Conservative Economists Criticize 'Off The Deep End' Republican Budget

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    Apr 11, 2011 4:24 PM GMT
    Thank God there are still some sane people in the Republican Party:

    Talking Points MemoNow that Republicans and Democrats have supposedly figured out how to fund the government through September, Congress' attention will turn to other issues, including the GOP's 10 year vision for the country: Paul Ryan's budget proposal, which includes Medicare privatization, severe cuts to Medicaid, and further tax breaks for the wealthy.

    While the government teetered on the brink of a shutdown last week over short term funding, economists across the ideological spectrum weighed in on the GOP's long-term plan with negative reviews. The biggest shock came from high-profile economists with GOP leanings, who also criticized it on the merits.

    "It doesn't address in any serious or courageous way the issue of the near and medium-term deficit," David Stockman told me in a Thursday phone interview. "I think the biggest problem is revenues. It is simply unrealistic to say that raising revenue isn't part of the solution. It's a measure of how far off the deep end Republicans have gone with this religious catechism about taxes."

    Stockman, who directed Ronald Reagan's Office of Management and Budget, approves of Ryan's entitlement proposals, but breaks faith over taxes and the GOP's unwillingness to slash defense spending. And he laughs off the notion that the plan will do anything about unemployment, let alone dramatically reduce it, which Ryan and his plan claim it will. "This isn't 1980. It's not morning again in America. it's late afternoon, or possibly even sunset."

    On this score, Doug Holtz-Eakin -- a former McCain and George W. Bush economic adviser -- told Huffington Post Ryan's plan is "implausibly optimistic."

    The libertarian economist Tyler Cowen wrote up a point-by-point critique of the plan. His principle objections are that the plan doesn't do anything to control health care costs, and cutting Medicaid is neither good policy, nor urgent. Indeed, he notes, "Medicaid should be one of the last parts of the health care budget to cut." Emphasis in the original.

    However, Cowen also argues that, by proposing $6 trillion in spending cuts, the main impact of the GOP plan will be to shift the center of the fiscal debate in Washington dramatically to the right. This is already happening.

    The question will probably come down to whether lawmakers and the Obama administration have the stomach for a public fight over how to cut popular entitlement programs with unemployment high, and old voters on guard against any major benefits changes.

    "It's kind of a pitiful commentary on our state of fiscal malgovernance when you consider the two leaders that we have that are trying to face down this issue," Stockman said. "One of them is so ready to compromise that he folds faster than a lawnchair (that's Obama). And the other is ready to sob at the drop of a hat."
  • rnch

    Posts: 11524

    Apr 11, 2011 4:33 PM GMT
    wow!

    a scathing indictment of the GOP "budget" from long term GOP fiscal experts!

    you know a plan is awful when it's panned and rejected by "one of their own".


    icon_exclaim.gif





    the only way to get the USA out of their budget deficit is to raise taxes on the wealthy.

    it's worked in the past, it will work now, it will work in the future.


    icon_idea.gif
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    Apr 11, 2011 5:02 PM GMT
    ^ On top of that, isn't that what the top 1%- Gates, Zuckerberg and Buffett are basically begging?
  • CuriousJockAZ

    Posts: 19128

    Apr 11, 2011 5:07 PM GMT
    rnch saidwow!

    a scathing indictment of the GOP "budget" from long term GOP fiscal experts!

    you know a plan is awful when it's panned and rejected by "one of their own".


    I guess that depends on how much credence someone gives to these long-term so-called "GOP Fiscal Experts".
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    Apr 11, 2011 5:20 PM GMT
    CuriousJockAZ said
    rnch saidwow!

    a scathing indictment of the GOP "budget" from long term GOP fiscal experts!

    you know a plan is awful when it's panned and rejected by "one of their own".


    I guess that depends on how much credence someone gives to these long-term so-called "GOP Fiscal Experts".


    I think their credentials are pretty much beyond repute. In fact, riddler quotes Cowan from time to time and Stockman was Reagan's tax guys for years.
  • CuriousJockAZ

    Posts: 19128

    Apr 11, 2011 5:49 PM GMT
    Christian73 said

    I think their credentials are pretty much beyond repute. In fact, riddler quotes Cowan from time to time and Stockman was Reagan's tax guys for years.


