Guest Post: Paul Ryan's Budget

Tyler Durden's picture

Submitted by John Aziz of Azizonomics

Paul Ryan's Budget

So Romney has picked Paul Ryan for Vice President; a man with a remarkably similar “deficit-reduction” strategy to that of George Osborne here in the UK, where unemployment and budget deficits have soared, and GDP remains well off its peak.

If Ryan or his Democratic rivals really understood the budget deficit, they would understand that its huge size is a result coming primarily out of a depression brought on by excessive total debt:

As debt soared from the 80s to the 90s, tax revenues soared as the economy boomed on borrowed money. But as the debt continued to grow relative to income, the costs of the debt mountain meant that income that might once have been invested in businesses and consumption went toward debt service instead. And so once we hit the point at which debt repayment exceeded new debt acquisition, we were flung into a depression. This has had a relatively severe impact on growth; since the deleveraging hit in 2008, GDP growth fell considerably from its long-term trend (nominal potential GDP):

So with the private sector (not to mention state and local governments) who acquired so much debt in the boom now deleveraging, Federal revenue has dramatically fallen, producing the huge Federal budget deficits we see today. Of course, Federal spending was on an unsustainable trajectory before that. But without a serious plan to get America out of the deleveraging trap (there are three routes out — liquidation, inflation and debt forgiveness) all talk of reforming entitlements is meaningless.

So, does Ryan’s plan address the problem of excessive debt?

No. Ryan completely misses the point of excessive total debt, and instead paints a portrait of the problem being one of excessive public debt:

Oh no! What a scary chart! But Ryan claims he is going to make public deficits disappear! How?

Ryan intends to cut taxes; reducing corporate taxes from 35% to 25%, and introducing two new income tax brackets; one of 10%, the other of 25%.

But here’s Federal tax revenues compared to the weight of total debt:

To get private debt to a sustainable level via tax cuts, Ryan would have to cut taxes to zero for a very long time (and hope that people use their tax cut to pay down debt instead of spending it at Chipotle and the Apple Store).

The biggest problem with that? Over 75% of Federal spending is mandated by law, and so US public debt — which Ryan believes is the real problem — would soar (as has happened in Britain). Ryan might seem worried about the future possibility of massive public debt (as opposed to the current reality of massive total debt), but his plan could conceivably result in much higher public debt  — after all the OMB and CBO have gotten it all very wrong before, just twelve years ago foreseeing massive tax surpluses of $48 and $87 billion respectively in 2012.

So does he have any real plan to significantly raise revenues?

Ryan intends by 2022 to have to closed enough loopholes to yield an extra $700 billion in revenue every year. That’s a lot of money. So which loopholes does Ryan claim that he will be able to close?

In his entire 98-page manifesto, Ryan doesn’t name any — but he has ruled out taxing capital gains as income, surely the biggest tax loophole of all, and one that has seriously benefited his running mate.

Ryan might talk tough on public deficits, but his own figures show that even if he can raise the revenue he claims to be able to raise (very dubious), the deficits won’t be gone for twenty yearsMeanwhile, he has not even approached the subject of excessive total debt, which is the real problem.

The only policies likely to return the US to strong organic growth are those that would produce some form of debt jubilee. Neither of the major parties has any plan for that.

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Temporalist's picture

Ryan the fraud is perfect for Romney the fraud which are a the perfect couple to run against Obama and Biden the frauds.

USA!  Universal Suckers of America

Pool Shark's picture

 

 

"Don't blame me, I voted for Kodos."

 

 Funny how people like to fight over who gets to be the next Captain of the Titanic:

http://globaleconomicanalysis.blogspot.com/2012/08/reader-question-could-obama-balance.html

vast-dom's picture

all of these guys have magical budgets where they get these revenues from the gods by just saying they will. 

 

here's a law: if you have no concrete mathematically explicit plan that adds up you are not allowed to propose it. very fucking simple. yet so simple that not one proposal or chart of late would qualify for submission, save for ObamaCare which isn't even that, but simply a tax and ponzi for ins co and gov. insanely unconstitutional bs.

 

bravo all these shitheads are useless.

