep raising these points...

  • Report this Comment On April 08, 2011, at 4:48 PM, TheDumbMoney wrote:

    +100 to tobernator1000, for your multiple delightful comments. I'm in commenter-lurve!! If I were an eighteenth-century maiden I'd be swooning. (Lordy, pass the ammonium smelling salts, please!)

    One quibble: "If two people are equally skilled but grow up with completely different opportunities they will have completely different levels of success."

    I think that may be a bit too deterministic, don't you?Let us instead also celebrate the impact of chance *during* our lives, as well as in our inceptions. Probably just a typo.

  • Report this Comment On April 08, 2011, at 5:24 PM, tobernator1000 wrote:

    dumberthanafool, Thanks, I'm glad I could make someone's day :)

    As for determinism I think you make a valid point, but one that's ideologically harder to argue. Most people are willing to accept that children are affected by their circumstances, and that they have little control over and/or responsibility for those circumstances.

    Someone who gets cancer or into a car crash at any age will have their lives completely changed, and possibly ruined if they don't have a community/society to care for them, but the argument can be made (and is, often and at high volume) that that person should have had private health insurance to care for themselves. At that point you have to defend the argument that poor people can't afford private health insurance AND that it's not their fault, which potentially leads to a circular argument, or at least a much longer one.

    Children, on the other hand, are easily shown to have little to no control over their environment, and so it's hard to blame things on their lack of competence, intelligence, piety, etc.

    Also, to answer the various cries of highway robbery people are accusing me of I'll point out that I'm in the top 5% of wage earners in America, and the top 0.75% in the world (see your "score" here: http://www.globalrichlist.com/index.php). If taxes go up I'll be giving away plenty of my own money, and I think that's perfectly reasonable.

  • Report this Comment On April 08, 2011, at 5:43 PM, tobernator1000 wrote:

    That should be http://www.globalrichlist.com/index.php with no ")"

  • Report this Comment On April 08, 2011, at 6:43 PM, TMFDiogenes wrote:

    Cool site, tobernator

  • Report this Comment On April 08, 2011, at 7:25 PM, FutureMonkey wrote:

    Well done Morgan. 2.8% unemployment rate? It's laughable the shennanigans non-serious politicians will try to pull to push an idealogical point rather than a fiscally responsible one.

    There are plenty of plausible plans to work our way out of this mess and almost all of them involve a combination of changes in social security (mentioned in an earlier article), medicare, intelligent spending, and increased revenue. And therefore totally unacceptable to everybody involved.

  • Report this Comment On April 08, 2011, at 8:30 PM, Eddie66 wrote:

    Funny, I just read through the CBO report. Aside from the wild assumptions already discussed, there were two items that leap out at me. First, CBO present the cost share between the government and the senior for three scenarios. For the case of continuing Medicare, the senior pay a bit less than half in 2030. For Ryan's plan, the split would be about 2/3 senior, 1/3 govt. However, the amount the senior pays is larger that the total amount both would pay under the ongoing medicare regime. Why? Because CBO assumes a 30% premium for the cost going through private insurance.

    so here's my alternative plan: We'll gradually increase the senior's share of Medicare, say by 3% per year, and in 25 years it will be fully funded by the seniors. I'll save 3% of GDP compared to Ryan's proposal. The insurance companies will hate it!

    I found he's got another trick up his sleeve that may ultimately solve the whole problem. Notice that Federal reimbursement of Medicaid will end for acute care for seniors. Why this, and why not pick on the babies of illegal immigrants or something? Well, seniors will be covered by medicare, and we don't want them to switch to save money. But what if they go broke paying their share of medicaid? Well then, they're out of luck. No death panel, just no medical care. That will cut the costs rather quickly.

  • Report this Comment On April 08, 2011, at 8:47 PM, IIcx wrote:

    Fair enough DJDynamicNC,

    Is 2.8% unemployment realistic if illegal immigration is resolved, if all taxation related spending was restricted to US made products and US labor? Yes, its a realistic figure that could happen in the next 2 years if properly implemented. So the notion that 2.8% isn't realistic under any circumstance doesn't hold water.

