There's an old joke back at AFTRS that the place would have run much better without students. Or the Royal North Shore Hospital would run much better if it didn't need to deal with patients. There's a certain mindset that says government would be so much better if it simply didn't have to service its citizens. Along those lines comes this little nugget:
Mr Ryan has answered the question today by unveiling a budget plan that, at least superficially, is almost as bold and painful as the Roadmap for America that he has flogged for years. It claims to slash the federal budget deficit from a little over 9% of GDP this year to just 1.6% by 2021. By contrast, the Congressional Budget Office reckons the deficit would fall to just 4.9% under Barack Obama’s budget. He does this without, on net, raising taxes. By closing loopholes, he would pay for a cut in the top personal and corporate rates. So how does he shrink the deficit? Through an eye-watering assault on entitlement spending, in particular health care. Mr Obama’s health care reform would be ditched, Medicaid would be converted to block grants, and traditional Medicare would be replaced with vouchers.
There are many problems with this strategy but it’s worth keeping in mind how remarkable it still is: a legislative proposal that takes dead aim at the real source of the long-term fiscal imbalance, namely, entitlements.
It's weird how health welfare and education come under 'entitlements' when Paul Ryan's plan doesn't exactly address how these things would become better by cutting these budgets. He even proposes to cut taxes for the rich, and one wonders how this is ever going to help government coffers, when there isn't a federal level sales tax in the USA. The point of cutting the top tax rate is that it theoretically frees up their spending. So without a consumption tax or sales tax or a VAT or a GST in place, there's nothing to replace the lost tax on direct taxation to indirect taxation. But of course, as George Bush the elder once said, "read my lips, no new taxes".
The same applies to cutting the top corporate rate. The cutting of direct taxation is fine provided that there is an equivalent collection of indirect taxation. Otherwise, there's no replacing the lost revenue. Granted that all government is a kind of 'robbing Peter to Paul' sort of affair, it doesn't really make any attempt to explain how these cuts will therefore translate into proper Federal revenue - but then he doesn't seem to be interested in that either because being Republican, a small government is best. In that sense, this is just another ideological whitepaper to tax less spend less screw over the poor and pretend the world's problems will go away, when the previous 8 years of the Bush administration essentially ran with that policy into a brick wall. Which is also the experience in many states in the USA where they keep cutting taxes and eventually they can't pay their employees, but then they can't raise any taxes for ideological reasons.
Doing the same thing over and over and expecting a different result is the working definition of stupidity. In this instance, the intransigence is breathtaking. This is the bright hope for the Republicans. America sounds less enticing by the day.
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