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Posted at 4:16 PM ET, 01/10/2011

The deficit doesn't care what you say, only what you do

By Ezra Klein

ryanawards.jpg

The occasion of Rep. Paul Ryan winning an award for fiscal responsibility has left a lot of people wondering where the Paul Ryan who seemed to care so much for fiscal responsibility has gone. In recent months, Ryan has refused to sign onto the fiscal commission's final report, voted for the tax deal that extended the Bush tax cuts (and some other tax cuts) at a cost of more than $800 billion to the deficit, and backed a series of new rules in the House that made it vastly easier to increase the deficit by cutting taxes and vastly harder to decrease it by raising them, and helped the GOP lift their own rules to try and repeal the health-care legislation without offsetting the increase that would mean for the deficit. Asked by NBC's Meredith Vieira to name a specific program he'd cut, Ryan dodged. "I can't tell you the answer to that because, as a budget committee person, we simply lower the cap and then those things go down," he said. Greg Ip wonders what has happened to the Ryan that deficit hawks thought they knew:

The charitable interpretation is that he is pursuing a more patient strategy of adhering to the party line until Democrats cave on entitlements, and then he will put tax increases on the table. The less charitable interpretation is that as his prominence in the party has risen, he has morphed from a principled fiscal hawk to an old-school "starve the beast" Republican for whom lower taxes always trump deficit reduction. Deficit hawks earn their feathers by championing balanced budgets even when it crosses its own party's priorities; by that standard, Mr. Ryan has work to do.

If you ask Ryan's office about this, you'll get an answer that sounds, at least to me, a lot like Ip's less charitable interpretation. Ryan's position is that fiscal responsibility is about more than deficit arithmetic. If government gets bigger, that's bad for the economy, too, even if it gets bigger while balancing revenues against spending. In other words, "lower taxes always trump deficit reduction." Or at least they do in every situation Ryan has been confronted with so far.

The reality, however, is that even this position, which I'd consider quite irresponsible, does not explain Ryan's recent actions: It would've been easy enough to pass a rule yoking tax cuts to spending cuts. Then Republicans -- led by Ryan -- could lower taxes, shrink the state and balance the budget all at the same time. They chose not to do that. Nor did they demand cuts as part of the tax deal. If you follow the policy rather than the rhetoric, you don't see a party or a politician will to make hard choices in service of a small and more fiscally responsible budget. All you see is a commitment to tax cuts, deficits be damned.

That position would be fair enough if the GOP had run on it. But they didn't. The two lodestars of the GOP's economic case against President Obama -- a case for which Ryan was the lead prosecutor -- were policy uncertainty and deficits. Here Ryan is making the case in Oregon:

Policymakers urgently need to advance an agenda for growth -- removing the obstacles to job creation and the paralyzing uncertainty from Washington. Both parties contributed to the current hardships -- and both parties helped plant the seeds of the crisis on the horizon: a fiscal time bomb from the explosive growth of government debt.

Since winning the election, the GOP -- with Ryan's support -- has increased budget deficits and policy uncertainty alike. They chose a temporary tax cut rather than a permanent one, and also sought the repeal of the health-care bill and a continuing resolution rather than real appropriations bills. All of that increased policy uncertainty. As for the deficit, the tax deal increased it by $850 billion. That's larger than any other single piece of legislation signed by Obama.

Ryan will point out that the real budget problem is health-care driven spending, and he's got a long-term plan to deal with that. People can argue about whether his Roadmap, which operates by the principle of "we simply lower the cap and then those things go down," will actually work. But fiscal responsibility isn't measured by what you want. It's measured by what you do. The reality is that every Democrat who voted to cut Medicare by more than $500 billion and raise taxes by more than $400 billion in order to offset the cost of the health-care bill cast a tougher vote for fiscal responsibility than Ryan has. And Ryan, who voted for Medicare Part D without demanding that its spending be offset, has criticized them endlessly for it.

In the coming year, Ryan will be charged with writing the budget. So he'll have plenty of opportunities to chart a different path. And perhaps he will. But for now, he doesn't deserve any awards.

Photo credit: By Jay Mallin/Bloomberg

By Ezra Klein  | January 10, 2011; 4:16 PM ET
 
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Comments

Paul Krugman has some good thoughts on this topic too. I.e., Ryan is and always has been essentially a fraud.

Posted by: jtmiller42 | January 10, 2011 4:34 PM | Report abuse

If Paul Ryan represents the intellectual wing of the GOP (along with Newt), the GOP is in trouble. The emperor wears no clothes, as we have been consistently shown over the years.