    Regarding cutting all Federal services by 70%. As structured data and automated systems gradually replace the need for labor, this figure is realistic. But only for areas that can be automated.

    Also note that government regulation accounts for massive waste and is projected to be even worse if the idiotic Democrat plans are implemented.

    I don't think Chairman Ryan's plan goes far enough but its a good start.

    If it were up to me I'd consolidate most of the agencies, eliminate all of the unnecessary red tape, take Social Security, Medicare and Medicaid out of the Federal Government and move it to the States in conjunction with agencies like the IRS and Treasury, immediately implement the flat tax without any loop-holes, and institute a transaction tax for all financial transactions including automated trading.

    Count yourself lucky I'm not making the decisions.

  • Report this Comment On April 08, 2011, at 8:50 PM, TMFHousel wrote:

    <<Is 2.8% unemployment realistic if illegal immigration is resolved, if all taxation related spending was restricted to US made products and US labor? Yes, its a realistic figure that could happen in the next 2 years if properly implemented>>

    I'd like to see the math on how you came to that conclusion.

  • Report this Comment On April 08, 2011, at 9:02 PM, Bert31 wrote:

    Why are you always so critical of Republican proposals, and say nothing about the shortcomings ofLiberal/Democrat tax and spend policies? The governemnet is literally about to shut down because Pelosi, Reid, Franks and Schumer did not do their jobs last year, yet you spend your energy criticizing Ryan's pan? It makes me sick how the Democrats run away from problems and are cheered, but when a Republican makes a proposal, he is completely ostracized in almost all media outlets.

  • Report this Comment On April 08, 2011, at 9:17 PM, Bert31 wrote:

    They can't even keep the government from shutting down!!! hahahaha What's the problem?? I wonder if the Democrats will flee the country to avoid a vote, the way the Democrats in Wisconsin fled the state for a resort in IL instead of gonig to work?

  • Report this Comment On April 08, 2011, at 9:46 PM, IIcx wrote:

    Here's a fairly simple example TMFHousel,

    Several California road construction projects were delayed because the reflective paint for the lane lines is made in China was on back order.

    Please explain to me why tax dollars are buying paint from China when it can be purchased in the US?

    The cost over runs due to delays and road congestion that resulted is equally absurd.

    It a minor example of what's currently going on.

    Here's a worse example, there isn't any silicon being manufactured in Silicon Valley. Part of the reason is due to the idiots in government in California who have tax business out of the state. But should any chip that goes into any piece of equipment thats paid for my taxpayers come from any other country -- especially chips for DOD hardware?

  • Report this Comment On April 08, 2011, at 10:05 PM, ETFsRule wrote:

    "Is 2.8% unemployment realistic if illegal immigration is resolved, if all taxation related spending was restricted to US made products and US labor? Yes, its a realistic figure that could happen in the next 2 years if properly implemented. So the notion that 2.8% isn't realistic under any circumstance doesn't hold water."

    Well that's an iron-clad proof if I've ever seen one. 2 years, no problem.

  • Report this Comment On April 08, 2011, at 10:22 PM, IIcx wrote:

    Use some imagination ETFsRule,

    Actually, I should first say that I'm not a Protectionist but there are methods that could be used to achieve zero unemployment.

    The issue here relates to the statement that its not realistic when it clearly is but requires a lot more than what we're currently getting from Washington.

    The only thing we need from Washington is smaller and efficient government that enacts legislation that's in the best interest of the American taxpayer and American business.

    The rest is easy.

  • Report this Comment On April 09, 2011, at 8:13 AM, Bert31 wrote:

    Why do you have to mischarachterize the man's plan to argue against it? Reduced unemployment is a result of the plan's institution, not a pillar upon which it rests,as you state in your article. It is shameful that your ideological articles are published here. You should blog this stuff on the Huffington Post and leave this site for the invsting stuff.

    You take offense at the plan's assertion that the rate of recovery is picking up? Maybe you are not listening to Presient Obama who tells us at every fundraiser that the economy is improving?

