

The Republicans’ budget proposal

Paul Ryan doubles down

An unworkable counter-offer to the president’s doomed budget

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Readers' comments



Regardless of what this Congress does to the budget, future lawmakers are not bound; they can make changes. The only way to keep Congress from making changes is to enact a balance budget requirement. Nothing else will work.

Gary C

I agree that Obama should come up with a budget like Simpson-Bowles that includes spending cuts as well as increased revenue. Spending cuts should include farm subsidies, ethanol subsidies, military spending - the US spends more than the next 10 countries combined, high speed rail, oil and gas subsidies, not allowing Medicare to negotiate pharmaceutical prices, etc. But cutting revenue is asinine.

Did you notice that the countries that are slashing their budgets are seeing their economies tank?

And yes, we as a society elect a government that determines how resources are allocated. Taxes allocate resources and are part of the social contract. You may not like taxes but the US supreme court ruled that taxes are the cost of living in a civilized society.

radical constitutionalist

Ryan's budget is superior to the Democratic alternatives. The President's is a fiction of accounting and the Senate Democrats are shirking their duty to produce a budget.

Its too bad we can't refuse to pay those politicians on the left who refuse to do their job honestly or at all.

Paul Marks

Standard disinformation article from the Economist magazine.

Congressman's Ryan's budget does not cut the Federal budget - Federal government spending would continue to go UP not DOWN.

Will the public support Congressman Ryan's efforts to slow the growth of Federal spending?

Perhaps not - as there will be a tidal wave of disinformation and propaganda against him.

Not mostly from the Democrats (and other "Progressives") - but mostly from the free media.

The television networks (ABC, CBS, NBC, CNN, PBS) the major newspapers (bar the Wall Street Journal) and so on.

The "mainstream" media will talk endlessly about nonexistent "cuts" and so on.

And, of course, the Economist magazine does just that here.

Actually Congressman Ryan might as well go for a real effort to balance the budget.

As Senator Rand Paul's propsed plan does.

If you are going to have endless ..... thrown at you for suggesting "cuts" in government spending, you might as well actually suggest cutting government spending.

There is no point in being a moderate - as the media (including the Economist magazine) will just present you as a radical anyway.

Truly Yours

When it comes time to pay for their often violently-extracted budget "agreements," Republicans seem to like Etch-A-Sketches for financial plans as well as for political positions. How can The Economist continue to support such blatant hypocrisy from the radical right wing? Without accountability, the public is certain to be defrauded by these ideologues.


Aren't American taxes already at historical lows?

Gary C in reply to thispaceforsale

US taxes are low by historical standards as well as compared to other countries. In 2010 the US government took in 14.9% of GDP - less than any year since 1950. Four of the five years with the lowest federal revenue in the last half century were between 2000 and 2010.

America's personal income taxes as a percent of GDP are also at their lowest level since 1950. Personal income tax revenue dropped from an average of 8.8% of GDP under Clinton and 8.2% average under Reagan to an average of 7.4% since the Bush tax cuts.

My income taxes are less than half what they were at the end of Clinton's presidency when we were running a surplus. How do your taxes compare?


It's obvious we need some kind of plan for reducing our deficit. Ryan's is at least a plan. The President's budget, by contrast, wasn't just partisan, but also didn't make the numbers add and just didn't reduce the deficit. Whatever the right size of the federal debt, infinity is too high.

Ryan's budget contains structural reforms in how services are provided, such as to health care. Whatever the right amount of services the government should provide - and I do think his proposal is far too low - Ryan at least got the how right. It also contains cuts that republicans are difficult to accept, such as farm subsidies.

It doesn't get into which deductions in particular should be cut, but that should be decided by republicans and democrats together. The President and the House have both talked about how cuts to marginal rates, coupled with tax simplification is the right approach, now it's time for them to talk to each other.

Of course it is partisan, it was written only by republicans. Democrats must sit down to the table and provide reasonable proposals for reducing our country's debt. Those two things together could make a decent plan. It's a shame the President walked away from the findings of the Bowles-Simpson plan, which is probably around where we'll need to end up. Now we have to do it the hard way.

