As usual, from Charles Pierce; as usual, about Paul Ryan:
He is a Leading Intellectual Force in a party full of people who eat oatmeal with their toes.
As usual, the whole post is worth a read.
The GOP’s opening salvo on the fiscal cliff negotiations* is so radical it wouldn’t even pass the House. The House Of Representatives. The one that set itself on fire in the summer of 2011, cost us our triple-A rating, etc., that one. Via Weigel:
The “balanced plan” is the Ryan budget, which can’t pass the Senate. The sequester replacement takes all the savings from defense and applies them to social programs. It lost 16 Republican votes when it passed the House in May, so not only is it doomed in the Senate, it probably couldn’t pass with the smaller House GOP majority taking office in six weeks.
Most likely, this is an indication that Boehner hasn’t figured out how to change his rhetoric to reflect the post-2012 election political landscape. Which is ironic, as he only went this far to the right because the 2010 tea party-infused election petrified him into his current position. Now he’s stuck repeating empty proposals his own chamber won’t endorse. This guy can’t win for losing.
* It’s not a cliff.
After the Zombie Eyed Granny Starver’s selection as Mitt Romney’s running mate, I wrote that win or lose—and Ryan almost certainly ensured Romney would lose—Paul Ryan would succeed. He had everything to gain from the national exposure, including frontrunner status for 2016, and nothing to lose. Either Paul Ryan became Vice President or he showcased his budget chopping chops to a conservative electorate that had been dying to hear somebody voice his exact policies.
I’m ready to revise this view. As Charles Pierce pointed out, Paul Ryan added absolutely nothing to Romney’s ticket. He did not help Romney carry Wisconsin. He did not help Romney carry anything. He even won his home district by half the margin of his previous victory, meaning he barely carried himself.
One reason for this—aside from the fact that his policies are so radical that people literally did not believe he actually proposed them—is that the Romney campaign hid him from view. Ryan had the smallest impact on a presidential ticket of any running mate in modern political history, his convention speech stunk so badly with falsehoods that most factcheckers had to leave the room, and he immediately began to tank Romney’s numbers with seniors in Ohio and Florida. This was one thing when Romney was still lingering in his get-out-the-base phase. But when he made a left turn into Moderate Romney during the first debate—and reaped enough of a reward that it seemed like he could actually win the election—suddenly Ryan’s conservative credentials no longer outweighed his detrimental effects on the ticket. Here’s Noam Scheiber:
When Romney first picked Ryan, I argued that the only possible rationale was to appease conservatives, even though the move could ensure Romney’s defeat. By late September, the Romney campaign had come to this conclusion, too. Ryan vanished into endless debate-cramming sessions. Other than rallying the campaign’s most hardcore supporters, the only time he emerged from his undisclosed location (and you thought they only got those after the election) was to hold fundraisers in electorally critical states like Alabama, Georgia, and South Carolina. When the Romney campaign ran ads, the wingman they showcased wasn’t Ryan. It was Ohio Senator (and vice presidential also-ran) Rob Portman.
Remember that the first introduction most of us got to Ryan on an electoral level was when his budget cost the GOP a special election in New York in 2011, a move that sent Republicans running from him in the Capitol hallways. Ryan started to have the same effect on the Romney ticket, at which point advisers basically buried him in a hole. It seems that any time Paul Ryan gets near an actual electorate, he melts every Republican around him. Which means, for all the hot air about him being the intellectual bulwark of the conservative movement, we may never see him run for anything but his own seat ever again.
The Republican Party is apparently adding a plank (a rotten one at that) to their platform that would set up a Gold Commission to consider returning the country to the Gold Standard, which the US and the rest of the world left in 1971. This is a bad idea, and it was a bad enough idea that the last Gold Commission established in 1982 under Ronald Reagan determined (pdf) that the status quo was better than a return to the Gold Standard.
Paul Krugman highlights the easy response to the idea of a gold standard by pointing out that: ” incessant warnings of runaway inflation from the expansion of the Fed’s balance sheet have been wrong, wrong, wrong; and that exchange rate flexibility has been crucial to most of the success stories of this crisis, from Poland to Sweden to Iceland.”
This is the important point for why the Gold Standard would be a bad idea, and it is even acknowledged in the Gold Commission report in 1982 when they wrote: “Another attribute claimed for gold standards is that at the rate of increase of increase in the gold money supply would vary arithmatically with the profitability of producing gold, and hence assure a stable money supply and stable prices at least in the long run“.