  • Report this Comment On April 09, 2011, at 9:29 AM, TMFHousel wrote:

    <<Why do you have to mischarachterize the man's plan to argue against it? Reduced unemployment is a result of the plan's institution, not a pillar upon which it rests,as you state in your article.>>

    False. It's a pillar. It's a pillar of any budget forecast because of the dramatic effect it has on tax revenue, growth, inflation, and safety net spending.

  • Report this Comment On April 09, 2011, at 10:37 AM, kalho13 wrote:

    Plain and simple. Our politicians are more interested in their careers and the power it brings. Until we have term limits in place then the decisions made will be in terms of the next election.

    For all of those in this forum who propose higher taxes go ahead and send the irs a little extra. Why does everyone complain about a simple flat tax where there are no deductions and everyone pays? It must be the same people who say the rich must pay more think anyone not rich has no such responsibility. A flat tax would bring in revenue lost from an underground economy and a multitude of illegal activities as everyone in turn still spends the money gained illegally or legally.

    I think people just like to bicker back and forth and close their mind and eyes to any idea that does not agree with the mindless indoctrination they are fed.

  • Report this Comment On April 09, 2011, at 6:25 PM, 2Brains wrote:

    This article is out there. The unemployment rate is 8%. Really? That doesn't count the ones that fall off unemployment does it? Answer "NO!." Base your fiction on manipulated government stat's and what do you have?

  • Report this Comment On April 09, 2011, at 7:21 PM, NOTvuffett wrote:

    Morgan,

    Maybe Ryan's budget contains some hopelessly unrealistic numbers. But at least he has put out a proposal to address some of the budgetary challenges that face the nation. I don't think it is possible for the unemployment number to dip much lower than 5% because of the mobile nature of the workforce nowadays.

    Not that the ruling party passed a budget, but did you even read the proposed budget from the administration? It assumes the same kind of things in GDP growth, and that tax increases will be enacted. It still comes up with about $1 trillion in deficits every year. Last time I checked, you have to pay interest on borrowed money, lol.

  • Report this Comment On April 09, 2011, at 10:28 PM, MIstock wrote:

    I'd have to agree it is a fairytale as well. The real issue is government supporting itself with taxes and having no long term plan for revenue production. Throw lobbyists into the mix and you have a situation that benefits those who will donate the most to re-election campaigns. Look no further than GE and how they didn't pay taxes for that one example, they aren't the only corp that does it. Now for the fix....

    The government should buy or through emminent domain, their choice, take FedEx or UPS over and make it part of the USPS. Ensuring that the company is still run for profit and competes fairly with competitors. Modifying anti-trust laws would be required and executive pay would stay the same to keep good people around. FedEx uses a contractor system for Ground that makes them my prefered choice in this scenario as the company doesn't pay retirement, medical, or truck maintenance.

    The next thing would be to cut the federal budget while downsizing and expanding state government. Part of that would include establishing state banks that will give out loans and keep people in their homes. The state bank of North Dakota didn't foreclose on farms in the 30's and its part of what we need to delay now. People won't shop if they are worried about their home. They need affordable payments at the expense of profit for now.

    My idea basically boils down to each state becoming part of our free market system and competing. Eliminating taxes and supporitng themselves through good investments that create jobs. Afterall, if one state owned GE that state would hardly have had a budget shortfall. The last part would be an account that holds enough money to run that state for 5-10 yrs.

  • Report this Comment On April 10, 2011, at 1:16 PM, Bert31 wrote:

    The Heritage Foundation's numbers were projections of implementing the plan, which means the plan was written before the nubmers were calculated. How can the numbers be a pillar of his plan if it was written before those numbers wer calculated.

    The only fantasy that comes to mind wehn I read this is the Wizard and the good old Strawman...

  • Report this Comment On April 11, 2011, at 4:01 PM, ragingtorrent wrote:

    Actually I think this criticism leaves the author in an uncomfortable place.

    He states that the plan is a fairly tale that has wildly optimistic economic/unemployment projections. Therefore Ryan's plan won't ever balance the budget or maintain prosperity.