    I'm not doubting their "credentials", what I'm doubting is how effective those credentials have been for the GOP, the country, and the economy --- and that goes the same for any so-called "experts" on the Democratic side.
  • HndsmKansan

    Posts: 16311

    Apr 11, 2011 5:59 PM GMT
    CuriousJockAZ


    I'm not doubting their "credentials", what I'm doubting is how effective those credentials have been for the GOP, the country, and the economy ---



    I've always thought that..... since I was old enough to understand the trickle down bullshit
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    Apr 11, 2011 6:01 PM GMT
    Like I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.
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    Apr 11, 2011 6:38 PM GMT
    mocktwinkie saidLike I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.


    ^^ This. But, I think this speaks to the shift in the debate and recognition that the cuts have to come first - and that the current budget and entitlement spending is unsustainable.

    For the record, David Stockman isn't an economist though he was a director of the OMB under Reagan if memory serves - and he's the one who you quote saying the budget is "off the deep end" while ignoring the fact that he also advocates significant spending cuts to balance off any tax cuts. I don't really see much of his critiques as particularly noteworthy or even influential now - though it's important to provide a more complete understanding of his views.

    With respect to Tyler Cowen - his review is here:
    http://marginalrevolution.com/marginalrevolution/2011/04/the-paul-ryan-budget-plan.html

    Cowen allows that there may be opportunities to cut (and specifically reasons why). Note that Cowen doesn't consider the tax cuts "off the deep end" at all. In fact, his point #9 is "I’m all for cutting the corporate income tax, but 35 to 25 percent isn’t impressive. Let’s eliminate it altogether."

    This is a consistent view of most libertarians and many economists based on the rationale that the money ultimately is spent by individuals anyway - so it's double taxation to tax both at the corporate level and at the individual level. Further, I'd make the point that it's possible both to cut the marginal tax rates while increasing overall effective tax rates if you get rid of loopholes / targeted incentives/tax breaks.

    As is the case of our last non-partisan moment of disdain over GE, lobbyists and special interests spend millions in lobbying efforts to craft legislation that helps insulate them from competition or to receive tax breaks/incentives within their existing businesses. GE is simply craftier than most other corporations despite their profitability.

    Not surprisingly given your source, TPM, the article is deliberately framed for tax increases rather than cuts. I think that both must ultimately be done - and given that the debate is being framed around cuts (as a starting point) I think is a remarkable shift in no small part because of the tea party movement. It's remarkable that today even large scale reductions in agricultural subsidies is being proposed in addition to structural changes to all entitlement programs. It shows how worried Republicans are that they would risk political capital from traditional constituents/supporters to reduce spending.
  • TrentGrad

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    Apr 11, 2011 7:02 PM GMT
    mocktwinkie saidLike I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.


    Interpretation: We would be willing to raise taxes as long as our priorities are the only ones that matter!

    Just sayin'!
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    Apr 11, 2011 7:05 PM GMT
    TrentGrad said
    mocktwinkie saidLike I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.


    Interpretation: We would be willing to raise taxes as long as our priorities are the only ones that matter!

    Just sayin'!


    Your priority should be the debt. Everyone's priority should be the debt. If not, then god help us all.
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    Apr 11, 2011 7:09 PM GMT
    mocktwinkie said
    TrentGrad said
    mocktwinkie saidLike I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.


    Interpretation: We would be willing to raise taxes as long as our priorities are the only ones that matter!

    Just sayin'!


    Your priority should be the debt. Everyone's priority should be the debt. If not, then god help us all.


    Except that in order to deal with the debt, we need to cut the military - significantly - since it's a huge driver of our debt. And on one on the Republican side will even entertain that. (Not that the Dems are much better.)
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    Apr 11, 2011 7:41 PM GMT
    Christian73 saidExcept that in order to deal with the debt, we need to cut the military - significantly - since it's a huge driver of our debt. And on one on the Republican side will even entertain that. (Not that the Dems are much better.)


    I'm curious about this - given some of the data that's out there. How do you define military spending as being a huge driver of debt? Would you agree that based on historical standards spending isn't significantly different (From another source: "For example, from 1961 through 1969, during the Kennedy and Johnson Administrations, military and defense spending accounted for approximately 46% of all federal spending, and about 8.5% of the U.S. gross domestic product (GDP). During the Bush Administration, military and defense spending averaged less than 20% of federal spending, and about 4% of GDP.")
  • TrentGrad

    Posts: 1541

    Apr 11, 2011 7:46 PM GMT
    Christian73 said
    mocktwinkie said
    TrentGrad said
    mocktwinkie saidLike I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.