As Krugman pointed out the reason why a gold standard is always touted is that it prevents the central bank from “printing money” and creating “runaway inflation”, and the link between the two, which is always help up, actually doesn’t always exist. For example, consider the graph below of M1 (the money supply) and the inflation rate since 2001.
If “printing money” were the cause of inflation, then the inflation rate would be continuing to increase to the right of the grey strip (which denotes a recession). That it doesn’t should by now have disproven the idea that the Fed’s actions are inflationary and if the entire reason to propose returning to the Gold Standard is to ensure stable prices, then you have to find another reason because the growth in the money supply (the red line) has not led to runaway inflation (the blue line, which is headed more towards deflation than inflation.
Where the Gold Commission report statement is clear is that a gold standard can only ensure stable prices “in the long run” is a very important point which is easy to overlook. For example, what might have happened if the Fed had not added all that money to the economy during the recession? Well, there’s a very good history of a time when the gold standard was the rule and central bankers promoting “hard money” were in charge.
The blue line is the money supply, the green line is the inflation rate and the red line is unemployment. After the financial market crash (and a crash in the price of land in some of the more speculative markets like Florida) hit, the Fed, instead of expanding the money supply like today’s Fed did, stayed on the path of the Gold Standard and pushed the country further and further into Depression (a good description from Barry Eichengreen is available here (pdf), a more readable version is a book by Liaquat Ahamed, Lords of Finance: The Bankers Who Broker the World).
The pointless pain that the policy inflicted did nothing to stabilize the financial system, one of its stated goals, and even made things worse. It wasn’t until FDR replaced Hoover that the policy changed after a banking holiday, which led to a recovery from the self-inflicted pain that Hoover imposed through his Liquidiationist policies, which bear striking similarity to the Ryan budget.
There’s a lot more that can and has been written on the flaws of the gold standard, particularly in the context of the Great Depression, but one of the reasons why pushing a gold standard indicates an extremist takeover of the Republican Party is that it ignores much of the work of conservative economist Milton Friedman, whose seminal work with the economist Anna Schwarz, A Monetary History of the United States, 1867-1960 presents a convincing case for why the “hard money” Fed policies pursued under Hoover not only failed in their goal, but pushed the US further into the Great Depression.
If the Republican Party is abandoning Friedman as “Milton the Red” (to use a tongue-in-cheek reference coined by Brad DeLong), than they have abandoned any sensible economic policy in favor of the conspiracy minded ramblings of Ron Paul, and should be reason enough to keep the party out of power until it abandons these types of fringe beliefs.
Paul Ryan supported a bill in Congress that would have stripped down the Federal Reserve’s dual mandate (“maximum employment and price stability”) down to just the price stability mandate. In practical terms this would do very little since the Fed is abjectly neglecting to do much of anything at the moment despite high unemployment and an inflation rate below its 2% target, but it is another piece of symbolic evidence that Paul Ryan (and this is probably one of the reason Romney likes him) is for those with wealth and against the rest of us.
Removing the focus on employment and focusing the Fed exclusively by law (rather than by choice at the moment) on price stability means that monetary policy will end up being too tight, which is good for the “hard money” types who make most of their wealth in the form of interest payments (inflation degrades the value of their interest payments, and also the value of the debt they own). However, as we see now, when monetary policy is not becoming more easy, the result is longer and higher unemployment.
UPDATE: More aspects of Ryan’s monetary policy views.
Am I the only one who thinks the normally reliable William Saletan did a bunch of wippets before writing this article?
Ryan is a real fiscal conservative. He isn’t just another Tea-Party ideologue spouting dogma about less government and the magic of free enterprise. He has actually crunched the numbers and laid out long-term budget proposals. My liberal friends point out that Ryan’s plan leaves many details unclear. That’s true. But show me another Republican who has addressed the nation’s fiscal problems as candidly and precisely as Ryan has. He’s got the least detailed budget proposal out there, except for all the others.
Perhaps that’s because others aren’t attempting to completely obliterate the social safety net under the guise of eliminating the deficit. Pull any thread of Ryan’s budget—transportation funding, education funding, health care funding, veterans programs, services for the poor—and the entire thing unravels into a scheme to cut services in order to pay for a seismic upper-class tax break. That’s the opposite of candid and precise. It’s mendacious and obfuscatory.