    Which means that in order to solve the problem we need a better plan. That would mean either that we must cut more spending or raise more revenue or a combination of both.

    So does the author have a plan?

  • Report this Comment On April 11, 2011, at 10:08 PM, imsodopey wrote:

    the posters on this site can't even agree on how to handle this situation.... how can those who are dependent upon re-election be able to do so?

  • Report this Comment On April 12, 2011, at 12:00 AM, daftstockpicker wrote:

    Raise taxes to the levels before the Bush tax cut. Cut military spending by a small percentage. That should balance the budget.

    The Bush tax cuts never made a difference to me personally and everybody I know does not seem to know how it made a difference to them. And it obviously does not seem to have helped the economy in any way.

  • Report this Comment On April 12, 2011, at 12:12 AM, daftstockpicker wrote:

    What is up with all the comments asking for a plan from the original author? Paul Ryan's plan is idiotic, in the same manner as Bush's tax cuts, in the same manner as Perry's tax cuts in 2005-2006. Perry's tax cuts is causing massive spending cuts in Texas Education currently.

    People who gripe about teachers not working hard enough or getting too many days off should perhaps think about what is involved in being a teacher.

  • Report this Comment On April 12, 2011, at 12:43 PM, Subsound90 wrote:

    Very good article. I am very glad at all the push back to the insane proposals made by people who should really know better then just making things up.

    I do think the posts that people can't state criticism others proposals (especially far outlandish ones) without a solution very funny. I think a good analogy is that person cannot issue criticisms of proposals to cure cancer with baking soda because they have not come up with a complete 100% effective cure for it. I am sorry to say that doesn't even pass the laugh test of basic logical reasoning.

    Even better to say that this Ryan's solution is the only one, or doom. Many people have come up with competing solutions put forward by people (good and bad), but Ryan refusing to even address them doesn't suddenly make "no other solution". That's just willful ignorance.

  • Report this Comment On April 12, 2011, at 1:23 PM, Teo123 wrote:

    It's not that the cure for cancer is less cancer. The cure for cancer is some other awful illness. Ryan does what every other politician who addresses this issue does: he recognizes the problem of long-term spending and then does nothing to cut long-term spending (unless you consider tax cuts as a method of addressing long-term spending).

    The reality is that Medicare is good policy, for the most part, and is needed. The elderly should not have to work into their 80s so they can pay their medical insurance. We just have to finally -- at long last -- figure out a long-term plan for dealing with the now-retiring baby boom generation. To me, the easiest fix lies in the payroll tax.

    As most know, the payroll tax hits the first $106000 income at 6%. Eliminate the cap. If that is not an option because people refuse to raise taxes on those making over $106K, then you need to raise the rate for everyone else. Perhaps a third alternative is to make Medicare more able to drive down price or drive out unneeded services. I'm not sure how this gets accomplished, though. Most people would call it rationing.

    Bottom line: long term, we need a plan that will address the spending problems.

  • Report this Comment On April 12, 2011, at 6:43 PM, buntyp wrote:

    Is this a 'Cancer', as so many are referring to it here, or is it more of an 'Addiction' problem.

    Has anyone & or group, ever recently got a consensus of what % of the G.D.P. should be the absolute Maximum needed to Finance the Govt.

    The current G.D.P. is approx. 15 Trillion Dollars. At say 20% of G.D.P. that would mean requiring Revenues of approx. 3 Trillion Dollars. The anticipated 2010 end of Financial Year, receipts, will be approx. 2.4 Trillion Dollars.

    If then, all calculations started there, stuff like 'Bush Tax cuts' & other juvenile statements, would soon have to depart the 'Tweet-ing' type of discussion, & start to bring some serious Adults, to do with 'Policy-Making', to the table.

    The constant harping about 'Rich People' & 'Fair Share', is not the sort of commentary which is imbuing any faith addressing intelligently the 'Fiscal -as is,- Situation', or what needs to be properly determined as a 'Feasible & Viable' strategy to try & overcome & or begin to straighten-out, the Fiscal situation, & try to bring some 'Confidence', particularly among the Nations Creditors.

