Three Things I Learned From Paul Ryan

Well, like everyone else who has commented on Teh Ryan Budget, I am going to start off with Teh Blockquote.

Well, first of all, I think we need to have a fact-based conversation about our budget. We need to get rid of all these accounting tricks, all these budget gimmicks and we`ve got to attack the drivers of our debt.

This from someone who presented his budget not with a CBO score, but with something from teh Heritage Foundation. If you remember Ryan's shadow budget (also titled Teh Path to Prosperity) from last year, he is already pretty well-practiced in giving CBO some ludicrous conditions for analysis but this time around - he didn't present the results of rigging teh game - he just pulled numbers outta his ass. So I guess he did get rid of gimmicks and accounting tricks, by simply ignoring accounting altogether and inventing numbers with no basis in reality whatsoever.

Is that a harsh description of Heritage's analysis? Well, general consensus is that teh Heritage analysis is full of shit - from "unicorn sighting" optimism to unemployment numbers that violate decades of central bank practice. You know, when even teh guys who did the analysis thinks something might be off, you know something might well be off.

Basically, the Ryan Budget isn't really a budget document, but rather a work of Objectivist slash fan-fiction. And while there is no useful information about economics or reality to be gleaned from it, it serves as a window into the Randian Super-Mind. The reaction from Heritage regarding 2.8% unemployment is quite interesting and brings us to our first insight.

"We adjusted the full employment unemployment variable," Beach told Weigel. "Nothing else changes as a result of that, but the employment number changes."

How much adjustment? 1.5% or roughly two and a quarter million jobs. Effect on tax revenues? 0. Effect on GDP and economic growth? 0. i.e. the "number of people working" in the Heritage model is incidental. It doesn't influence anything, it's just spit out afterwards - like an after-thought. IOW, in Objectivist Supply-Side magic unicorn land, EMPLOYMENT DOES NOT MATTER. They have literally said that whether or not there are two and a quarter million people at work or collecting unemployment, there is no effect on the economy. So when the Heritage Foundation makes unfounded claims about job losses, bear in mind that they don't give a shit. According to the Heritage Foundation, jobs have no effect on the economy.

Lesson 2 is about vouchers. In the magic world of conservatardism, Vouchers mean Freedom. In this case it's the Freedom to Die From Easily Treatable Medical Conditions, but that is a type of Freedom that you'll have to pry from the cold dead hands of Tea Party People - and by then it will be TOO LATE. Teh Ryan Medicare Plan is to replace teh EVIL gubmint Medicare with vouchers. You'll be able to use your vouchers to purchase the private health insurance of Your Own Choosing and not As Dictated By Some Bureaucrat - SOCIALISM! RATIONING! This totally follows standard supply-side reasoning - vouchers are bettar because it puts more power and choice in the hands of the consumer, plus private enterprise gets to do the job instead of brutally inefficient and immorally coercive Big Government.

So what's the Lesson? The vouchers are only for people under 55. Anyone 55 or older stays on the old system.

There are two possible explanations for this:

1. Paul Ryan hates old people and thinks they should be exluded and denied the Freedom to Choose their own health care coverage. Maybe because he thinks they are all senile idiots who would squander the Freedom he is offering. If so, this isn't age-induced senility, because the people who will have to deal with the magic vouchers will be old by the time they have to use them.

2. Medicare vouchers are not as good as the existing system. Government-run socialistic Medicare is better than vouchers for private-run insurance. IOW - health care, at least for seniors, is better managed by some huge central bureacracy. Now intelligent folk may already know that to be true, but this isn't a statement about what is and what is not. This is a statement about what Paul Ryan thinks, or at least what his budget says about the way he thinks.

There's the real framing on these Medicare reforms. Either teh GOP hates seniors, or not only are they cutting Medicare - but they also acknowledge that health care is better run by the government.

Thirdly, and finally for this analysis - it's the claim about whether or not Tax Cuts Pay For Themselves. Here's the Heritage Report. Appendix 3 presents the numbers. Remember that we are now playing in teh world of magic supply-side sparkleponies - the unadjusted 2.8% unemployment, plus 150 billion dollar per year average growth miracle world of Randian Super Awesome. Net difference with magic sparkleponies over ten years? $325 billion dollars. BUT, and I cannot lie - this is a big BUT, personal income tax is up $680 billion. That works out to thousand dollars per man, woman and child in the US. IOW, the tax cut shifts roughly One Trillion Dollars worth of tax burden from corporations to people.

Hertitage has people taking home an additional $935 billion dollars over ten years. Wait - that's before taxes. After-tax it's plus $255 billion. Still, that's net plus, so obviously the tax cuts are paying for themselves. Well, kinda. That's plus 255 on a base of 97,000 (averaged over 10 years) or a quarter of a percent. A quarter of a percent over ten years. IOW, no difference at all. BUT, corporate after-tax profits go up by $400 billion on $1,300 billion or a whopping 30.7%. Over one hundred times the benefit that households see. Even the most blood-thirsty and sadistic of pirates would have moral qualms about this level of looting.

So the answer is actually no. Even in the Heritage Foundation magical supply-side universe where a Galtian Perpetual Money Machine constantly pumps dollars into the economy without end, Tax Cuts Do Not Pay For Themselves. They Pay Their Corporate Overlords.

Note: CBO has scored the Ryan Budget (in this pdf), and it ain't pretty. Even after slashing trillions of dollars of spending, the ten-year effect on the deficit is marginal. And any gains after that are heavily influenced by the cancelling of Medicare. In this case it's not teh Tax Cuts, but rather the total gutting of Medicaid and CHIP that produce Big Fat Corporate Profits.