Posted by: nickthap | January 10, 2011 4:46 PM | Report abuse

Krugman is the fraud. The nomination of Obama after only two weeks in office demonstrates that a Nobel prize is meaningless. All Krugman does is promote largely discredited Keynesian theories.

And the rest of the Democrats who were in charge of it ALL decided not to have a budget this year so they could spend...spend and spend some more.

*NOW* they are worried about deficit spending. Paleeeze...!!

Paul Ryan has a plan. He's had a plan all along but was shut out of the process by the ruling Democrats. Well, now his plan is coming to light. It's not a perfect plan, but Jeeeezeus, it's better than NOT HAVING A BUDGET!!

Ryan wants to cut spending and since the Democrats power is based upon transfering wealth and creating Government dependency, is there any wonder why liberals are howling?

Hey, someone's got to be the adult and take away Congress' Credit card.

Posted by: WrongfulDeath | January 10, 2011 4:48 PM | Report abuse

Just you watch. The Republicans will cut $35 million from the budget over five years by giving each Hill staffer no more than two pencils or one pen per month. Tightening their belts. Just like we do at home.

Posted by: willows1 | January 10, 2011 5:08 PM | Report abuse

WrongfulDeath wrote "...transfering wealth and creating Government dependency" Isn't that what we did when we extended the tax cuts to the top 2& of income earners in this country? God knows they're dependent on that tax cut to buy the new Rolls or put a new pool in the Belair mansion. What I just don't get is why everyday Republicans want to help the rich get richer. How does it benefit them. Just wait til the time comes when they have to rely on Social Security and Medicare....they're in for an eye opener.

Posted by: Twiddle | January 10, 2011 5:10 PM | Report abuse

As Krugman noted months ago, Ryan's flim-flamery has been obvious to everyone, except those who chose (and still choose) blindness in order to ensure access to the congressman and his office. Dissapointing evidence on the state of American access-journalism; and Ezra, you are one of the culpable in this instance.

Link to Krugman's Op-Ed:
http://www.nytimes.com/2010/08/06/opinion/06krugman.html

Posted by: Nitina | January 10, 2011 5:18 PM | Report abuse

"In the coming year, Ryan will be charged with writing the budget."

This will be the acid test for me.

Posted by: jnc4p | January 10, 2011 5:22 PM | Report abuse

WrongfulDeath, you sound pretty fired up, but I don't know what you're basing anything that you said upon:

1) You say, Krugman is a fraud b/c Obama got a Nobel Prize? What do the two have to do with each other?

2) When was Keynsian economics largely discredited? If you're referring to the stimulus: They didn't try Keynsian economics because (a) stimulus was too small and (b) unemployment was underestimated. If you're referring to the New Deal, things got worse in 1937 when they pulled back on stimulus.

3) You said, "Democrats who were in charge of it ALL decided not to have a budget this year." When did they "decide" not to have a budget? Last I checked, neither side could agree on a budget so they passed a "continuing resolution" to fund the government. It sucks, but it's still a budget.

4) You said, "Democrats [want to] spend...spend and spend some more. *NOW* they are worried about deficit spending." What do you believe they're spending on? Are you referring to the stimulus? If they're concerned about "deficit spending" now it's because it plays good in the media not because it's the right thing to do (at the moment).

5) You say, "Paul Ryan has a plan ... [he] wants to cut spending." What's he going to cut? And how will that help the deficit? And what about the $850 million of lost revenue from expanding the tax cuts? How do we make up that difference?

6) You say, "Democrats power is based upon transfering wealth and creating Government dependency." What are you referring to now? Do you not like your Social Security or Medicare? There's probably a way to give the money back if you don't want it.

Posted by: pbasso_khan | January 10, 2011 5:35 PM | Report abuse

Everyone who signed onto the tax cut is a fraud. The Democrats who held out on signing because they wanted it to stab out at the rich are frauds too.

Krugman may occasionally say something logical, but he is a hopeless partisan and can't think clearly anymore. He is a fraud because he too pretends he knows the answers and speaks overconfidently. Wake me when he can explain Japan.

Posted by: staticvars | January 10, 2011 5:57 PM | Report abuse

The budget busting actions of the past 10 years were, in chronological order:

The 2001 tax cut
The Iraq war
The 2003 tax cut
Medicare Part D
The 2009 stimulus
The Obama tax cut plan

Ryan supported 5 out of 6. Plus he wants to make the tax cuts permanent, and has no desire to decrease defense spending. Has he voted for any actual bills that decrease the deficit?