    Interpretation: We would be willing to raise taxes as long as our priorities are the only ones that matter!

    Just sayin'!


    Your priority should be the debt. Everyone's priority should be the debt. If not, then god help us all.


    Except that in order to deal with the debt, we need to cut the military - significantly - since it's a huge driver of our debt. And on one on the Republican side will even entertain that. (Not that the Dems are much better.)


    Well, that's not entirely true Christian...some of the tea party members have expressed a willingness to entertain cuts to the military.

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    Apr 11, 2011 8:01 PM GMT
    Only CuriousJockAZ would be brainless enough to suggest that economists know less about economics than politicians.

    He's more credulous than the entire population of Brigham Young!
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    Apr 11, 2011 8:04 PM GMT
    riddler78 said
    Christian73 saidExcept that in order to deal with the debt, we need to cut the military - significantly - since it's a huge driver of our debt. And on one on the Republican side will even entertain that. (Not that the Dems are much better.)


    I'm curious about this - given some of the data that's out there. How do you define military spending as being a huge driver of debt? Would you agree that based on historical standards spending isn't significantly different (From another source: "For example, from 1961 through 1969, during the Kennedy and Johnson Administrations, military and defense spending accounted for approximately 46% of all federal spending, and about 8.5% of the U.S. gross domestic product (GDP). During the Bush Administration, military and defense spending averaged less than 20% of federal spending, and about 4% of GDP.")


    We have an aging population with rising healthcare costs, a crumbling infrastructure and have been cutting taxes for 40 years while continuing to spend the same amount of money on the military.

    The two wars we have now were entirely put on the credit card because Bush cut taxes at the same time. Also, the portion of Defense spending that is calculated as such is actually only a percentage of what we actually spend. Taking in to account a range of defensive and offensive programs that the US is engaged in, and our foreign aid with which countries buy weapons, our defense spending is nearly $1 trillion this year. And our deficit is $1.4 trillion. Do you see a relationship?
  • TrentGrad

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    Apr 11, 2011 8:04 PM GMT
    mocktwinkie said
    TrentGrad said
    mocktwinkie saidLike I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.


    Interpretation: We would be willing to raise taxes as long as our priorities are the only ones that matter!

    Just sayin'!


    Your priority should be the debt. Everyone's priority should be the debt. If not, then god help us all.


    The priority should be the well being of the nation...of which climbing out of the debt is just one aspect of that. Obviously some government programs need to be scaled back...however cuts should more practical than just making the numbers work!

    I'm all for reducing the deficit...but I'm not all for gutting all social programs to do it! Find a way to financially emancipate the poorest 150,000,000 Americans while closing tax loop holes that allowed a company like G&E to pay no tax on billions in profit last year and you will go a LONG way towards solving the USA's deficit and debt crisis.

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    Apr 11, 2011 8:05 PM GMT
    TrentGrad said
    Christian73 said
    mocktwinkie said
    TrentGrad said
    mocktwinkie saidLike I said before, ultimately conservatives would be okay with agreeing to raising revenues as well as making cuts but only IF they are assured that it will all go towards the debt and not towards something else.


    Interpretation: We would be willing to raise taxes as long as our priorities are the only ones that matter!

    Just sayin'!


    Your priority should be the debt. Everyone's priority should be the debt. If not, then god help us all.


    Except that in order to deal with the debt, we need to cut the military - significantly - since it's a huge driver of our debt. And on one on the Republican side will even entertain that. (Not that the Dems are much better.)


    Well, that's not entirely true Christian...some of the tea party members have expressed a willingness to entertain cuts to the military.



    I said Republicans, not Tea Party membership. Yes, some of them have given a nod to cutting military spending, but let's see it reflected in their budgeting and legislative priorities.
  • TrentGrad

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    Apr 11, 2011 8:11 PM GMT
    Christian73I said Republicans, not Tea Party membership. Yes, some of them have given a nod to cutting military spending, but let's see it reflected in their budgeting and legislative priorities.


    Oh no doubt the axe wouldn't fall on military spending until virtually every other Federal program was almost completely cut off of funding. Still though, I had to point out the Tea Party on this because it did shock me...that any wing of the Republican party would even think about doing the un-Reaganable and cutting military spending. LOL
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    Apr 11, 2011 8:26 PM GMT
    Christian73 saidThe two wars we have now were entirely put on the credit card because Bush cut taxes at the same time. Also, the portion of Defense spending that is calculated as such is actually only a percentage of what we actually spend. Taking in to account a range of defensive and offensive programs that the US is engaged in, and our foreign aid with which countries buy weapons, our defense spending is nearly $1 trillion this year. And our deficit is $1.4 trillion. Do you see a relationship?