 

PS even if gov budgets were balanced somehow and they will never be, just the student loan bubble is enough to torpedo the nation.

engineertheeconomy's picture

Are you suggesting that students actually attempt to pay back those loans with interest?

vast-dom's picture

i did not suggest any such thing.

engineertheeconomy's picture

I would recommend that students (as a united entity) pay back the principle, but not the interest. I would reccomend that they choose to be free, instead of submit to alife of debt enslavement

JoBob's picture

You apparently support getting something for nothing and screwing all the previous borrowers who lived up to their obligations. Some great "engineer" you are!

engineertheeconomy's picture

Nice try, but you're still a loser.

I said they should pay it back you fucking imbecile...

And as far as those previous borrowers that you refer to, they all just had their homes repossesed in case you didn't notice...

and judging by your name Jobob, you're no more than an inbred genetic catastrophy

Michael's picture

Revenge votes for Obama is the solution. Black balling Dr Ron Paul was not a smart move this time.

No self respecting Ron Paul supporter will vote for Mitt Romney since he is a wholly owned subsidiary of the Rothschild's and Rockefeller banksters just as Obama is.

The Presidency is a wholly owned subsidiary of the international banking cartel, multi national corporations, and Goldman Sachs/JP Morgan.

Many millions of Ron Paul supporters like me will be voting directly for Obama in November in a political strategy so we can get a real Liberty candidate on the ballot in 2016.

If you don't like Obama next year, then impeach him for illegally attacking Libya, gun running fast and furious, and being disqualified for his forged birth certificate.

Fox news is an infomercial for the republicans and the GOP. MSNBC is an infomercial for the democrats, and ABC, NBC, CBS, CNN is left leaning, brainwashing, social engineering scum. Try not to get your news from them.

What's Romney gonna give me? Will he cancel the TSA/government 750 million hollow point bullet order, abolish NDAA and the Patriot act? Then fuck him.

Harbanger's picture

"Many millions of Ron Paul supporters like me will be voting directly for Obama in November in a political strategy so we can get a real Liberty candidate on the ballot in 2016."

Bullshit I've been supporting RP since b4 mommy started taking you to play soccer.  It's one thing to vote RP on principle. it's another to vote for man dismantling America.  That's your political strategy?  I'm starting to think you're one of the OWS drones.

LongBalls's picture

I'm a RP supporter. If I can't write him in I am voting for Obama. Obama makes me sick to my stomach but both parties are controlled so Romney or Obama makes no difference. At least enough people can't stand Obama because he is the one currently in offce and his re-election might spur the American people into action. If Romney gets elected then people will wait for another 3.5 years untill they recognize he is no better and this will only prolong the situation. We are out of time. 

Harbanger's picture

If waiting a little longer were the only difference , that's still ok by me, it's 3.5 more yrs of stacking and prepping.

economics9698's picture

 

The budget will get paid for with inflation, taxes, or borrowing.  Ryan is looking at production and making producers produce more.  If more is produced the standard of living does up and people have more things.

Don't get lost in the banking bull shit.  

Study some tax tables and see what happens in the real world.

I guarantee you 100% Ryan’s 10/25 tax rates will bring in more revenue.

100% bet me on it.

 

Rick Masters's picture

I didn't participate in one OWS protest, but name one other group who stood up to the wall street fraud, Ron Paul supporters never protested, so name one. And before you say Tea Party, they protested Obama. They would not exist if mcCain won. And If McCain won, he would have done the same thing as Obama (except kill Osama since he explicitedly said he would ask Pakistan for permsission  to enter their air space and the ISI would have tipped the fucker). Well there would be no obamacare but that's not the reason we are in this mess, it may just speed it up, or maybe not. I don't make predicitions. But, tangent aside, why the hate towards OWS, at least they fucking tried.

nmewn's picture

"I didn't participate in one OWS protest, but name one other group who stood up to the wall street fraud, Ron Paul supporters never protested, so name one. And before you say Tea Party, they protested Obama."

I voted for Paul in the primary and I'm a TP supporter.

Next.

Inspector Bird's picture

Vote for who you want.  But your strategy is flawed.  The #1 goal should be getting Obama OUT.

Seriously - there's something to be said for the fact not much will be left in 4 years regardless of who wins, but Obama is going to employ a scorched earth policy.  There will, literally, be almost nothing left to work with in 4 years.

Romney isn't much better, but at least he recognizes business is important.  It's a subtle differentiation, it amounts to very little in terms of government spending, but the truth is he's more likely to yield a result which will set us up for a good Liberty candidate.  Why?  Because in all honesty the Republicans have sheltered the core of a new party (Ron Paul's supporters like me), and our basic needs are covered more by Republicans than Democrats. 