    What America's Creditors are observing, is a very good 'Oscar like performance' of a Country whose 'Mentality' is in 'Decline'. This is what is 'Freaking them-out', more than anything else.

    When people like Obama, as 'President' can say publicly, that he is telling the 'Business Community, that he wants the Jobs to stay here, & the workers to be Paid better while also they, the Business Folk, pay their 'Fair Share', in the form of higher Taxes, that is sort of 'Mind-Blowing' statement that give our 'Creditors' the he-bee-jeebies.

    I would not like to hazard a guess how much more 'Capital' got wings & fled, as a result of those exhortations.

    One thing is for Damn sure, the situation is not 'Pretty', & all the 'Touch-Feely Tweeting & stuff' ain't going to 'Cut-It'.

    The Idea that 'Boss Tweedie's' old time way of doing things, is not going to not soon bring y'all to your knees, is akin to the belief in the 'Mathematical Alchemy', that people like Paul Krugman at the NYT, are constantly hawking,- like 2+2 is anything he makes it to be,- will only allow the continued use of 'Steroids', by the all these latter day - 'Tammany Hall types' & their - 'Way of doing things', & may also hopefully bring 'Obama' back to his 'Community Organizing Roots', which is where he 'Belongs'.

  • Report this Comment On April 14, 2011, at 10:33 PM, sailrick wrote:

    Sounds like Ryan is like all the others who are under the delusion that we can somehow return to the good ole 18th century and require that the only role of the federal government be defense.

    Well, those founding fathers, who they like to quote so much, were largely against having a standing army at all, never mind the empire we now have, with something like 700 military bases in other countries.

    Bush tax cuts for the rich - about $230 billion

    Iraq war - about $1 trillion and still counting.

    Afghanastan war - maybe another $1 trillion when all is said and done.

    Bank bailout - $700 billion

    All of that was before Obama, or initiated before him.

    You can't start two wars and cut taxes for the rich at the same time and not run up a deficit.

    The GOP wants the middle class working people and the not so well off to foot the bill for deficit reduction. Oh, and they want the environment to foot a bunch of it too.

    How about ending subsidies to fossil fuels, which have been going on for about 90 years? That money would be better invested in promoting clean energy and an improved grid, which would also create jobs. The oil industry is actually a low employment business, relative to it's size.

    Fossil fuels are ruining our economy. Between the ridiculous subsidies and the huge externalized costs, which includes 3 wars in the Mid East, we are talking about several hundred $billion every year. Yeah I know, we're looking for Osama Bin Ladin. But our entire interest in that whole part of the world, all the way up to the Russian border, is about oil and potential pipelines.

    Then there's the oil portion of our trade deficit, which is huge. Plus, the oil is only going to get more expensive.

    But the GOP is married to the oil and coal industries, and all but a small handful of GOP congressmen are not global warming deniers. So they were using the cover of deficit reduction to further their anti science delusional agenda. The Koch brothers have been very busy and have most of the GOP congress in their pocket. They trained the Tea Party and feed them the talking points that further their agenda.

    I suppose it's a coincidence that the GOP gets 80% of political contributions from the oil industry and 90% of coal industry contributions.

    How can you solve big problems when one of the two political parties will not even acknowledge scientific evidence of climate change. It's the most thoroughly peer reviewed theory in science history. The prestigious science journal Nature has twice issued statements lambasting the GOP anti science position, and not just on climate change. Every national academy in the world agrees on AGW, along with virtually every other major scientific organization in the world and 97% of climate scientists.

    Even under the milder projections for climate change the economy will be wallopped like nothing we have ever seen. This is the biggest threat to the future economy. Peak oil and climate change will wreck havoc on the world economy, not just the U.S.

    The military is taking climate change very seriously, as a threat to national security. They also are preparing for peak oil by developing alternative propulsion and fuels for planes, ships, and other vehicles, etc.

