Sign up before Midnight to watch our video,
“Biggest Ponzi Scheme in U.S. History to Crash,”
and get our daily e-letter Investment Contrarians.
We respect your privacy!
We will never rent/sell your e-mail address.
That’s a promise! And you can opt out at any time.
Shortly after 10:30 a.m., Tuesday Rep. Paul Ryan and the Republican members of his House Budget Committee entered the TV studio and took their places. They positioned themselves behind the economic guru of the party, holding white and green copies of The Path to Prosperity as tight as hymnals.
“What we have here,” said Ryan, “is a budget that balances the
budget. A path to prosperity with a responsible balanced budget. We
believe that we owe the American people a balanced budget. And for the
third straight year, we’ve delivered it. In fact, we’ve balanced this
budget in just 10 years. This is a document, a plan that balances the
budget in just 10 years.”
In 25 seconds, Ryan had uttered some tense of the word “balance” five
times. This was master-class message discipline, telegraphed weeks in
advance. In the middle of January, Ryan had sold House Republicans
on a three-part punt of the coming fiscal crises, climaxing with a
budget that would balance in 10 years. His previous budgets took 25
years to come into balance. Some Republicans did their own math and
panicked: Would Ryan be forced to expand his Medicare “premium support” plan to hit more seniors?
He wouldn’t. For all of its mystic, wonkish charms, a budget resolution doesn’t have to be very specific. Ryan eliminated the deficit in 2023 by counting new revenue from the “fiscal cliff” tax hikes, repealing Obamacare, restoring money that had been “raided” from Medicare, and cutting social programs by as much as 50 percent. According to the Congressional Budget Office’s math, he would balance the budget and Democrats wouldn’t.
As Ryan talked, the National Republican Congressional Committee issued cloned press releases to brag about this difference. “Will [New Hampshire Rep. Anne] Kuster Stand Up for a Balanced Budget?” they asked in one email. In another: “It’s time for [New York Rep.] Tim Bishop to step up to the plate and demand that SOMEONE in his party produce a balanced budget.”
He wouldn’t. For all of its mystic, wonkish charms, a budget resolution doesn’t have to be very specific. Ryan eliminated the deficit in 2023 by counting new revenue from the “fiscal cliff” tax hikes, repealing Obamacare, restoring money that had been “raided” from Medicare, and cutting social programs by as much as 50 percent. According to the Congressional Budget Office’s math, he would balance the budget and Democrats wouldn’t.
As Ryan talked, the National Republican Congressional Committee issued cloned press releases to brag about this difference. “Will [New Hampshire Rep. Anne] Kuster Stand Up for a Balanced Budget?” they asked in one email. In another: “It’s time for [New York Rep.] Tim Bishop to step up to the plate and demand that SOMEONE in his party produce a balanced budget.”
It’s good, clean hit. Senate Democrats haven’t passed a budget
resolution since 2009. (They have, obviously, funded the government.
Remember, budgets are more about statements of principle than making
numbers add up in real time.) On Wednesday, Washington Sen. Patty Murray
will release a budget, which will include a rumored 1-1 ratio of tax
hikes to spending cuts, but won’t balance. The White House has never
produced a balanced budget. It’s hinting at a plan in which “the ratio of debt to GDP is below 3 percent”—stable, but not balanced.
Why do Democrats keep tumbling backward into this trap? Because they
don’t think it’s a trap. Voters don’t punish them for failing to balance
the budget. In 2012,
Mitt Romney won voters who called “the deficit” the “most important
issue” by a 2-1 landslide. And yet Romney’s eating birthday cupcakes in
California somewhere, and Paul Ryan is stuck in the House, reintroducing
his old budgets. Investors don’t punish the Democrats, either. In 2011,
when Standard & Poors downgraded America’s debt rating,
the agency fretted for a plan that fixed “the government’s medium-term
debt dynamics.” It didn’t cry out for a balanced budget. And then
everybody stopped paying attention to S&P.