Any deal, as The Economist says, will have to involve increased revenue and reductions in future increases in spending. That is where negotiations will head if this is taken up as a starting point.

Remember that Ryan is talking about not increasing spending as much as before, not cutting it. And he is not proposing revenue cuts, but rather tax simplification. Starting from this actually signals that republicans will accept revenue increases as an end result. Not sitting down to the table shows that democrats are still unwilling to deal with a reality that will involve entitlement cuts.

This is a good start to the process from the right side. Now, it's time to hear the same from the left side of the aisle.

New Conservative in reply to Pompatus

All you need to do to fix health care is extend medicare to everyone.

That's it. The only reason the government health care schemes are insolvent is because they are legally barred from insuring anyone but people who can't pay (Medicaid) and high risk seniors (Medicare). Allow young healthy people to buy into it and the profits from them offset the cost of insuring seniors.

Paul Marks in reply to New Conservative

The "false flag" tactic (pretending to be the opposite of what you are) was new once - back in Russia in the early 20th century, but it is rather old hat now.

Also you use the tactic crudely - you can not just call yourself a "conservative" and then suggest left policies (hopeing that by calling yourself a conservative people will assume the policy is conservative).

That is as mistaken as David Frumm (of Newsweek - but former Bush person) saying that the Foodstamp nation (tens of millions of able bodied people in the prime of life, now dependent on the Federal government to buy their food) and even the Feds paying the rent (and thus pushing up all rents - the standard effect of government subsidy programs from health care to college tuition), are examples of the "free market".

It is mistaken because it is so obviously false that it fools nobody. A better policy for you to follow would be to claim to support privately financed health care - but then suggest regulations (that look harmless - unless one looks closely) that would have the effect of increasing costs to discredit, and eventually bankrupt, independent healthcare.

After all this policy has been followed (with great success) by the American left for decades. And Obamacare completes the process - its mandates (and so on) will increase costs to the level where most people find real private cover out of their reach.

This, of course, was always the intention of Obamacare.

A successful collectivist does not make wild demands such as "Medicare for everyone".

What an effective leftist does is to make step-by-step changes that have (over time) a funedmental effect.

This is the Fabian (or Progressive) way.

New Conservative in reply to Paul Marks

You mistake my dastardly plan.

I'm actually a Maoist instead of the vicious capitalist roader following Soviet revisionism that you accuse me of. And like that effective leftist, Mao, I'm writing rational style comments on the economist, not to convince the majority to gradually adopt my views, but to view me as non threatening while I train an army of peasants in the hinterland to violently overthrow the government.

Curse you for exposing me and foiling my convoluted plan.

(The real irony of this is that Taiwan, which is the capitalist side of the Chinese civil war opposed to all things communist and unlike the US actually does face the imminent threat of communist takeover, literally copied medicare, extended it to everyone and they pay 900$ a person vs. our 7500$. Go look at it and tell me what's bad about paying 15$ in Taiwan vs. 387$ in the States.

Now, China, by contrast, has a completely free market system. People go to the bank before going to the emergency room because you will not be admitted without cash in hand, just as God intended. If a doctor treats someone who can't pay, the cost of the treatment, drugs, nurses, operating room hours, comes directly out of the doctor's pay. As a result, people live more responsibly, save a lot more money and don't go see the doctor for little things, like broken limbs or tumors smaller than baseballs. )

Which system do you think the US should work towards?

Paul Marks in reply to New Conservative

I would not call Mao's barefoot doctors "free market".

But if China has moved to free market health care since the death of Mao - good for them! I do not know - and, of course, would not take your word for it.

As for "as God intended" - as most charitable hospitals (that provided free health care for the poor) were founded by religious people in the United States, your claim that religious people do not wish the poor to get medical treatment is false.

You also leave out fraternal action - 80% (and rising) of British industrial workers were members of "Friendly Societies" in 1911 before the government got involved. Interventionism (as with Woodrow Wilson and Richard Ely in the United States) was more about immitating Prussia/Germany than it was to do with genunine concern for the poor (Ely and Wilson, and the Progressive movement as a whole, were in a weird love/hate relationiship with Prussia/Germany - they wanted to immitate its statism, but they also hated it as a rival for the collectivist state they wished to build).

