begins like this:
It has been a big week for budget documents. In fact, members of Congress have presented not one but two full-fledged, serious proposals for spending and taxes over the next decade.As it happens, and as one discovers by reading Krugman's entire New York Times column, both "full-fledged, serious proposals" are by Democrats, those in the Senate, and those in the Congressional Progressive Caucus.
Krugman acknowledges that 3 proposals were presented this week, but the third was not serious, that it was essentially a cruel joke. Krugman reminds us that in 2010 when others were treated Ryan as a serious thinker, he himself described him as The Flimflam Man reminding us today that his proposals were obviously fraudulent:
huge cuts in aid to the poor, but even bigger tax cuts for the rich, with all the assertions of fiscal responsibility resting on claims that he would raise trillions of dollars by closing tax loopholes (which he refused to specify) and cutting discretionary spending (in ways he refused to specify).Krugman describes Ryan more recent proposals as "even flimflammier," supporting that by noting Ryan claims that he can slash the top income tax rate
from 39.6 percent to 25 percent, yet somehow raise 19.1 percent of G.D.P. in revenues — a number we haven’t come close to seeing since the dot-com bubble burst a dozen years ago.I checked that last assertion, and according to The Tax Policy Center the last time revenues were that high was 2001, when they were 19.5% of GDP. For the last 4 years or so revenues have been between 15 an 16% of GDP. Perhaps that is one reason why, as Krugman notes, this time pundits and reporters are greeting Ryan's approach with skepticism and appropriate derision.
But that is not what is really important about this column.
This column praises the budget proposal of the CPC. After describing the Senate Democratic proposal as not bad, but basically insufficient because it does not call for "substantial though temporary spending increases" which would logically follow from its own analysis, he notes of the CPC proposal that it calls for such increases, largely offsetting them by "higher taxes on the wealthy, corporations and pollution."
Of even greater importance, he takes apart the notion of false equivalency, that somehow the CPC budget is a "Ryan plan of the left" -
There are no Ryan-style magic asterisks, trillion-dollar savings that are assumed to come from unspecified sources; this is an honest proposal. And “Back to Work” rests on solid macroeconomic analysis, not the fantasy “expansionary austerity” economics — the claim that slashing spending in a depressed economy somehow promotes job growth rather than deepening the depression — that Mr. Ryan continues to espouse despite the doctrine’s total failure in Europe.The plan may, according to Krugman, be as equally audacious as Ryan's proposal, and therefore probably has as little chance of being enacted, but as he writes
it’s refreshing to see someone break with the usual Washington notion that political “courage” means proposing that we hurt the poor while sparing the rich.His sense is we are unlikely to get a grand bargain, what movement there is is "in a direction conservatives won’t like" and that
Mr. Ryan’s efforts are finally starting to get the derision they deserve, while progressives seem, at long last, to be finding their voice. Little by little, Washington’s fog of fiscal flimflam seems to be lifting.Now if only the President were not so fixed on the notion of the Grand Bargain, as he clearly is. If only he would listen to the likes of Krugman and the CPC instead of Simpson and Bowles and Jack Lew.
The one hope we do have is that resistance from Democrats has increased enough that the President might not be able to put together majorities in either chamber of Congress in favor of a grand bargain, with Republicans firmly against raising tax rates or further closing loopholes and Democrats increasingly opposed to cutting benefits on the needy and the middle class.
It is worth noting that the amount of savings aimed for in the originally Simpson Bowles have been more than half accomplished already, and that projections of the impact of the Affordable Care Act helps seriously slow the growth of Medicare spending. Putting people to work will increase tax revenues at all levels of government, including payments into Medicare and Social Security, as well as decreasing expenditures on unemployment and Medicaid.
Of the three budget proposals out there, that of the Congressional Progressives is the one that makes the most sense, and the only one whose numbers actually work.
Too bad the Washington consensus does not yet grasp that.
It is nice that Krugman gives it appropriate credit.
And it is even nicer that he again properly labels Ryan and his proposals for what they are: fiscal flimflam