Archive for March 22nd, 2012
If you had any doubt that class war was being waged in America, doubt no more! Paul Ryan’s proposed GOP budget was a direct assault on the poor by the rich, cutting programs that benefit the poor by $5.3 over ten years, while giving tax cuts to the wealthy worth $4.3 trillion. He promises that he can get the GOP House to pass his budget — something that could give Democrats real fodder in the House campaigns this summer!
What’s perverse and audacious in this effort is that he is trying to make it sound like he’s actually helping the poor. Dana Milbank points out the “Orwellian euphemisms” in Ryan’s rhetoric. From Milbank’s column:
“Ryan’s budget outline omits specifics about how much he would take from programs. Instead, it provided a string of Orwellian euphemisms. The budget “repairs the safety net” by allowing the states to award public assistance to fewer people — “those who need it most.” Financial aid for college would be slashed — er, “put on a sustainable funding path.” And the Ryan plan would give workers “the tools to thrive in the 21st century” — by killing off various job-training programs.
Ryan would cut Medicaid by a third and ship the remnants to state governments to handle. Or, as the congressman described it: “We also propose to strengthen Medicaid by empowering our states.”
What makes this class war instead of a bold initiative to cut spending is that so much of the money “saved” doesn’t go to deficit reduction but instead to tax cuts. The claim is that this will grow the economy more and wealth will “trickle down,” much like the right claims happened when Reagan cut taxes. Rather than go over all the lists of what is cut, how is hurt and all that — articles delineating that are ubiquitous — there are four clear reasons to reject Ryan’s approach.
1. The Reagan years were driven by debt, not tax cuts. The 1980s saw economic growth, but that growth was due to declining oil prices and a massive increase of both governmental and private debt. Government debt soared from 30% of GDP to 60% by 1990. Private debt grew as well, meaning that the country was partying on borrowed time. It was like the early stages of someone who borrows their credit card to the max and then takes out new credit cards to make payments. For awhile you’re living on top of the world, but then reality bites. Reagan economics were voodoo economics because it was deficit spending in a boom.
2. Tax cuts harmed the economy and worked against investment. Those who argue for tax cuts rest their case on a myth — a belief that has been shown false, but still lives on in the ideological heart of some on the so-called right. The myth is that these new tax cuts provide money that will be invested and create jobs here in the US. However, that doesn’t happen on a scale that helps the economy; perhaps it could have back in the 60s when economic affairs were state-centric, but in an era of globalization the rules have changed.
Money from tax cuts goes to four different places: a) some money is used to consume goods and services — that can help the economy, but much of that spending is for foreign produced goods and oil; b) some money gets invested overseas, c) a lot of this money helps create bubbles and ‘unreal’ investments out of a desire for ‘something for nothing,’ and d) a small fraction gets invested at home in businesses that create jobs. During the dot com bubble and the real estate bubble low taxes fed two consecutive bubble manias as people were less concerned about long term “real” investment and more interested in playing the casino. It seemed it was a casino where everyone won! Easy money!
When the bubbles burst, that money was gone. It would have been far better to tax and use much of that money for infrastructure or business loans/aid. Instead, the misguided belief that tax payers know best how to spend their money (the two bubbles show that proposition to be decidedly untrue) brought us to a crisis that just about took down the world economy — and still could!
3. States will be devastated. States right now are seeing their deficits grow due to increased medicaid and medicare costs. State budgets are being pushed to the brink across the country. If the feds simply cut that spending and claim they are “empowering the states” (but not enriching them!), then state governments will be forced into massive layoffs. This will hurt the poor the most (such cuts always do), but could severely damage state economies. Ryan’s plan is an attack on every state budget, and should get the opposition of every Governor, Republican or Democrat.
4. The human cost is immense. Ryan’s budget is a fantasy of ideology. It’s not built on practical observations or the use of real world wisdom. He has a theory and extrapolates the theory into a budget that would intensify the problems of the poor while adding to the wealth of the rich. It’s a grand experiment on the basis of an ideology.
Ideologies appear persausive. They simplify reality and then set up internally consistent propositions based on the definitions and assumptions of that theory. Ideologies can never lead to truth, they simply provide one interpretation of real world evidence. Ideologies are always simplifications — the world is too complex to be captured by any human theory.
Ideologues always put humans second to their “ism.” The “ism” promises to solve all problems, if only people would embrace it. While Ryan’s ideology isn’t as dangerous as the utopian fantasies of Mao or Pol Pot, it is similar to the kind of thinking Marxists engaged in, just with different base assumptions. Any time you put theory above people you’re putting fantasy above reality.
In this case, the ideology must already be doubted for the three reasons above. Taking from the have nots and enriching the haves is not only immoral, but could lead to social breakdown. It would push us towards a third world kind of economy and ultimately Ryan’s fellow class warriors on the right might find that they’ve awoken a sleeping giant — the potential class warriors amongst the poor and middle class. In an ironic twist, adopting Ryan’s plan might put us on a path to a socialist revolt!