Taiwan I do know more about - indeed a friend of mine lives there.

The government takeover of healthcare in Taiwan is actually quite recent - it will have negative effects over time, as such takeover always do.

As for your statement about the United States - not even you could claim that the regulation and government subsidy dominated healthcare situation in the United States is anywhere close to a free market.

There was a debate in the 1960s (indeed a connected series of debates) and one aspect of this debate was whether Medicare and Medicaid would be a limited cost "safety net" or whether the programs would grow out of control (and push up general health care costs).

Well like whether the 1965 Immigration Act would work well, or whether government subsidy of college tuition, or whether the Food Stamp program would not rise in cost over time, or ..... (all of the debates/debate) we now know the answer to the debate about Medicare and Medicaid. They have grown like cancers - and now tens of millions of people are dependant on them. As with the rest of the Welfare States.

Eventually (and it will not take long) the Welfare State will "solve" itself - by totally bankrupting the United States (as it is totally bankrupting all other major Western nations).

If you actually were a conservative you would be accept that the experiment has failed - and trying desperately to find some way of reducing the growth of these programs before they totally destroy civil society (and, by the way, leave exposed the tens of millions of people who are now dependent on these programs - many decades of "Progressive" social policy, having destroyed such cultural institutions as the family, thus leaving people dependent upon unsustainable statism).

Instead you actually want to EXPAND these programs (no doubt you even think Obamacare is a good idea).

You may not be a Maoist - but "Conservative" you certainly are not.


Ryan's budget illustrates the power of self-delusion that sets in when a party's constituency accelerates its dash into a black hole. It plays to a top-end demographic whose fiscal wings are likely to be clipped visibly and to an increasingly irrelevant bottom-end that clings to its Bibles and its fowling pieces, as Obama tactlessly over-summarized in his 2008 campaign.

As a former army medic two or three wars back, the way to recovery is not via vivisection. Do your autopsy after everything else has failed, but don't kill off your patient in order to learn what you can from the autopsy quicker. The more life support you hack away before giving the guy a chance to recover, the lower his chances of recovery. It's not quite as simple as that, but stay the course the GOP is laying out and it bids fair to become a moribund hostage to ideology.

WT Economist

The most important point about Ryan's budget is that it cuts taxes for today's seniors while imposing all sacrifices on those age 54 and younger. It's just more of the same -- an generational war by the most selfish generations in U.S. history.

If fixing the growth of Medicare as a percent of GDP is a good idea, why not start right now?

Ideology is a smokescreen. This is the same political party that passed a Medicare prescription drug plan financed entirely by borrowed money. Republicans have been pandering to Generation Greed for 30 years, and I wish someone would call them on it.


Again the Economist calls Ryan's plan full of "swingeing" cuts. Its editors cannot be this gullible -- can they? Perhaps they simply have not done their sums and their history homework. And if that's not the problem, then we readers are going to have no choice but to suspect we're being politically manipulated here.
(1) The case is flawed from the get-go. To those of us in the real world, who have actually implemented true spending cuts (some of us many times), it's not a cut if it keeps going up. Ryan's plan cuts nothing; he merely slows the growth of the budget. By the transitive property of inequality in math, anything that is not even a cut cannot be called a swingeing cut. To disagree is to fail to understand even the beginning laws of numbers.
(2) Any budget plan longer than two or three years is meaningless. There have been many five- and ten-year plans and as many 20- and 30- year projections, all of which are worth nothing. Even when formally passed as budget, not a single one of those plans has EVER gotten implemented, much less followed; in every case it was quickly gutted and ignored by successors, and spending has continued to grow at roughly its same general pace. To argue against that is to fail history, as the evidence is overt and abundant.
The Economist supposedly has been hiring the best journalists in the world, or so we've wanted to believe. That's in question if these editors cannot reason with basic sums or refuse to do the minimum background work.
Or maybe the Economist is not truly independent, and the publishing firm is biased and forcing the writers to say these ridiculous things. But at some point, like now, readers call foul, bolt, and the effort backfires.

