Home Economics Paul Ryan’s Yellow Brick Road to Oblivion

Paul Ryan’s Yellow Brick Road to Oblivion


In this country we have some of the finest economists in the world. Many of them, including Ben Bernanke, Alan Greenspan, Lawrence Summers and Austan Goolsbee work within government to steer economic policy in the right direction.

Representative Paul Ryan is not one of them. He is in government, but he is not one of the nation’s finest economists. He has no advanced education in economics at all, and while one might say that neither did FDR, Harry Truman or LBJ…they did have advisors who were learned economists. And they listened to them.

What prominent economists like Drs. Joseph Stiglitz, Robert Reich, Jamie Galbraith, Bradford DeLong, and Mark Zandi will tell you but you will not read in newspapers or see on television–that we cannot survive with only cuts in government. That is the Paul Ryan formula.

You have other economists also, like Dr. Douglass Holtz-Eakin, who was Chairman of the Council of Economic Advisors for President George W. Bush (Bush #2, the dumb one.) Dr. Holtz-Eakin maintains that cutting taxes is a good way to stimulate economic growth.

He does so today even though while he was head of CBO under the first President Bush (the smart one), he had a study done which proved that tax cuts do not improve government revenues and earn a return of only from 1% to less than 20% of the amount of money they cost the government.

So let’s be very, very clear. You cut taxes by one trillion dollars (which Bush II, the dumb one, did) and you get back a return of between $10 billion and $200 billion. In other words, not only do tax cuts not stimulate enough production to increase revenues but they reduce revenues by at least 80% to 99% of the amount cut…while providing no stimulus at all. That’s how you create deficits of $5 trillion in 7 years from a budget surplus.

The problem is even worse than merely the numbers. We have a supposedly learned economist, Holtz-Eakin, lying to the people. He knows what he is saying is false…because he supervised the study. But because of financial and political pressure, he lies about it.

The economy, according to Ryan’s theory, requires austerity, cuts in spending. That comes from the Neocons, the Right Wing of the Republican Party. The problem is that it is not an economic but a political argument. The idea of cuts in government spending comes from those in the camp of the Koch Industries, Cato Institute and Chamber-of-Commerce wing of the Republican Party that wants to gut all social services, leaving the upper classes with all equity in corporate America. By telling you we need cuts, they think you will be diverted from raising their minimal tax rates.

This is not a plan for the future. Today, the wealthiest 1% of the population owns 67% of all non-real estate equities all stocks in other words. And with ownership of all this corporate wealth comes also the ability to control the national message. Through the leverage of national advertisers, the national television networks are controlled by the super-rich and by international corporations. This is a plan by those groups to control the message by controlling media.

Most recently, we see that Keith Olbermann, a commentator who challenged the Right Wing lies and propaganda was fired from NBC, when it is about to be merged with more conservative Comcast, the nation’s troublesome, largest cable system. The Right Wing are able to eliminate the truth-tellers and keep the brazen liars, and hate mongers like Glenn Beck on the air even in the face of 200 advertisers who canceled his program in protest.

In addition to the television networks, most radio networks are actually owned by Right Wing corporations. Of every 10 radio talk shows, 9 are hosted by acknowledged Right Wing talk show hosts like Limbaugh, Hannity, Beck, Savage, Ingraham, and numerous others. There is no strong Liberal movement because the Neocons, the Right Wingers, are suppressing free speech through simple ownership of the means of distribution of ideas…television and radio. They will not allow Populist ideas on the air.

With corporate wealth comes the ability to buy the Presidency and the House and the Senate. Once in office, the Administration can put into place its own U.S. Attorneys in every state in the Union, plus Federal judges, plus members of the Supreme Court.

If you can find judicial hacks…political hacks… like Antonin Scalia, John Roberts and Sam Alito, hacks who seek and accept a Federal or Supreme Court judgeship purely for ideological political and financial reasons, not for the honor of implementing a just judicial. As former corporate lawyers…they have already made it clear that they rule for corporations.

Once you control the judicial system you control the entire political system. Once you have done that you have total control…a totalitarian state. One should remember that the theme of “Judgment at Nuremburg,” was that the greatest disdain by the American judges who tried the Nazis was held for those German Judges who did not stand up against a totalitarian regime when they were the last hope of oppressed citizens.

So in the context of a looming totalitarian state, here is the Ryan economic plan.

1. Health care.

Ryan wants to do away with the government involvement in health care entirely for those not on Medicare. He wants to do away with Medicaid completely. Health care will cost what it costs and people will pay what is demanded by the for-profit insurance companies.

In the Ryan plan, every family would have a credit on their tax bills of $5,700. That’s all. His plan does not tamper with the “free enterprise system” like all the other countries of the world. This minimal $5,700 that we would all have to purchase health insurance is almost exactly like the Health Savings Accounts which we have now that almost no one uses because they are virtually useless. Those who do have them are those who could afford to pay for health care out-of-pocket.