We share some social beliefs (but not policies) with Democrats.  We share no economic beliefs.  Republicans share very little in the social realm, though Ryan is a small step in the right direction with his views on homosexuality, but slightly more in the economic realm.

The balance between the two parties is not distinct, but I believe that if you focus on getting the economics moving in the right direction the social stuff follows anyway. 

 

I'm not voting Obama.  Ever.  I don't want to vote Romney, but I fear him less than Obama, and I believe this election is one where a vote of conscience, which I've engaged in virtually every election, will be a dangerous proposition.  Obama must go.  He has to go.  There is no question.

pods's picture

Funny but I see these posts every election cycle.  They always say the same thing.  We HAVE to vote the guy out.  

Voting is for your benefit.

It keeps up the illusion that you have any say in what goes on today.

If that illusion is ever destroyed, and the bars become visible, people are shaken.

pods

object_orient's picture

Let's all work really hard to get Obama out of office. Then in 2016 we'll work really hard to get Romney out of office. Then in 2020....

If a presidential candidate is viable, by default he or she is terrible on everything important to a Ron Paul supporter. Why expend all the effort every four years when it won't make the slightest difference? Voting [in national elections] is stupid.

sharkieboy's picture

Well ..talk is cheap and action speaks louder than words. AS much as i  can remember Obama save GM which Romney would have send to  the dogs or Bain them... as they say. 

 

Everybody blaming uncertainty but one thing is for certain is we need congress that can function. Obama is far from being perfect and even Romney is a swell guy, but i have not heard anything which  will change anything in  Washington so  far. Just bunch  of talk and plans that will  not make sense. You can  not solved this problem without cutting military in half, raise retirement age to  70 and  deal  with health care and the insane amount they are charging compare to  the rest of the world. Lets get real please.

EscapingProgress's picture

I'm glad RP got railroaded out of the GOP. An RP win would have been a devastating blow to the liberty movement. He would have merely become the captain of the Debtanic while it was already underwater and been blamed by imbiciles for sinking it. Now libertarians can continue to say, "See, we told you so. If only you would have elected Ron Paul..." An RP loss is actually a victory, and I believe Dr. Paul knows this which is why he didn't challenge the GOP on all of their shenanigans. It doesn't matter who is the next president or who is in the next Congress. The music stopped in 2008, and now we are all just dancing around with no tune.

Landrew's picture

Dude, why so harsh? JoBob doesn't have the same interest in education as we do. That said it doesn't mean we shouldn't have an honest debate on spending, funding and even more to the point priority of education. Do we want to be Hati or spend as they do in Germany (Europe) Asia? We can as the 1% would like return our nation to a country of lower intelligent workers digging around the dirt for zero value added higher wage jobs or we can investment even more in education as the Europe/Russia/Asia (really the whole the developed world) and enjoy a return of high wage value added jobs? That is the real question? Should a teacher be paid more than a ball player or a CEO of a bank? I myself not having children in a system any longer still think teachers are under paid. 

dog breath's picture

 

Why did I buy a car without waiting for the next junkers for clunkers program?

Why did I pay off my student loan debt when the government will reduce my loan?

Why am I still making payments for my mortgage when the government can restructure it so I pay less principal?

Why am I paying for my medical insurance when Obamacare will kick in?

Why am I working when I can get 99 weeks of unemployment?

Why don't I start a business and if it goes into bankruptcy, the feds will come in and bail me out?

Why don't I buy risky securities and if the bottom falls, the feds will do another TARP and buy my securities?

Why dont' I start a green company that no venture capitalist will touch and ask the White House for a loan so I can milk the money until bankruptcy?

Why am I the idiot who doesn't wait until the feds ride in their white horse and save the day?  Some else will pay for that, not me.

 

 

The government is encourging the mentality of not doing the responsible thing under the guise of helping us.  No different than a rich parent always bailing out his spoiled kid.  Time to cut the cord.  Tough love.

JPM Hater001's picture

"Ryan the fraud is perfect for Romney"

Come on people...you are smarter than this shit. I know Paul and other than being mostly asleep he's one of us.

Quit being an ass clown and throwing worlds around like fraud without any basis. You embarrass the legitimate movement. Paul is close to the best thing to happen for a vp.

Used to be we called that libel and we shunned it...guess we rot from both ends then.

engineertheeconomy's picture

If he is campaigning to end the fed then he is good. If not, he is evil

JPM Hater001's picture

Very good. We care about facts. He voted for,the full audit.

engineertheeconomy's picture

ok, where is his stance on giving the power to coin money back to the people?

