I've written that Rep Paul Ryan did the world a favor by not trying to hide the ball with his budget -- now adopted by House Republicans and endorsed by Gov. Romney. Their vision for America is clear, a vision that we at CBPP have been elaborating through a set of publications in recent days (see here, here, here, and here).
President Obama made a similar point Tuesday in a speech here in DC:
"I can't remember a time when the choice between two competing visions of our future has been so unambiguously clear."
So what's the best way to most succinctly describe these visions? At On The Economy, I've tried to do so by examining the role of government. We should do our best to understand what the private market does best and what it does least well. The latter should be considered as a role for government.
The president made a similar point citing another president, and a Republican at that. Abraham Lincoln believed that "through government, we should do together what we cannot do as well for ourselves."
This is, of course, an ancient argument, dating back to Hamilton and Jefferson, but it is crystallized in the House budget in a way that one might view as the logical realization of the 2010 midterms, where a bunch of members were sent to DC to vastly shrink the role of government.
I'll speak to that role in a minute, but there's another dimension to this -- it's not simply a debate on what "we cannot do as well for ourselves." It's also about further enriching the wealthiest households. The Ryan budget solves the problem that the poor have too much and the rich have too little... that is, if you think that's the problem.
That aside, here's one economist's list of the functions better accomplished at least in part by government than wholly left to markets. I tried to keep this list quite spare, listing only those functions agreed upon by most folks who think about this pragmatically, as opposed to ideologically:
-Social insurance for retirees: Health and income security for those past their working years cannot efficiently and universally be offered at affordable rates and are therefore at least partially provided by governments in every advanced economy.
-Public infrastructure: Private commerce depends on the provision of public goods including roads, bridges, rail to move goods and people. Households and businesses depend on public infrastructure to accommodate the provision of safe water, energy, communications, air travel -- much of which is privately provided but could not exist without public coordination and support.
-Barriers to production, trade, and technology that markets don't solve. No single firm can support early stage research and development into a new technology, like the internet or advanced batteries, because returns are too uncertain and start-up costs too steep. Private firms need help negotiating the rules of trade with other nations or coordinating large infrastructure projects, like a smart grid.
-Public education (including preschool), worker training, and support for those trying to access and complete higher education (e.g., college) but who lack the means. These functions are increasingly important in an economy characterized by increasing inequality and stagnant or diminished mobility, because absent public provision, society risks under-investment in human the capital development of all its citizens.
-A safety net against recession, unemployment, poverty and falling onto hard times.
-Regulation of potentially harmful outcomes and markets, from food and air safety to financial market regulation, consumer protections, and so on. Some economists argue that this function could be accomplished by self-regulation -- if a food company's products killed people, or a bank sold toxic assets, they'd go out of business. But few people have that kind of faith in markets (actually, former Federal Reserve chair Alan Greenspan did so regarding financial regulation... but he was... um... wrong).
-Health care. This one's controversial these days, but it shouldn't be. The fact that it's not a normal market has led every other advanced economy to at least partially take this function out of the market, to avoid the "externalities" that arise when people forego coverage yet need care (which turns out to be a much bigger problem for society then if people forego the broccoli course).
I left out military defense and a judicial system because they're not controversial. No private firm could adequately provide them.
Now, where does Rep Ryan's budget come down on these functions? Other than strengthening the military, from what we can tell as elaborated in the CBPP links above, it severely diminishes each one.
According to the President today, 19 million would be cut from the Medicaid roles, and the program would lose its countercyclical function (the ability to expand in recessions). Medicare would become increasingly expensive as costs are shifted onto beneficiaries and the healthiest seniors are incentivized to leave the program.
The safety net could not be sustained, nor could R&D, infrastructure investment, the FAA, veterans services, Homeland Security, educational support, and pretty much everything else outside of interest on the debt, defense, and the scaled-down entitlements providing health coverage and Social Security.
And remember, all of these spending cuts are accompanied by trillions in new tax cuts -- on top of making the Bush tax cuts permanent -- that disproportionately benefit the wealthy.
That's it. That's what's on offer here. We can and will have good arguments about the facts of the case, but our work at CBPP, along with that of many others, including CBO, find this to be the inexorable logic of the R's platform. And again, to their credit, it's not like they're trying to hide it.
They can, will, and should invoke their explanations as to why such critiques are wrong. They've already been touting supply-side rationales as to how the tax cuts for the wealthy and their deregulatory agenda will unleash growth to offset the costs of the cuts. They claim that they'll close unspecified tax loopholes to prevent the deficit from worsening.
They'll claim that President Obama's vision to address those functions elaborated above is misguided, unaffordable, and impossible to accomplish without ruining the economy, over-regulating industry, and discouraging entrepreneurs from creating jobs.
Those issues will form the arguments we'll be having in coming months. But we mustn't allow that noise to obfuscate the starkly different vision of government on offer. I'm not saying the decision is necessarily a simple one. But I very much am saying that the choices are clear.
This post originally appeared at Jared Bernstein's On The Economy blog.
Follow Jared Bernstein on Twitter: www.twitter.com/@econjared
Harlan Green: Ryan Budget Punishes the Poorest -- A Return to 'Les Miserables'?
Robert Lenzner: Obama's Inept, Elitist Political Warfare
Robert Teitelman: Edward Luce's Unraveling American Dream
It matters not that the underpaid for decades suffer more indignities and keep giving their services and keeping this country going with their labor and in the end are expected to die early so they don't cause any more financial burden for the 1%.
http://www.nationalreview.com/articles/295268/unsubstantiated-budget-attacks-sequel-james-c-capretta
-0- credibility it is an opinion magazine promoting what now amounts to a100% JBS agenda.