Posted by: StevenDS | January 10, 2011 5:57 PM | Report abuse

"6) You say, "Democrats power is based upon transfering wealth and creating Government dependency." What are you referring to now? Do you not like your Social Security or Medicare? There's probably a way to give the money back if you don't want it."


No, I hate it. Please give me my FICA tax back.


Oh, and Keynesian economics is obviously either a fundamentally flawed or useless philosophy if it cannot exist in the real world. You spend a trillion dollars, but give it away to labor unions and other political backers, well, tough crap.

Posted by: krazen1211 | January 10, 2011 6:02 PM | Report abuse

staticvars, I'd agree that the whole tax cut is bad policy, and that the Dems. should *not* haave sought to extend any of them. But, were the Dems. the one claiming that tax cuts don't have to paid for? No. It's the GOP that doesn't believe lost revenue from tax cuts should be offets. That's the fraud. Agreed, shame on Dems. as well for playing along, though.

Your point about Krugman is ... weird. When is it that he "can't think clearly anymore"? And he never claimed *not* to be a "hopeless partisan." His blog is "Conscience of a Liberal," after all. Being "overconfident" doesn't make him a fraud. It might lead to his being wrong, but he's not trying to fool anyone.

Posted by: pbasso_khan | January 10, 2011 6:08 PM | Report abuse

I can't say this often enough: Reagan was elected twice with a free-lunch approach that belied his "conservative" fiscal rhetoric. Bush followed the same game plan to win electoral gold.

Cheney gave away the game plan when he said, privately, "Reagan proved deficits don't matter (to voters)."

Do you think Republicans are going to give up the free-lunch approach when that's all they have?

Posted by: fredbrack | January 10, 2011 6:11 PM | Report abuse

krazen1211, this is an overstatement:

"Keynesian economics is obviously either a fundamentally flawed or useless philosophy if it cannot exist in the real world. You spend a trillion dollars, but give it away to labor unions and other political backers, well, tough crap."

Keynesian economics can exist in a real world -- it's certainly not a fantasy -- it just didn't in the case of the stimulus because politicians get timid around debt. Keynsian economics is counterintuitive (it's more natural to think austerity measures), but the theory is sound: You have to match the size of government stimulus to the size of the output gap, and they didn't here, which is why the recovery has stalled and growth is sluggish at best.

As for what it was spent on: The stimulus was $787 billion:
-- $288 bill. in tax relief
-- $144 bill. to state/local govt.
-- $111 bill. to science and infrastructure
-- $81 bill. to assistance for the needy/low-income people.
-- and smaller slices for education, green initiatives, and health care costs.

Where's the giveaway to labor unions and political backers? Have something in mind that bothers you?

Posted by: pbasso_khan | January 10, 2011 6:20 PM | Report abuse

krazen1211, this is an overstatement:

"Keynesian economics is obviously either a fundamentally flawed or useless philosophy if it cannot exist in the real world. You spend a trillion dollars, but give it away to labor unions and other political backers, well, tough crap."

Keynesian economics can exist in a real world -- it's certainly not a fantasy -- it just didn't in the case of the stimulus because politicians get timid around debt. Keynsian economics is counterintuitive (it's more natural to think austerity measures), but the theory is sound: You have to match the size of government stimulus to the size of the output gap, and they didn't here, which is why the recovery has stalled and growth is sluggish at best.

As for what it was spent on: The stimulus was $787 billion:
-- $288 bill. in tax relief
-- $144 bill. to state/local govt.
-- $111 bill. to science and infrastructure
-- $81 bill. to assistance for the needy/low-income people.
-- and smaller slices for education, green initiatives, and health care costs.

Where's the giveaway to labor unions and political backers? Have something in mind that bothers you?

Posted by: pbasso_khan | January 10, 2011 6:21 PM | Report abuse

"The deficit" is invoked whenever spending comes up that Republicans don't like (for the poor and working classed). It is forgotten entirely when spending comes up that they like (dumb, expensive wars). And when it is invoked by people who not only voted for, but demanded, huge tax cuts that increase the deficit, it's a bad joke. Let's call a spade a spade: the deficit is about the wealthy paying as few taxes as possible, and not anything else.

Posted by: ciocia1 | January 10, 2011 7:32 PM | Report abuse

There is only one policy that can put the budget on a PERMANENT path to balance. It is called AUTOBALANCE.

Autobalance automatically adjusts tax rates based upon an agreed upon percentage of the previous years's surplus or deficit.

For example, if the agreed upon percentage was 20% and the deficit was 20% of the budget, tax rates would rise by 20% of 20%.