The Medicaid and SCHIP programs subsidize health care for low income families on a sliding scale. The poorest would get $5,000. Under our current system, the funds would probably last a family about three months. Nothing apparently covers catastrophic illness because nothing prohibits rescission or refusal of health insurance. If it did, Ryan would not favor repealing the existing program, which does prohibit these practices.

In summary, Ryan’s plan moves the burden onto the backs of the citizens but asks nothing of the health insurance industry. Nothing of significance is done to reduce costs and planned subsidies or tax breaks are far less than needed to make the plan work. In short, it is a gift to the health insurance industry and a slap in the face to consumers.

2. Social Security

This is pretty simple. Ryan would end Social Security as we know it in 2021. In 2012, he would begin a ten-year phase in for all those under age 55. With certain adjustments to see that older workers do not have retirement incomes that are too low, the plan would allow for workers to have minimum retirement incomes based on 5% of income plus more if they desired invested in retirement. They would be basically 401K programs similar to those that federal employees have.

The question is not the policy but the people. The people applauding this idea are the same people who caused the Wall Street crash and the Republican Senators who recently tried to prevent workers from getting unemployment insurance.

These are the same people who, in 2005, tried to push through a privatization plan that would have turned your Social Security over to Charles Schwab and Goldman, Sachs. Do you know what kind of Social Security you would have now? Virtually none.

Paul Ryan thinks the same way, votes the same way and has the same attitude towards his fellow citizens as do the Republicans in the Senate. He votes with them, is a leader among them and works with them as they have vetoed every jobs bill that the Democrats proposed. He wants to repeal…not improve…health care reform.

They received $400 million in campaign contributions—some would say bribes—during the health care reform struggle from the health insurance industry. You would have to be totally brain-dead to believe that they are sincere. They work for the health insurance industry that is trying to charge more premiums, pay fewer claims, and let you die.

3. Tax revisions.

Ryan would reduce the top rate to 25% and the next rate to 10%. What does that tell you? He will say that the outcome is the same as currently. OK, even if it were the same as today…today we have an annual structural deficit of $500 billion created by the old Bush tax policies…ones that Ryan voted for. He hasn’t left the Republican Party to become a monk. He is the head of the Budget Committee, and was a leading member of the Republican Party that created $13 trillion in deficits!

This rate is ten percent lower than the current rates, which are already too low. Even if you cut out all deductions, you will still only come up with revenues of 17-18% of GDP and we will be in the same mess we are in now. What we really need are higher top rates. When we were solvent, we had top rates of 97% and later 74%. We should have a top rate of at least 50%. Thanks to Clinton and Gore’s cuts we could now balance the budget on those kinds of rates. But not on half that amount.

We need to cut our military budget to only double the total of what China, Russia, North Korea and the Western European states spend. That would mean a cut of approximately 50% in the military budget. Then we need to bring our troops all home from Iraq and Afghanistan. If we do all these things we will have a—big—surplus.

Ryan creates a business consumption tax. He takes all purchases and subtracts them from all sales and assesses an 8.5% tax on the difference. That is ok, if it is real. The problem is: what are considered purchases? And what are considered sales? And can we assess a minimum alternative tax of simply 5% of sales on all corporations should there be some kinds of deductions or exclusions brought into the law?

Ryan wants to add a tax on imports by American corporations. Again, we should believe this when we see it proposed in actual legislation. But it is a good idea.

4. Training programs and Budget Reform

These are minor issues, involving streamlining of government training programs, consolidating them. That makes sense. And the budget portion simply says that we should have a process whereby we do not spend more than we take in and budget for what we legislate.

That’s it. That’s the Ryan Plan. The plan itself is fine except for one simple fact. It does not get to the point that Ryan says he wants to reach…budget solvency. Dr. Joseph Stiglitz, by most academics and economists, the most respected American economist today, a long time Nobel laureate, seems to indicate that Ryan’s plan is far too simplistic, like an arrow that not only misses the bulls eye but the target itself.

Our problem with it should be that it is produced, welcomed and lauded by the very people who clearly are bought and paid for by the super-wealthy, by the corporations and by the Right Wing in government and the military. This may be…some would say definitely is…an attack by the Right Wing on the Middle Class. Not necessarily as it is, but as it could be, if the wrong people are elected.

We would be one simple step from Ryan’s plan to the elimination of financial support for health care for the elderly and the poor. We would be a few votes in the Senate and one Republican President from doing away with any kind of meaningful retirement program or financial support for the disabled.

It goes even further. It takes the concern for our fellow man and puts it back in to charitable organizations, so that if you have some misfortune, you need to rely on charity. This turns the clock back 100 years.

The very definition of a Fascist state is one where the government, the military, the large industrialists combine to create a total government, all combined to do only the will of the political party that runs the country. In really severe Fascist states, those governments also controlled the judicial system, indicting, convicting and imprisoning their political enemies.

The concern about Fascism is its insensitivity, even cruelty, towards the People. The Ryan plan is potentially the first step in that process and we need to achieve many of the same goals but do so with politicians we can trust because we know that they have worked in the past, not for the rich, not for corporations but for the American People.

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