Is Paul Ryan really a 'fraud'?
Matt Miller has been going after the only man in Washington working on a proposal to reform entitlement programs. Miller laced into Rep. Paul Ryan (R-Wis.), with the sort of invective liberals usually reserve for Republican presidents:
Thanks to House budget chief Paul Ryan, it's possible to measure the size of this fraud. And it's colossal. As can never be said often enough, Ryan is absurdly hailed as a fiscal "conservative" for a "roadmap" that doesn't balance the budget until the 2060s and that adds an unthinkable $62 trillion to the national debt between now and then. How can this be the case when Ryan puts forward trims for Social Security and Medicare so "bold" that most Republicans wouldn't dream of supporting them? Because Ryan also pretends we can keep federal taxes at their recent historic levels of 19 percent of gross domestic product as the boomers age.
Ryan isn't "pretending," of course. He really thinks raising taxes will retard economic growth that is essential to bring unemployment down and dig out of the trillions in debt added by this president. But more to the point, Miller is simply wrong.
Let's take his point on taxes for starters. Historical tables examining taxes as a percentage of GDP tell us that 19 percent is hardly unprecedented. Moreover, raising tax rates doesn't make any difference. W. Kurt Hauser, chairman emeritus of the Hoover Institution at Stanford University, wrote in the Wall Street Journal:
Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this "Hauser's Law."
Over this period there have been more than 30 major changes in the tax code including personal income tax rates, corporate tax rates, capital gains taxes, dividend taxes, investment tax credits, depreciation schedules, Social Security taxes, and the number of tax brackets among others. Yet during this period, federal government tax collections as a share of GDP have moved within a narrow band of just under 19% of GDP.
So Ryan, far from "pretending" that taxes will remain about 19 percent of GDP, is recognizing reality. It's not clear why Miller thinks 19 percent is some fantasy figure cooked up in Ryan's office.
Then there is Ryan's plan. Ryan spokesman Conor Sweeney responded to my inquiry via e-mail:
With all due respect, the crux of his claim is false. The tidal wave of debt before us is the result of politicians making empty promises, accelerating the explosive growth of government spending. Ryan's reforms seek to put an end to years of empty promises from a broke government, offering instead real security with real reforms. Ryan's legislative reform proposal not only puts the Federal budget on a path to balance and our economy on a path to prosperity, but would in fact PAY OFF the debt.
He points to the favorite refuge of cheerleaders for ObamaCare, the Congressional Budget Office.
The CBO tells us that if we do nothing to alter our current trajectory, "debt held by the public" will exceed 700 percent of GDP in 2080. By contrast, in 2080, the CBO estimates that Ryan's proposal will eliminate the debt. Sweeney reiterated that Ryan's plan "does not merely pay down the debt -- Ryan's plan pays off the debt."
Could Ryan seek to reform current benefits to accelerate the pace of debt reduction? Sure, but as it is he's run into a firestorm of opposition by Democrats. Aside from the politics, Ryan has shielded those 55 years and older for policy reasons. Sweeney explained that "while there is an urgency to act, the reforms themselves can -- and should -- be gradual, modest and sensible. The key for credit markets is confidence that we're getting the trajectory right. The key for economic growth today is certainty that tomorrow's investment climate won't be overwhelmed by debt and taxes."
Could Ryan decide to hike taxes dramatically? Sure, that would be an option, although not even President Obama could hike taxes enough to wipe out the trillions in debt. And history shows we wouldn't get more revenue as a percentage of GDP anyway.
But none of this constitutes a "fraud." To the contrary, Ryan -- unlike congressional Democrats and the president -- is trying in earnest to address our fiscal mess. Based on my recent conversations with Ryan, I know he's not expecting liberals to applaud. But they can at least be accurate and fair in their critiques.
| March 4, 2011; 11:08 AM ET
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