Does he support allowing the Fed to print itself monopoly money for free, and they charge us interest to use it?

You better come up with the right answers because I'm not going to let you off the hook here

JoBob's picture

Gosh, Daddy, we didn't know you were in charge of letting people off the hook when they have better opinions.

engineertheeconomy's picture

Look you fucking retard, opinions are opinions, and facts are facts. Catch a clue and go fuck yourself

neptunium's picture

Stop arguing asshats...

 

Anyway, the delivery of this goon reminds of the 'company' guy in Aliens, every heavily manipulated syllable is unconvincing - as if he's speaking to a bunch of gullable tards, well, he is in fairness - but what you have to master to be a good politician is to lie with conviction - Obama does it well, Tony Blair did it well - this guy is a B-movie actor by comparison but then he was speaking to people who look up to protozoans intellectually.

 

: ) 

neptunium's picture

And I'm not inferring that good-liar = good policies, just that a good acting performance gets, and keeps you elected. 

Rick Masters's picture

Paul is a public figure so libel laws don't apply to him. It's called Gertz v. Welch (He would have to prove he is not a subjective adjective, fraud, and ironically, prove fraud and malicious behavior. Romney needed Florida to win, he just lost it. Obama wins Florida on basis of Paul's budget plan. He gets PA too because of Paul. But the PA republican party is handing the election to Obama on a stick due to Corbett's words and acctions not to mention the voter ID law in PA and the fact after it passed its sponsorr said "We needed this to pass so Romney can win here." Talk about foot-in-mouth.

monad's picture

If actually getting a job and applying their new collegiate talents is impractical in surreal Obamaoland, I suggest that they hit up their loaded, tax exempt cults. Surely the various international cons can perform some domestic charity, or at least bail out their own? Otherwise, fuck 'em all. Their stupidity is no claim on my limited time and resources. Through deception and coersion the government bred these idiots, impeding the competent from maintaining stable, autonomous culture. Life is fatal, you're on your own. Losers.

 

Antifaschistische's picture

I have another idea;

No more plans that extend beyond the very next fiscal year.  Period.  

No more "here's our plan....we'll borrow a trill this year, because the following year the US will win the lottery.

Screw that...if you don't have a plan to fix something in the short term...you do NOT have a plan.

flattrader's picture

Ryan has a plan...

>>>but he has ruled out taxing capital gains as income, surely the biggest tax loophole of all, and one that has seriously benefited his running mate<<<

That's the plan.  Protect the wealthy and fuck everybody else.  Lather, rinse, repeat.

cjbosk's picture

How do you figure this flattrader. Right now, 49% of the country pays zero taxes...so the "wealthy" pay all the taxes so the broke dicks can suck off the proverbial teet of the system. Let's all share in the sacrifice, flat tax, isn't that what Ron Paul would want? Let it rip, I'd be like a pig in slop if that were to happen. But it won't as the middle/lower classes will bitch and wine if they have to pay anything in taxes.

Yeah, the path we're on is a great one, you can really feel the prosperity can't you...

Rick Masters's picture

There is a word for your idea: myopic.

engineertheeconomy's picture

POTUS is just the gas station attendant

Ben Beranke is the EXXON

engineertheeconomy's picture

All Presidents since Kennedy have been purchased, not elected

MillionDollarBoner_'s picture

I'm guessing Kennedy is an example of what happens if you refuse to be bought?

engineertheeconomy's picture

United States President John F Kennedy was assisinated by the Bankers, because he started printing paper money that was not subject to paying interest to the Bankers. The Bankers immediately regained controllof the printing press and we have been their slaves every since. Revolution required

The Big Ching-aso's picture

 

 

Ron Paul, Paul Ryan, well at least there's some Pall there 4 everyone now.

CrockettAlmanac.com's picture

All we need now are six pallbearers. Case closed (pun intended).

malikai's picture

I'm going to write in Bob on the ballot. I'm sure he'll be pres one day.

We'll finally get some slack.

engineertheeconomy's picture

Bob will end the fed and won't waste our time with all this disinformation and propaganda bullshit

monoloco's picture

Welcome to the 2012, United States Presidential Election Extrvaganza, brought to you by Goldman Sachs, JP Morgan Chase, Bank of America and Koch Industries.