I was driving this morning and listening to the Larry Kudlow show on WABC. I do not share Larry’s unmatched enthusiasm for supply side policies, but if you are interested in the economy, his discussions are informative, and it helps me understand the arguments on both sides of the debate over our national debt, deficits and monetary policy. Today, he played an interview with Paul Ryan that I found revealing. Larry appreciates Congressman Ryan’s supply side pedigree, but he also understands that you can’t just endorse a plan for solving the economic woes of our country without getting specific as to how you would achieve tax cuts for wealthy Americans without raising income taxes on the middle class. A Wall Street Journal editorial by Austan Goolsbee, Obama’s former President of the Council of Economic Advisers, drove this point home this week. Citing a report I mentioned in an earlier blog post, Mr. Goolsbee notes that if Ryan and Romney follow through on their budget plan, the lost revenue from tax cuts benefitting the wealthiest Americans “exceeds the value of all the relevant deductions and exemptions in the tax code combined—charitable giving, mortgage interest, state and local taxes, health insurance not counting as taxable income, etc. So to keep the deficit from increasing, middle-class tax increases are inevitable.” Economists on the left claim Romney’s plan would “could impose a trillion-dollar tax increase on the middle class while still managing to increase the deficit by an additional $2 trillion.”
Larry Kudlow sees the soft underbelly of Ryan’s plan, recognizing that you can’t tout a budget plan without explaining what steps you plan to take to achieve the outcomes you claim. In his interview with Ryan, Kudlow gently prods Paul Ryan, referencing the Goolsbee article (implicitly acknowledging its credibility) and asks him to be specific. Citing the $4M shortfall created by the Romney plan, Larry tries to pry some specifics from Ryan. Check out his efforts here. At minute 9:55, 12:45 and 14:22, Kudlow seeks specifics. By the end, with no specifics from Ryan, he simply seeks estimates of the spending cuts that would be necessary, $700B, $800B, $1T? Like the Apostle Peter, Paul Ryan has three chances to own up to the details of his budget plan, and three times he bobs and weaves. When Larry asks him for the third time, Ryan says these details will be the subject of a “long debate” with Congress.
In essence, Paul Ryan has no plan and is asking that we trust him. He assumes, perhaps correctly, that people’s eyes glaze over when it comes to these details, and he will get a pass as long as he keeps tossing out phrases like “pro growth” and “get people back to work”. I welcome someone to post or explain to me how his plan will achieve the tax cuts he proposes, protect Defense spending and balance the budget. Not possible. From what I have seen so far, he is no guru or economic savior. He speaks well, uses all the right supply side lingo, but when pressed, refuses to get specific. I will vote for anyone, regardless of Party, who acknowledges the fiscal problems we face, speaks honestly on the sacrifice necessary to fix it, and asks those who have benefitted the most from our “free markets” to give up their low tax rates, forswear offshore tax shelters and accept means testing of governmental benefits. Instead, I expect what we will see is hundreds of millions of dollars pouring into Republican superpacs in an effort to protect the vast wealth migration that our lobbyist-induced tax code has enabled a sliver of our citizens to accomplish over the last 20 years.