Ryan refutes the Democratic Party’s bogus arguments. He knows that our domestic spending trajectory is unsustainable and that liberals who fail to get it under control are leading their constituents over a cliff, just like in Europe.
Yeah, those Democrats who were in charge from 2000-2008 when federal spending went from a massive, Clinton-era surplus to the biggest deficit in history really screwed the pooch. Also, half the European countries currently in trouble did not have out of control spending, but were victims of a private-sector housing bubble. But don’t let the fact that your point makes no sense stop you from writing another 800 or so words of this nature. (And, as has been pointed out, Ryan’s budget would steer us much closer toward another European country that’s not doing so hot.)
For the first half of Saletan’s article, I literally thought he was joking. He’s not. For a regular reader of Saletan, who’s usually incisive and insightful, this is weird.
Back when the debt ceiling was the number one debate in Washington, there was a push by many in the Republican Party to push the US government into default for the first time ever and guess who joined them:
Establishment Republicans including Tim Pawlenty, the former Minnesota governor who announced his presidential candidacy last month, are backing a short-term default if it leads to deep, immediate spending cuts.
Jeff Sessions and Paul Ryan, the top Republicans on the Senate and House Budget Committees, have also said failure to raise the debt limit would not trigger immediate catastrophe.
Of course, it didn’t happen with the Stupor Committee and the Sequester that is coming at the end of the year, but the Vice Presidential nominee from a major political party (Paul Ryan) has recently been in favor of defaulting on the US debt in order to score a political victory and slash spending and kill popular social programs like Medicare, Medicaid and Social Security. If Romney is elected, this person would be within a heartbeat of the presidency (as they like to say).
For anyone who wants to have a ‘serious’ or ‘adult’ discussion about the future trajectory of fiscal policy in this country, it should be clear that the top priority should be defeating Mitt Romney and Paul Ryan. Supporting them is supporting a cutthroat political strategy where it is perfectly acceptable (for them) to hold the nation’s unblemished record of paying its debt on time and in full hostage and openly state that they are willing to kill the hostage. That is not a ‘serious’ approach to fiscal policy. It is insanity.
The nomination of Paul Ryan as the VP candidate is a clear sign of the priorities for the Republican party. Ryan’s budget plan was ridiculed for its reliance on fantasy in economic projections and magic asterisks and for being mean-spirited by lowering taxes on the wealthy while gutting the social safety net. With no credible economic plan of his own, Ryan’s budget proposal is the default for what a Romney administration would push. One of the biggest parts of his budget pushes the impact of health care inflation (in particular Medicare and Medicaid) onto the beneficiaries as well as by repealing the Affordable Care Act.
Here’s a chart that shows the inflation rate in healthcare costs for the US pre-ACA and France, which has universal coverage.
One of the goals from the ACA is to “bend the curve”, wonk-speak for lowering the rate of inflation in health care costs. In the chart above, it is to lower the slope of the blue line closer to the slope of the red line. Because the ACA only went half-way to a system of universal healthcare coverage like France (or the UK), the rate of growth in healthcare costs won’t be slowed quite as dramatically as it would have with a single-payer system like France has.
So, what about under Ryan’s plan? It would get rid of the ACA, returning healthcare cost growth to its pre-ACA level, but cut government payments for healthcare to a slower rate to lower the budget deficit. It assumes that through the “magic of the market” (in a market that suffers from market failures) the growth in costs would slow. If they don’t, then the beneficiaries (the poor, infirm and old) would have to make up the difference from their own wallets. Without any credible way for cost growth to slow down and with less government assistance, Ryan’s plan would require one of two things:
1) People who use Medicare and Medicaid become magically healthier and need less healthcare; or,
2) People who use Medicare and Medicaid see their healthcare rationed dramatically based on their ability to pay.
My money’s on #2, which is just one specific example of how the Ryan budget, which until Romney actually proposes something of his own, is Romney’s plan is pointless and cruel. If that is ‘serious’ than Paul Ryan and Mitt Romney are ‘serious’. I think its just excessively harsh bad policy.