Alexis de Toqueville in reply to berferd

Gullible they aren't, Berferd. I have seen their gradual but steady shift left over the last ten years to where they are now, a reliable and totally partisan shill for the democrat party. Might as well read NYT, same ideological blinkers. A shame. It used to be, not many years ago, that one could read TE without having to weigh each and every phrase for ideological slant and spin.

berferd in reply to Alexis de Toqueville

Thanks, A de T. Yes, those were the days. I think I've been subscribing for over 20 years now. (See how habits can be bad things?) Plainly the objectivity and the quality of argument we enjoyed the first of those two decades has just evaporated, particularly regarding fiscal policy. Agreed, agreed -- a shame indeed. The end of my stint as a subscriber is on the distant horizon, and is more clearly visible with each new issue.

Gary C

Dramatic cuts in taxes are needed to unleash America's entrepreneurial spirit and grow the economy. Wasting money on education and infrastructure will just be a drag on America’s long term prospects. But is a 67% cut in funding for schools and roads really enough?

Cutting Medicaid (low income health care) in half is inadequate. Eliminating Medicaid will not only reduce health care spending but will also help get rid of non-productive members of society.

I can pay for good schools and university for my kids, and with fewer graduates they’ll have less competition for good jobs. It’s the new American way. It’s all about me and mine – why should I care about anyone else? Compare “Atlas Shrugged” to “The Grapes of Wrath”.

Paul Marks in reply to Gary C

In the real world Federal government spending (including on things that the Federal government has no Constitutional authority to do) would still go UP under Congressman Ryan's budget.

It would go up more slowly than scarastic leftists like Gary C would like - but it would still go UP (not down). Congressman Ryan's budget does not reduce Federal government spending - if only it did....

As for not careing about other people.....

When will "liberals" learn that "careing" means you spend your own money and your own time, to help people.

Stealing money from people in taxes, keeping a large amount of it for the govenrment machine and then spending (in a hopeless fashion) the rest is NOT "careing".

It was not careing under the wild spending George Walker Bush - and it is not careing under the even more wild spending Barack Obama.

By the way on "The Grapes of Wrath" point - I suspect you know as little of the facts of the interventionist polices of Herbert "The Forgotten Progressive" Hoover (tax inceases, on the rich, endless interventions to PREVENT the market adjusting prices and wages to the credit-bubble bust of 1929, and so on) and Franklin Roosevelt, as you know of modern matters.

Gary C in reply to Paul Marks

The question is what kind of country does the US want to be. Benefits for the poor are already lower in the US than in most developed countries as are taxes.

Is it more important to provide medical care to the poor or increased luxury consumption by the wealthy? Does ever greater rewards to investors do as much or more for US competitiveness than investments in education and infrastructure.

America's personal income taxes as a percent of GDP are at their lowest level since 1950. Personal income tax revenue dropped from an average of 8.8% of GDP under Clinton to an average of 7.4% of GDP since the Bush tax cuts. Income inequality under Bush was at its highest level since 1928.

Compared to other countries US spending/taxing is even lower. The US government spends 38.9% of GDP. The UK spends 47.3%, Germany 43.7% and France 52.8% of GDP. The tax burden in the US, as a percent of GDP, is at least 10 percentage points lower than in any of these countries.

As far as history the top tax rate in the US from 1925 through 1931 was 25% and this was on incomes well over an inflation adjusted $1 million/year (on $250,000 it was 8%).

Hoover was in office from 1929-1932 and inherited an economic collapse but made it worse by his insistence on a balanced budget and no tax increases (until 1932) and his support for tariffs. He opposed government assistance to individuals.

FDR increased taxes and spending which made life better for most Americans, but it wasn't until WWII and the massive spending and the forced shared sacrifices that the economy really took off.

Calvin Coolidge, the president from 1923-1929) was more responsible for the depression than his successors and he cut taxes from 46% to 25%, shrank government and reduced regulations.

You may not have noticed, but those European countries you cite as budgets to emulate are rapidly retreating from their high spending levels.