Today repubs President reagan's polcies and the fact that he and his economic advisors all dismissed supply side and trickle down as a failure even before leaving office.
Reagan raised cap gains in 1987 to 28% now just 15% and later said a top ta brackets of at least 50% was required...
If reagan had been the repubs we now have today, we would have died as a country by 1995!
The group noted the irony of Obama being slammed by Republicans as inciting class warfare for an idea that Reagan championed when pushing for the 1986 overhaul of the tax code.
In a 1985 speech at an Atlanta high school, Reagan complained about tax loopholes for the wealthy.
"We’re going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share," Reagan said. "In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10% of his salary, and that’s crazy."
Reagan then asked the crowd, "Do you think the millionaire ought to pay more in taxes than the bus driver or less?" The crowd roared "More!" in response, causing Reagan to flash a broad smile"
http://latimesblogs.latimes.com/money_co/2011/10/ronald-reagan-warren-buffet-rule-president-obama.html
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The Ryan Plan. No defense cuts.
Does Paul Ryan's budget cut the military?
Does Ryan's budget close individual and corporate loopholes and other corporate give-aways?
"Paul Ryan offers a budget with some hope" ... for whom?
No dem voted for it because they knew the new budget was already in works.
-Cicero, 55 BC
When will we learn? We all know what happened to the Roman Empire.
We experienced our most explosive growth in the decades following World War II, because we borrowed our butts off, and taxes were high enough on the wealthy to keep wage growth in tandem with GDP. and that trend stopped in the 80's when people blamed unions for everything they could, thus starting the spiral of income inequality as middle of the road good paying jobs got shipped overseas or replaced with computers or people who would do it for less. And when you get paid less for the same work, you DO NOT have the extra to buy things or afford exploding health care rates (but hey lets not try and reform the system? what?!)...its a BAD prescription for growth when 70% of the economy is consumer spending.
Thomas Jefferson
Thomas Jefferson
Thomas Jefferson
Thomas Jefferson
Economics Professor Mark Thoma provides a helpful chart on his blog that puts President Obama’s per capita spending into context, comparing it with the spending of every president in the last 40 years.
That’s likely a hard pill to swallow for Obama’s critics, who have spent years hammering his administration for record spending and fiscal irresponsibility. The Atlantic’s Derek Thompson put it best: “Going by federal expenditures…it would seem that if Obama’s a socialist, Ronald Reagan is Karl Marx with an ICBM.”
http://thinkprogress.org/economy/2012/03/19/446990/obama-bush-reagan-government-spending/
Repubs need to ignore their own rhetoric and look at their last 35 years actual record/results. No one should let them near a check book or even allow them to run a lemonade stand.
The Atlantic crunches the numbers:
For all the talk you hear about Obama’s historic spree, government spending actually hasn’t increased so dramatically under this president. The stimulus was big, but it’s over. It’s been replaced by, if not austerity (which has struck our states and cities) then a hard correction to the center.
Evidence of the cost-cutting measures employed by Obama can be found in the last several jobs reports. While the overall number of jobs created has steadily increased for the last several months, those advances have all come entirely in the private sector. Public sector jobs have actually been on the decline for much of the last year as government spending on some agencies and programs have been cut."
http://thinkprogress.org/economy/2012/03/19/446990/obama-bush-reagan-government-spending/
The U.S. budget situation has deteriorated significantly since 2001, when the CBO forecast average annual surpluses of approximately $850 billion from 2009–2012. The average deficit forecast in each of those years as of June 2009 was approximately $1,215 billion. The New York Times analyzed this roughly $2 trillion "swing," separating the causes into four major categories along with their share:
Recessions or the business cycle (37%);
Policies enacted by President Bush (33%);
Policies enacted by President Bush and supported or extended by President Obama (20%); and
New policies from President Obama (10%)."
wiki http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms
Note that when Bush took office he was handed a projected 5.6 trillion surplus over ten years and Ammerica debt free by 2010..
Note Obama was instead of the 850 billion in projected surpluses he was projected to get by the CBO when taking office, before the repubs, we will not pay for anything record, including their wars ... HE WAS SUPPOSE TO GET 850 BILLION surpluses each year., not an avg 1.2 trillion in deficts.. or a TWO TRILLION DEBT SWING PER YEAR!
Obama like Clinton have shrunk government emloyees, while all Bushes and reagans radically increased the size of government and the number of government employees and debt!.
regards
Causes of change in Federal spending as % GDP 2001–2009 from CBO Data
Causes for Changes in CBO Forecasts.According to the CBO, the U.S. last had a surplus during fiscal year (FY) 2001. From FY2001 to FY2009, at the height of the Global Financial Crisis, spending increased by 6.5% of GDP (from 18.2% of GDP to 24.7%) while taxes declined by 4.7% of GDP (from 19.5% of GDP to 14.8%). Spending increases (expressed as % of GDP) were in the following areas: Medicare & Medicaid (1.7%), defense (1.6%), income security such as unemployment benefits and food stamps (1.4%), social security (0.6%) and all other categories (1.2%). Revenue reductions were individual income taxes (−3.3%), payroll taxes (−0.5%), corporate income taxes (−0.5%) and other (−0.4%).
The 2009 spending level is the highest relative to GDP in 40 years, while the tax receipts are the lowest relative to GDP in 40 years. The next highest spending year was 1985 (22.8%) while the next lowest tax year was 2004 (16.1%).[34]
Note all increases in spending due to repb economic collpase and a 30% drop in tax revenue...
Obama has not increased the 1.7 trillion deficts he was handed in Bush last budget year, nor the projected ten trillion in new debt he was handed, actually he has reduced it..