    Any plan to fix the economy that ignores this elephant in the room, is doomed to failure. Oh, did I mention that under GOP energy policies, we will fall behind in the worldwide clean energy revolution? That should be good for the economy.

  • Report this Comment On April 15, 2011, at 12:30 AM, muddlinthrough wrote:

    Daft...

    I grew up in Texas, so I follow what went on with the tax cuts and the current situation with some interest.

    And now living in California, land of the perpetual '$15B dollar annual budget gap,' I find what's happening 'back home' a bit laughable...in the 'okay, just get it together, people.'

    For instance, Arnie came to power in Calif as a populist who was going to 'audit the state government' to find where cuts could be made. That worked right up until the vested interests got ahold of him and pointed out that he didn't have the power, even if he had the mandate and law-given right, to do so.

    In Tejas, it used to be the trial lawyers ran the state government, and the PUF (permanent university fund) kept the colleges reasonably well-funded, and the richer school districts kept the money they took in and kept their kids in public schools. The obvious effect was after a while, the oil money dwindled, the populist view that a 'Robin-Hood Plan' introduced by Senor Ross Perot was over-due, and poor districts started getting their cut of the educational budget.

    Enter GW, who teamed up with Bob Bullock, Lt. Governor, and pretty-much re-rigged the power structure by acting as a do-nothing on the public front and one of the biggest wheeler-dealers behind the scenes. Pollution levels went up, the TRC became even less of a watchdog on pipelines and oil safety, and Perry went hog-wild building and selling toll roads that no one wants in a 'build-it-and-they-will-come' once he got the figurehead.

    All of this rambling aside, it should have never been in anyone's interest to have public education funded by the states or federal government: look at the mess that public universities have gotten into--it used to be that education was about the same sort of cost-growth as general inflation. Along comes deregulation of federal lending standards, and the public schools start trying to and in some cases outbidding the Ivy's for 'star' professors, who don't teach but add to the prestige of the schools. Meanwhile, we now turn out graduates across the nation who are in financial servitude for the rest of their natural lives. Who does this benefit, besides the lenders? Uh...you, if you own CIT or BA or any number of banks that underwrite such guaranteed streams of income. Does it benefit society? Sure...we need more teachers that sign up for 9 months of work and a union job that pays $70K-$90K at 20 years of tenure.

    Concentrating wealth-means in the public sector is always a bad idea. It corrupted the nobles in any European country you can name after the Roman Catholic Church started using its 10% tithe requirement to fund wars. It completely sank the Roman senate, to the point they came up with the idea of a Caesar to clean house. (He never gave up power, and had to be assassinated. Maybe we could try that in this country? Nah...haven't had a good coup since 1964. And that 'Great Society' gig certainly seems to be fitting the corruption pattern, if you look at the trend of public moneys and tax spending as a percentage of GDP, you can pretty much bet no one's going to have another successful one for at least another decade.)

    Perry's 'take from everyone and give to business' bought him the election. That was his only goal. LIke Obama, he got the gig because he's a careerist, and only knows how to go on apply for the next level of the job...not actually do the job he's been hired to do.

    Ryan, in some ways, is on that same path. It's impossible to do the right thing, because the vested interests are going to stay entrenched. He's trying to 'pay off' the seniors because he wants a stab at the top-job, because as GW, Clinton, Reagan, and Gore (who never got the gig, but still went from $2M to $50M in net worth in a matter of short years) have proven, it's not about what you do, just that you showed up and got the nod, put in your 4 or 8 years, then retire off to the ranch to write how you were misunderstood, you saved the masses from yourself, and you never-ever tell off on how your buddies got their cut. Every so often, you hand out a $500M tax-cut to one of your BIG contributors, like GW gave Hank Paulson...or Clinton gave Frank Rich...just to prove that you're untouchable.

  • Report this Comment On April 15, 2011, at 12:38 AM, muddlinthrough wrote:

    oops. Make that 'Marc' Rich, not 'Frank.' Methinks I've confused the blow-hard tax dodger with the blow-hard boss of the delusional Herr Doktor Krugman.