Also, your line "to provide medical care to the poor or increased luxury consumption by the wealthy" reveals a fundamental misunderstanding of the social compact. Government doesn't provide luxury consumption for the wealthy. They, like most Americans, earn an income and the government confiscates a portion.

How can you defend the non-existent or fictional Democratic budget proposals?

Paul Marks in reply to Gary C

The Great Depression (like the present crises) was caused by the credit-bubble montetary expansion of the Federal Reserve.

As for Calvin Coolige cutting the top rate of income tax - that INCREASED revenue (it did not reduce revenue).

There is an Federal income tax problem in the United States - the problem is that half the population pay little or nothing, and yet are promised benefits by politicians.

You can not have it both ways - either the other half of the popluation will have to pay Federal income tax, or these wild promises of spending by politicians will have to stop.

The idea that "the rich" can fund all the endless spending by the Federal government is absurd.

As for the idea that yet more government intervention will reduce costs or increase quality of care.

Your argument is counter factural - as the explosion of government intervention over the last 50 years (Medicare, Medicaid, endless mandates and other regualtions) has led to an explosive INCREASE in costs.

Just as the government subsidy of higher education has led to a vast INCREASE in tuition fees.

Lastly on the myth of prosperity during World War II - see Robert Higgs on this matter.

Although there is one point that Higgs does not stress (as he tears apart phony GDP figures and so on).

The war did mean the breaking of union power preventing falls in real wages.

In 1921 the World War One credit money bunbble burst leading to terrible distress - however, the economy went into recovery within six months.

Why? Because prices and wages were allowed to adjust.

In 1929 the Ben Strong (New York Federal Reserve) bubble burst - yet neither Herbert "The Forgotten Progressive" Hoover, or Presdent Franklin Roosevelt allowed the economy to adjust - indeed they everything they could to PREVENT the free market operating.

World War II did indeed break the log jam in terms of unemployment (by cutting real wages - when one takes account of real "black market" prices). But it did so in a terrible way.

Gary C in reply to Paul Marks

Under Calvin Coolidge federal revenue fell from 5.81% of GDP the year before he became president to 4.14% the year he left office http://www.usgovernmentrevenue.com/revenue_chart_1920_1930USp_13s1lo011m....

As I said in my post above, it all comes down to what kind of country do we want. Will we choose ever higher luxury consumption by the middle and upper class today or will we choose our long term good and ensuring the minimal well being of the least of our citizens. You may not like it but governments influence this choice through taxes and laws.

Paul Marks in reply to Gary C

The cuts in the top rate of income tax produced vastly more revenue - just as they did with the Jack Kennedy and Ronald Reagan cuts in the top rate.

Of course getting the poor out of paying income tax costs revenue (even in money terms - let alone as a percentage of GDP), but I thought you were in favour of the nonwealthy not paying income tax?

As for the idea that "long term good" comes from statism - that is counter factual.

The belief in the ability of the government to do "long term good" via "investment" (the leftist name for wild spending) is just as nonrational as believing in elves at the bottom of the garden.

Real "investment" comes from real savings (not government programs) - and, sadly, saving is what most Americans (and most British people) do not (net) do anymore.

As for the "luxury of the rich" - well then you will OPPOSE credit money expansion (whether by Ben Strong in the 1920s or Alan Greenspan and B.B. [if only that was "Bilbo Baggins"] now).

After all the inegalitarian effects of credit money expansion were not discovered yesterday. Richard Cantillion (John Law's partner in crime - of the "legal" sort) explained the process back in the 1700s, and vast numbers of other writers have done so since.

There is no excuse for anyone to support "monetary stimulus" (credit money expansion) and then stand amazed at the increase of inequality to an extreme level.

That is exactly what one should expect to happen when this policy is applied.

P.S. - we are both writing comments in the house journal of the credit-money expansion people.

I would have hoped that dislike of the credit-bubble corporate fat cats is one thing that we could agree on Gary.

But, please remember, this magazine loves them.


"Mitt Romney, the probable Republican nominee seems to agree: he has heartily endorsed Mr Ryan’s approach."

Could this herald the beginning of the end of this newspaper's support for Romney? Or will it remain blind to the fact that any Republican president will be nothing but a lackey to the party's extreme right-wing?


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