I’ll throw out a couple of quick reactions to this morning’s news:
1) This flies in the face of all the anti-Washington rhetoric the right has been flinging around the past few years like potato salad in a food fight; the only place outside of his home district where Paul Ryan
has ever been heard of is taken seriously is Washington, DC. Somebody (Sarah Palin?) is going to have to explain to voters how every Democrat who legislated in complete sentences since 2006 is a Beltway insider elitist, but this guy’s “Trust me, I’m a wonk” schtick is the recipe for responsibility.
2) Speaking of Sarah Palin, Ryan’s number one cheerleader is Weekly Standard‘s Bill Kristol. Kristol is, more than anybody save John McCain and Steve Schmidt, responsible for Sarah Palin’s selection in 2008. So, great track record there.
3) Back in March, I did a hit-and-run study of poll numbers from the tea party resurgence and until after the debt ceiling debacle, and charted the vicissitudes of Obama’s and the GOP’s approval rating. Needless to say, at the start of 2011, the GOP was on the rise, and Obama’s numbers were the lowest they’d ever be (41%ish); he was floundering. By September 2011, the GOP’s numbers had peaked and reversed; they were plunging to pre-tea party levels, while Obama was creeping back up toward the 48-50% at which he now polls, and from which Romney can’t seem to dislodge him.
Care to name the event that statistically correlated with that switch? If you picked “Paul Ryan releases budget proposal slashing Medicare,” you win. No, correlation does not equal causation; but, as I’ll never tire of pointing out, Americans only like budget cuts in the abstract; once you start naming specific programs that affect voters, you get real unpopular, real quick. If there’s one take away from Ryan’s selection, it’s that Mitt Romney just chose as his running mate the guy who put the brakes on the GOP’s comeback.
The Tax Policy Center finds that the Ryan plan would cut taxes on the richest 1 percent of the population in half, giving them 117 percent of the plan’s total tax cuts. That’s not a misprint. Even as it slashed taxes at the top, the plan would raise taxes for 95 percent of the population.
Finally, let’s talk about those spending cuts. In its first decade, most of the alleged savings in the Ryan plan come from assuming zero dollar growth in domestic discretionary spending, which includes everything from energy policy to education to the court system. This would amount to a 25 percent cut once you adjust for inflation and population growth. How would such a severe cut be achieved? What specific programs would be slashed? Mr. Ryan doesn’t say.
That was in 2011, by the way; that 25% bumped up to anywhere from 40 to 90% in Ryan’s 2012 proposal.
I love it when questions I ask are immediately answered. We’ve been chasing Mitt Romney down his Bain Capital rabbit hole, in which the profits he made as a CEO demonstrate a business acumen that qualifies him for president, while he was simultaneously not responsible for a single policy implemented the company of which was CEO that qualifies him to be president. A few hours ago, I asked what Romney does in response to the Bain Capital attacks, as this is one narrative he can’t pivot into jobs, and it doesn’t go away even if the economy remains subpar.
Jon Chait has the next act:
More openly embracing Paul Ryan (whose ideas have taken over the party’s policy apparatus) would help change the argument, at least momentarily. But of course if he did so, Romney would be running exactly to the place Obama was trying to chase him. I speculated this last month, and Greg Sargent did actual reporting to help confirm it: The main point of the attacks on Bain is to soften up Romney for the final argument about policy. The Ryan budget, with its tax cuts for the rich and massive cuts to the social safety net, is so far out of line with public opinion that many undecided voters have trouble believing that Romney would do such a thing. Defining his biography is a way to set up that argument.
Walker insists, “Always be aggressive, moving forward. You’re always better moving forward.” But probably not if you’re moving forward straight into the trap your opponent has set.
That’s probably why Romney is instead responding by returning to his go-to attack, which is to assail Obama as a “crony capitalist” for continuing longstanding policies of subsidizing green energy. (This is also how Romney replied to the last wave of attacks on his tenure at Bain.) It’s not the silver-bullet response anxious Republicans are demanding. That’s because the silver-bullet response does not really exist.
I’d add that the crony capitalist attack doesn’t sit too well with the “Obama = socialist” one. They’re not mutually exclusive—Obama’s grants/tax deductions to green companies could be seen as a sort of social engineering of the economy—but try explaining that in a 30 second ad.
Romney remains without an out here. Anybody who can think of one, that doesn’t involve Romney closing his eyes and wishing real hard for 10% unemployment, let me know.