  • Report this Comment On April 15, 2011, at 1:57 AM, pkluck wrote:

    After reading this article that sounds like it was written by MSNBC is one more reason why I'll never give a nickel to the Fools. Are all journalists (used very loosely here) flaming ignorant liberals?

  • Report this Comment On April 15, 2011, at 1:08 PM, jwxfiles wrote:

    Morgan,

    You say, "...Ryan's plan would create two groups: Baby boombers with lavish Medicare plans...'' Wow! When will this be happening? I'm guessing you aren't on Medicare. Perhaps you should try it.

    Your article tells us what we already know. Both parties manipulate the numbers to make their point, which lately seems to be wrong. I haven't heard either party talk about little things. Just like the average person could cut out that extra coffee each week, seems our congress could find some small expenditures to do away with. Oh, that just doesn't make sense when you are talking trillions in debt.

    Seems that none of the congress are in on the recession. Please ask your readers to suggest to their senators and representatives that they should cut their pay and staffs in half. Less money - might have to figure out a personal budget. Less staff - Less time to meddle in things makes you spend more time on what's important.

    Sorry, I'm sure that most senators and reps would consider that last statement to be their reelection campaigns.

  • Report this Comment On April 15, 2011, at 1:47 PM, IndianaGirl72 wrote:

    Can we put all these ideas and opinions together and write our own budget proposal?

  • Report this Comment On April 15, 2011, at 1:48 PM, Harley117 wrote:

    The article states that high unemployment is the cause of the deficit. This seems to ignore the fact that spending has increased 40% since 2007 when the Democrats took control of congress. The deficit the last year Republicans controlled congress was $160 billion. Of course Mr. House would never agree that Democrats out of control spending is the real problem.

  • Report this Comment On April 15, 2011, at 1:58 PM, TMFHousel wrote:

    <<The article states that high unemployment is the cause of the deficit. This seems to ignore the fact that spending has increased 40% since 2007 when the Democrats took control of congress>>

    A large portion of that came from spending on unemployment benefits/food stamps -- About $300 billion of the $800 billion increase between 07-09. Falling tax revenue (again largely due to unemployment) took another $400 billion cut.

  • Report this Comment On April 15, 2011, at 3:26 PM, muddlinthrough wrote:

    Housel,

    How much faith do you really PUT in these numbers? Pentagon budget has NEVER been cut, as far as I can tell.

    We're talking 'round numbers' that encompass rounding errors that take off chunks that are greater than GDPs of a lot of countries.

    Fact: no monies are going to pay off the debt, just interest payments.

    Fact: even 'the great balancer,' the dishonorable WJC, didn't 'cut the deficit' with his 4-year economic 'I balanced the budget' years. At best, he got a few payments ahead just in time to leave office with an employment bust that Shrub managed to have 9/11 bail him out of long enough to go throw a couple of wars.

    Which, we're finally realizing, only causes a post-WWII budget surplus if you're the only country still standing.

    Fact: BOb' promised to 'bend the cost curve down' on healthcare costs. He expanded the pool of potential includees for healthcare to 30 million more people. Healthcare costs have gone up about 30% since he started mucking with things. He then asked for the remaining $400B of TARP to go spend on 'stimulus.'

    So, 3 years into it, we still don't have a workable economic policy, the 'flight to the bottom' for the USD has finally started as $14T starts to look insurmountable. And Mr. Ryan's 'plan' based on unrealistic, never-before-reached numbers as a trial balloon is getting air time.

    Right before his secondary proposal, the VAT, will come back up in 6 months. That'll balance the books for 2 years while creative accounting is done to make things look good. After that point, the real cost will kick in, we'll realize we've got even more corrupt and less workable 'government spending' than India has today...the beast will get larger, and eventually all the guns WILL be used to go 'make peace' in some unstable-but-defensable 3rd world oil-producing nation or nations.

    Yes, I'm a cynic, but after 25 years of watching more and more talk, and less and less action, I'm becoming part of the disaffected (but highly taxed) percentage who pay AMT and watch with sad amusement that the merry-go-round never stops.

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