There are many advantages to this policy. They are:

1) It removes the illusion that tax rates are independent of spending.

2) It is a permanent solution.

3) It also reduces surpluses.

4) It can be automatically suspended when growth rates are low.

5) It saves the politicians from having to commit career suicide by voting for a text increase.

6) It forces those who want to cut tax rates to propose specific cuts.

7) It can be overridden when economic circumstances dictate a need and Congress and the President are willing.

8) It implements a continual whittling of surplus and deficit without making too large a change in any particular year.

I could probably think of of a few more if I thought anybody was going to read this.

Avraam Jack Dectis

Posted by: avraamjack | January 10, 2011 8:03 PM | Report abuse

Ezra, by your logic, nationalizing the Microsoft and Google is "fiscally responsible"... Yes, Ryan and the rest of the reality-based community have a different view

Posted by: cdosquared5 | January 10, 2011 8:44 PM | Report abuse

"Keynesian economics can exist in a real world -- it's certainly not a fantasy -- it just didn't in the case of the stimulus because politicians get timid around debt. "

If Keynesian economics can't exist with a Keynisian president and a Keynesian Congress its obviously a philosophy that cannot be applied in the United States.

"Where's the giveaway to labor unions and political backers? Have something in mind that bothers you?"

-- $144 bill. to state/local govt.
-- $111 bill. to science and infrastructure
-- $81 bill. to assistance for the needy/low-income people.
-- and smaller slices for education, green initiatives, and health care costs.

All of these are money to Democratic political backers, really.

Posted by: krazen1211 | January 10, 2011 9:40 PM | Report abuse

krazen1211:

"All of these are money to Democratic political backers, really."

This will come as a surprise to my next door neighbor, who had her house insulated through a stimulus program, or my other neighbor, whose job at the GM plant got saved through the bailout of the (now) successful US car companies. It will be a shock to my sister, whose street was fixed with stimulus money. Sorry reality doesn't fit into your worldview.

Posted by: ciocia1 | January 10, 2011 10:23 PM | Report abuse

krazen1211: What makes you think we had a Keynesian president or a Keynesian Congress? The Pres. did buy into the basic premise of stimulus, but he certainly had no qualms about departing from the Keynesian economics. He and members of Congress were more interested in a short-term political win than in making sure the stimulus would be sufficient (i.e. that it would meet the output gap). Rather than try to sell an adequate stimulus, they wanted to sell it based on its pricetag alone. They wanted to boast, "Oh, yeah, we managed to keep it below $1 trillion!" Or, "we managed to keep it below $800 billion!" These numbers might sound good, but had no real correlation to the output gap.

And to the next point: State and local governments are Democratic political backers? Since when? Back in '08, at least, they were pretty evenly split between Dems. and Reps., and stimulus went to all 50 states. If I recall, some GOP governors made a big show of refusing to take stimulus monies offered to their states (e.g. Wisconsin and the railroad monies).

Science and infrastructure are a Democratic political backers? Since when?

Needy/low-income people are Democratic political backers? I would guess they lean-Democratic, but I wasn't aware that our country's working poor are a big source of campaign contributions.

Money for education? Democratic? I thought "No Child Left Behind," for one, was one of George W. Bush's most highly touted pet projects.

krazen1211, to suggest that funding for states, infrastructure, education, health and human sources, etc. is "Democratic" makes it sound like each of these issues is inherently partisan when they're not. One should care about such things as education, the fiscal stability of our states, or infrastructure whether you're a Democrat or a Republican. We can disagree about how best to address these issues, but let's not deride them as mere "Democratic political backers."

Posted by: pbasso_khan | January 10, 2011 10:29 PM | Report abuse

You do your best to keep your children healthy, but sickness and accidents are a part of life. Getting health insurance for your children gives you peace of mind knowing they have health coverage when they need it. Search one the web "Wise Health Insurance" for kids they are the best.

Posted by: terryjobe | January 11, 2011 1:23 AM | Report abuse

Wrongfuldeath, you are spouting a revisionist history. Obama had a 2012 budget. It passed the House, but got stifeled in the Senate. Hard to blame Obama for endless filibusters.

What the heck are you talking about when it comes to budget busting? Who was it who said, "Deficits don't matter?" In case you weren't paying attention, that was Dick Cheney in the Vice Presidential debate against John Edwards. Remind yourself when the last time the budget was balanced.

Like I said, revisionist.

Posted by: Northstar1 | January 11, 2011 11:59 AM | Report abuse

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