    This argument would be more convincing had this spending been significantly more than historical standards - again "For example, from 1961 through 1969, during the Kennedy and Johnson Administrations, military and defense spending accounted for approximately 46% of all federal spending, and about 8.5% of the U.S. gross domestic product (GDP). During the Bush Administration, military and defense spending averaged less than 20% of federal spending, and about 4% of GDP."

    While I would suggest that part of the spending reduction solution should come from the military, to suggest that the recent debt is because of - or a causal relationship to military spending rings hollow and does not seem consistent with the facts.
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    Apr 11, 2011 8:48 PM GMT
    riddler78 said
    Christian73 saidThe two wars we have now were entirely put on the credit card because Bush cut taxes at the same time. Also, the portion of Defense spending that is calculated as such is actually only a percentage of what we actually spend. Taking in to account a range of defensive and offensive programs that the US is engaged in, and our foreign aid with which countries buy weapons, our defense spending is nearly $1 trillion this year. And our deficit is $1.4 trillion. Do you see a relationship?


    This argument would be more convincing had this spending been significantly more than historical standards - again "For example, from 1961 through 1969, during the Kennedy and Johnson Administrations, military and defense spending accounted for approximately 46% of all federal spending, and about 8.5% of the U.S. gross domestic product (GDP). During the Bush Administration, military and defense spending averaged less than 20% of federal spending, and about 4% of GDP."

    While I would suggest that part of the spending reduction solution should come from the military, to suggest that the recent debt is because of - or a causal relationship to military spending rings hollow and does not seem consistent with the facts.


    It's not "hollow" at all. Do you really think that we should be spending 20% of our federal budget on the military?

    If you don't want taxes raised - which is unavoidable in the near term - then our aging population requires that we use our tax money to take care of our people first, not engage in endless adventurism.
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    Apr 11, 2011 8:51 PM GMT
    Christian73 saidIt's not "hollow" at all. Do you really think that we should be spending 20% of our federal budget on the military?

    If you don't want taxes raised - which is unavoidable in the near term - then our aging population requires that we use our tax money to take care of our people first, not engage in endless adventurism.


    Now you're just twisting words. Like I've said - I think it makes a lot of sense to reduce military spending - but to say that it's the cause of the deficits/debt is just wrong. But in the interest of one of our beautiful bipartisan moments, I will agree that 20% of the federal budget on the military is too much and there remain significant inefficiencies - especially in base maintenance. (Though for the record, I am not a fan of either parties - and I think being partisan is not useful)
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    Apr 11, 2011 8:55 PM GMT
    riddler78 said
    Christian73 saidIt's not "hollow" at all. Do you really think that we should be spending 20% of our federal budget on the military?

    If you don't want taxes raised - which is unavoidable in the near term - then our aging population requires that we use our tax money to take care of our people first, not engage in endless adventurism.


    Now you're just twisting words. Like I've said - I think it makes a lot of sense to reduce military spending - but to say that it's the cause of the deficits/debt is just wrong. But in the interest of one of our beautiful bipartisan moments, I will agree that 20% of the federal budget on the military is too much and there remain significant inefficiencies - especially in base maintenance.


    It is the cause of the current deficit because unlike every other instance where while at war we raised taxes, Bush cut them.
  • CuriousJockAZ

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    Apr 11, 2011 9:02 PM GMT
    TigerTim saidOnly CuriousJockAZ would be brainless enough to suggest that economists know less about economics than politicians.

    He's more credulous than the entire population of Brigham Young!



    The only point I was making, Mr. Condescension, was that all these so called "experts" with all their so-called "credentials" don't seem to mean a hill of beans when it comes to getting us out of the economical pickle we have found ourselves in. So many experts, so few answers.
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    Apr 11, 2011 9:10 PM GMT
    Christian73 saidIt is the cause of the current deficit because unlike every other instance where while at war we raised taxes, Bush cut them.


    You just sort of answered your own point and argument that the cause wasn't so much the military spending as even you initially suggest, but it was the tax cuts. Are you familiar with Hauser's law per chance?