Romney + Ryan = Real Discussion We Need

The announcement by Mitt Romney that he has chosen Paul Ryan as his vice presidential running mate means we will have a much needed discussion about the serious economic issues facing this nation. That Paul Krugman and other "progressives" dislike Ryan's budget proposals means the ideas deserve some consideration.

You can find many articles describing the "Ryan Budget" and you can read the complete budget document.

The House Budget Committee posts its documents online:

I disagree with some of Ryan's specific proposals, but the key to me is that he admits we are in a financial quagmire that must be addressed. As opposed to the Keynesian idealism of progressives (which twists Keynes as much as some on the right twist Friedrich Hayek or Milton Friedman), Ryan starts with the assumption that broke is broke — and the United States is broke. That means endless deficit spending cannot be used to stimulate the economy back to health.

But, without stimulus in the form of increased monetary easing, federal spending, or tax cuts, what can we do to encourage economic growth?

Ryan suggests radical tax code simplification. Close the loopholes. I like that start. It will seem fair and reasonable to most people. Why should some companies get out of taxes thanks to crony capitalism? The idea is that closing loopholes will increase federal tax revenues without raising tax rates. This will help balance the budget (over many long years, granted), ensuring continued low interest rates (in theory) and economic stability.

Personally, I believe we have to cut federal spending — real cuts, not slower growth or cuts based on inflation — but at least Ryan suggests an interesting path.

I'm willing to endorse raising tax rates, slightly, if there are genuine federal spending cuts. Ryan opposes any rate increases. Still, he is closer to my position than any other politician seems to be.

My tax proposal is simple: raise rates a half percent across all marginal rates. Then, for two years, raise the top marginal rate a quarter percent each year. The slow increase would be predictable and steady. These increases would only go into effect with an equal cut to the overall federal budget. After four to six years, spending could again be indexed to inflation.

We know federal spending is out of control because most spending is automatic, non-discretionary. Medicare, Social Security, VA benefits, and other programs consume far more of the budget than discretionary items do.

At least during the remainder of this presidential campaign, there is a chance that American voters will have a serious budget discussion. It is a slim chance, sadly, because any attempts to reduce spending will cause an outcry.


Popular posts from this blog

The 90% Tax Rate Myth

Call it 'Too Depressed to Blog'

Economics of the Minimum Wage