Think back to the origins of this Ryan budget. Why does it balance in
10 years, not 25? Because back in January, at the House Republican
retreat, it seemed like the sort of thing that could get the feral
members in line. “This looks like a concession to the internal dynamics
of the [Republican] conference,” says National Review columnist Ramesh Ponnuru. “It doesn’t make as much sense in the broader context of public opinion.”
Ponnuru should know; he was one of the speakers at that retreat. He’s
happy with much of the new Ryan budget—“it’s great that they’re still
standing for Medicare premium support”—but wonders whether they focused
on the wrong numbers. Why be so specific about when the budget will
balance, but not about how? The Ryan plan collapses the tax
code into two “pro-growth” rates, 10 percent and 25 percent, with no
change to expected revenue. At today’s press conference, Ryan was asked
whether he’d get those numbers by closing loopholes that middle-income
people crave—the mortgage tax deduction, for example. Ryan said that the
Ways and Means Committee would hold hearings to figure this out, but it
might be painless. “You can actually plug loopholes and subject more of
a higher-earner’s income to taxes with a lower tax rate,” he said.
Why leave it so vague? “I don’t think there’s good argument for being
specific about the rates and unspecific about the tax base,” says
Ponnuru. “They’ve left themselves open to the argument that they are
delivering a specific valuable promise to rich people. If you’re making
$2 million, and your top rate falls from 39.6 percent to 25 percent,
you’re going to be saving a lot of money.”
And this is how Democrats have always defeated the “balanced budget”
cause. In 1995, when a balanced budget amendment was close to victory in
the Senate, Democrats warned that mandatory balance would mean biting
hard into Social Security. In 2013, a new Senate Republican version of
the BBA has been introduced, and forgotten. Republican strategists admit
that “balanced budgets” are a “70 percent issue”—supermajority support
when voters hear about them—but that the details of possible cuts remain
horrifically unpopular. Republicans who aren’t yoked to the party’s
daily messaging don’t see the benefit of making sure every idea has a
nice CBO score.
“What I would have advised to Romney, if Romney won, was something
that immediately helped the economy,” says Kentucky Sen. Rand Paul. “I’d
pass one bill that cuts the corporate income tax rate in half. I would
have started there. I wouldn’t have worried about whether it was revenue
neutral, or what anyone says.”
And Democrats don’t sound worried about their “unbalanced” budget. I
asked Alaska Sen. Mark Begich, who’s up for re-election next year,
whether he was comfortable with a budget that didn’t balance buy a
certain date. “I don’t worry about those things,” he said. “We’re
working towards a balanced budget.” Maine Sen. Angus King, an
independent elected last year, made the same distinction. “The important
thing is we’re on a sustainable path toward a balanced budget,” he
said, “while at the same time not crippling the economy.”
King has slain the “unbalanced” dragon before. When he ran for
Senate, Republican-aligned groups attacked him for his record as
governor from 1995 to 2003. “When King left office,” warned the narrator
in one Chamber of Commerce ad, “he left Maine with a $1 billion budget
shortfall.” None of this stopped King from winning a three-way race, by 22 points. The Balanced Budget God, so compelling to Republican voters, isn’t so compelling for anyone else.
“Republicans are missing the vast majority of the American
electorate,” says Kellyanne Conway, a pollster who spoke at the GOP
retreat. “They’re not job seekers. They’re not job creators. They’re job
holders. Focus on them.”
It’s good, clean hit. Senate Democrats haven’t passed a budget
resolution since 2009. (They have, obviously, funded the government.
Remember, budgets are more about statements of principle than making
numbers add up in real time.) On Wednesday, Washington Sen. Patty Murray
will release a budget, which will include a rumored 1-1 ratio of tax
hikes to spending cuts, but won’t balance. The White House has never
produced a balanced budget. It’s hinting at a plan in which “the ratio of debt to GDP is below 3 percent”—stable, but not balanced.
