Voodoo Economics Still Isn't a Plan
By naming Paul Ryan as the Republican vice presidential nominee, Mitt Romney has endorsed what used to be known as “voodoo economics” — and restored that special brand of Republican superstition to the center of national debate.
To take Ryan seriously, as all too many pundits and politicians insist we must, requires everyone to behave as if the plans he produced as House Budget Committee chairman represent a meaningful effort to improve the nation’s fiscal future. Sooner or later, however, real analysts will scrutinize the Ryan budget using honest math instead of humbug and magic.
In fact, they already have done so — and that is where the myth of Ryan as a serious, scrupulous and bold reformer begins to disintegrate.
As close observers know, the Wisconsin congressman wants to cut taxes for the wealthiest Americans even more sharply than George W. Bush, whose tax policies caused the bulk of the deficits that provoke so much righteous anger among Republicans like Ryan today. In Ryan’s budget, his tax cuts leave an enormous revenue gap, even with the absurdly destructive spending cuts he also proposes.
But according to Ryan, we need not worry that his plan will increase fiscal deficits as well as the deficits it will assuredly worsen in infrastructure, education, health care, environmental quality, consumer protection and scientific research. He says that his tax cuts, which naturally favor the wealthiest Americans, will pay for themselves by creating a huge, rapid spurt of economic growth — which will result in higher tax revenues to cover the deficit.
Where have we heard this before? There was the original Reagan version, and then later the Bush version, which relied on a gimmick called “dynamic scoring” to create the same fake equation. Ryan’s version is updated slightly, claiming that if Congress removes enough loopholes and tax expenditures, the resulting spurt of growth will reach 5 percent, 10 percent or even more.
Let us turn now to the respected professionals at the Congressional Budget Office and the Center on Budget and Policy Priorities, who are too polite to simply laugh at Ryan. They took him seriously enough to examine his assertions with care, only to find that the research he cites doesn’t support his assumptions — and that most economists still don’t buy his theories. They also noticed that Ryan never specifies which loopholes and expenditures he expects to end. That must be why Romney, who has offered similarly foggy plans for tax reform, feels Ryan is such a kindred spirit.
When voters hear that Ryan is a bold, responsible figure determined to reduce the fiscal overhang that threatens future generations, they should know that his budgets don’t balance — at least not any time before 2040. And that’s because he is pursuing the same agenda as George W. Bush did — which will produce still more ruinous exults if he succeeds.
No fear, however, because Ryan happily tells us that his tax cuts will stimulate so much economic growth so rapidly that fresh revenues will fill the gaps. Yes! Cutting taxes will actually increase tax revenues.
Everyone in Washington certainly knows where we heard that before. That argument first appeared when Ronald Reagan was president, then disappeared when he was forced to raise taxes in a vain attempt to cover the vast deficits his policies spawned. The same argument reappeared in the guise of “dynamic scoring” to justify the Bush tax cuts, with consequences that continue to cripple the nation.
Voodoo economics, as the senior (and smarter) Bush so memorably termed this belief system, does not work. But Ryan evidently believes in it, because his budget depends heavily on that old voodoo to achieve balance. He claims that closing loopholes and reducing tax expenditures will cover the revenue losses.
Joe Conason is the editor in chief of NationalMemo.com.
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