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Monday, August 20, 2012

NY Times: Paul Ryan and Tax Policy

New York Times op-ed:  Paul Ryan and Tax Policy, by Ross Douthat:

Scott Galupo, the former Capitol Hill staffer turned blogger for the American Conservative, responds to my last post on Paul Ryan’s policy record, mixing some praise for Ryan with the following critique:

My problem with Ryan isn’t on the entitlement reform side; it’s on the revenue side. His assumption that another round of supply-side tax cuts will spark growth and unleash pent-up consumer demand strikes me as just as wooly-headed as the Tea Party freshmen’s knowledge of the federal budget.

And it’s this outmoded Kemp-ism that undermines his best idea, i.e., premium support. If Ryan and the GOP would have agreed to a sensible compromise on new revenue — which can be accomplished without the higher marginal tax rates that Obama calls for — then a deal on Medicare would have been far more likely.

I agree with Galupo’s first point; I’m more doubtful about the second one. Ryan’s supply-side zeal is probably his most significant weakness as a policy entrepreneur: Like most Reaganites, he has a Kemp-ian belief in the growth-unleashing power of lower marginal tax rates, but he’s operating in an era when (thanks to Kemp and Reagan) those rates are already low enough that there’s a lot less to be gained from slashing them even further. This doesn’t mean that some kind of rate-lowering, base-broadening tax reform isn’t still a good idea — it is, and Ryan’s right to champion it. But it isn’t the only good idea in the world, and the disappointing returns to the Bush-era tax cuts strongly suggest that the interests of the investor class are not always identical to the interests of middle-income Americans, and that the goal of lower rates needs to be balanced against other policy objectives.

Hence my persistent argument that the right needs to embrace a kind of small-government egalitarianism, which focuses on means-testing entitlements and ending corporate welfare and capping upper-income tax breaks (all ideas that Ryan supports) but then plows some of the savings into payroll tax cuts or a family-friendly tax reform or an expanded earned income tax credit, rather than just using them to keep (ahem) Mitt Romney’s taxes as low as possible. This has always been my biggest problem with the Ryan budget: In an age of stagnating incomes in the middle and reduced mobility at the bottom, its proposed reform of the welfare state doesn’t do enough to foster equality of opportunity.

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Comments

After reading Mr. Galupo article I notice there was no reference made to his degrees in economics, which makes me believe his article was no more than the type of rubbish we heard from the left durring the Reagan administration about supply side economics.

I hate to break it to you boys and girls, but capital hill staffers and attorneys understanding of economics is not very comforting.

We have arrived at the point where our taxing policies can no longer keep up with current spending levels. There has to be drastic cuts, which will not be popular by either side if we are going to avoid following Europe.

I sure there are thing we will disagree with Ryans plan, but at least he stuck his neck out and prepared one. Please take note that Ryan actually has a degree in economics.

Posted by: Jeff W | Aug 21, 2012 7:09:23 AM

I am thrilled that people are exposing ryan paul for who truly is. Paul and Romney are master capitalist interested in monetizing the presidency and turning this country into their own private company without regard to the american people.

Posted by: Income Tax | Aug 21, 2012 9:54:26 AM

Turning the country into a private company would be quite an unlikely feat, but at least companies aim to operate in the black, a concept this administration is woefully unacquainted with. Romney and Ryan are determined to get spending under control, and that's a start.

It seems to me that spending tax dollars to create DOT jobs at $780,000 apiece shows very little regard for the American people.

Posted by: Eric | Aug 22, 2012 12:55:51 AM