Why do Democrats keep tumbling backward into this trap? Because they
don’t think it’s a trap. Voters don’t punish them for failing to balance
the budget. In 2012,
Mitt Romney won voters who called “the deficit” the “most important
issue” by a 2-1 landslide. And yet Romney’s eating birthday cupcakes in
California somewhere, and Paul Ryan is stuck in the House, reintroducing
his old budgets. Investors don’t punish the Democrats, either. In 2011,
when Standard & Poors downgraded America’s debt rating,
the agency fretted for a plan that fixed “the government’s medium-term
debt dynamics.” It didn’t cry out for a balanced budget. And then
everybody stopped paying attention to S&P.
Think back to the origins of this Ryan budget. Why does it balance in
10 years, not 25? Because back in January, at the House Republican
retreat, it seemed like the sort of thing that could get the feral
members in line. “This looks like a concession to the internal dynamics
of the [Republican] conference,” says National Review columnist Ramesh Ponnuru. “It doesn’t make as much sense in the broader context of public opinion.”
Ponnuru should know; he was one of the speakers at that retreat. He’s
happy with much of the new Ryan budget—“it’s great that they’re still
standing for Medicare premium support”—but wonders whether they focused
on the wrong numbers. Why be so specific about when the budget will
balance, but not about how? The Ryan plan collapses the tax
code into two “pro-growth” rates, 10 percent and 25 percent, with no
change to expected revenue. At today’s press conference, Ryan was asked
whether he’d get those numbers by closing loopholes that middle-income
people crave—the mortgage tax deduction, for example. Ryan said that the
Ways and Means Committee would hold hearings to figure this out, but it
might be painless. “You can actually plug loopholes and subject more of
a higher-earner’s income to taxes with a lower tax rate,” he said.
Why leave it so vague? “I don’t think there’s good argument for being
specific about the rates and unspecific about the tax base,” says
Ponnuru. “They’ve left themselves open to the argument that they are
delivering a specific valuable promise to rich people. If you’re making
$2 million, and your top rate falls from 39.6 percent to 25 percent,
you’re going to be saving a lot of money.”
And this is how Democrats have always defeated the “balanced budget”
cause. In 1995, when a balanced budget amendment was close to victory in
the Senate, Democrats warned that mandatory balance would mean biting
hard into Social Security. In 2013, a new Senate Republican version of
the BBA has been introduced, and forgotten. Republican strategists admit
that “balanced budgets” are a “70 percent issue”—supermajority support
when voters hear about them—but that the details of possible cuts remain
horrifically unpopular. Republicans who aren’t yoked to the party’s
daily messaging don’t see the benefit of making sure every idea has a
nice CBO score.
“What I would have advised to Romney, if Romney won, was something
that immediately helped the economy,” says Kentucky Sen. Rand Paul. “I’d
pass one bill that cuts the corporate income tax rate in half. I would
have started there. I wouldn’t have worried about whether it was revenue
neutral, or what anyone says.”
And Democrats don’t sound worried about their “unbalanced” budget. I
asked Alaska Sen. Mark Begich, who’s up for re-election next year,
whether he was comfortable with a budget that didn’t balance buy a
certain date. “I don’t worry about those things,” he said. “We’re
working towards a balanced budget.” Maine Sen. Angus King, an
independent elected last year, made the same distinction. “The important
thing is we’re on a sustainable path toward a balanced budget,” he
said, “while at the same time not crippling the economy.”
King has slain the “unbalanced” dragon before. When he ran for
Senate, Republican-aligned groups attacked him for his record as
governor from 1995 to 2003. “When King left office,” warned the narrator
in one Chamber of Commerce ad, “he left Maine with a $1 billion budget
shortfall.” None of this stopped King from winning a three-way race, by 22 points. The Balanced Budget God, so compelling to Republican voters, isn’t so compelling for anyone else.
“Republicans are missing the vast majority of the American
electorate,” says Kellyanne Conway, a pollster who spoke at the GOP
retreat. “They’re not job seekers. They’re not job creators. They’re job
holders. Focus on them.”
Read More : slate
Read More : slate
Sign up before Midnight to watch our video,
“Biggest Ponzi Scheme in U.S. History to Crash,”
and get our daily e-letter Investment Contrarians.
We respect your privacy!
We will never rent/sell your e-mail address.
That’s a promise! And you can opt out at any time.
No comments:
Post a Comment