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Brooks Wilson's Economics Blog: Cruseturner on Democrats and Republicans

Sunday, February 7, 2010

Cruseturner on Democrats and Republicans

My friend and colleague, Ashley Cruseturner, wrote "Are the Two Major Parties Too Lost to Right this Ship?" for  I have cut out a lot of good writing to focus on a main point of the article: that neither party is prepared to make tough choices to resolve long term budget deficits caused by unfunded liabilities of Medicare, Social Security and Medicaid.  I wish to offer a hypothesis to explain the dithering.  Politicians are giving voters what they want: unrealistic promises that can't fiscally be kept.  Cruseturner writes. 
...Like the 1850s, the thrilling and astonishingly decisive victory of a handsome dark horse, paradoxically, may mask the structural instability of the Democratic ascendancy.  Under the sweet but delusional spell of sudden and unexpected congressional majorities and control of the White House, Democrats then and now misread their mandate and misjudged the durability of their dominance.  Ironically, the recent meteoric elevation of party fortunes in 2006 and 2008, the euphoric triumph of Barack Obama, and perhaps even a hard-fought reelection win in 2012 by default, may well offer the Democratic Party of today one final and spectacular opportunity to definitively demonstrate the utter bankruptcy of modern liberalism...

The inconvenient truth: the Republicans of 2010 carry the baggage of a failed party bereft of ideas and visionaries—lacking intellectual honesty and the courage to speak classical conservative truth to its own conventional wisdom...

Right now no one in the Republican Party is seriously addressing the tough issues that pose an existential threat to our survival as a nation: the trillions of dollars in debt we currently owe and the tens of trillions in unfunded liabilities looming in our future.  The best the GOP can do is offer a promise to return to the status quo ante Pelosi: the pledge to stay on the road to disaster —but drive at a more moderate speed.
As Cruseturner penned these words, Paul Ryan, the ranking Republican member on the House Budget Committee released his budget plan, "A Roadmap for America's Future" which is a truly bold plan for the future. The proposal, which would among other things fundamentally change social security, Medicare, and Medicaid, was scored by the Congressional Budget Office.  The report from the CBO to Ryan begins with the usual disclaimers about the limitations of long term forecasts and the unsustainable nature of today's budget path but concludes,
Using CBO’s “textbook growth” model, it is not possible to simulate the effects of the alternative fiscal scenario after 2058 because deficits become so large and unsustainable that the model cannot calculate their effects. The Roadmap would put the federal budget on a sustainable path, generating an annual budget surplus of about 5 percent of GDP by 2080. According to CBO’s textbook growth model, which incorporates the assumption that economic output is determined by the number of hours of labor

that workers supply, the size and composition of the capital stock, and the state of technological expertise, real potential gross national product per person would continue to grow over the entire 75-year period (see Figure 4).10 The economy would be considerably stronger under the proposal (as analyzed by CBO) than it would be under the alternative fiscal scenario. Real gross national product per person would be about 70 percent higher in 2058 under the proposal than under the alternative fiscal scenario.
Ryan's provides a graph of projected economic growth per capita under the "Roadmap for American" plan and the status qua.  It appears to be based on the same data as the CBO report and it indeed shows and extreme difference in economic growth.  Other projections show dramatic improvements in the deficit and national debt, and levels of taxation and spending. 

The Ryan plan seems to be the exception that proves Cruseturner's point that nothing useful is being proposed by in Washington.  Democrats are attempting to pin the plan on all Republicans and Republicans have turned their backs on it.  Jake Sherman of Politico writes in "Dems rip into Ryan's roadmap,"
Last Friday, Rep. Paul Ryan looked like President Barack Obama’s new Republican best friend. The president showered praise on everything from his substantive budget proposal to his family during the now-legendary question-and-answer session with House Republicans.

But rather than opening a hopeful new avenue for bipartisanship, the White House and Hill Democrats quickly went to work ripping apart Ryan’s “Roadmap for America’s Future” — which Obama himself said he had read...

Republicans believe the criticism was a setup.

Rep. Devin Nunes (R-Calif.), an ally of Ryan’s and a collaborator on the plan, said the Democrats’ playbook was obvious: Obama elevated Ryan’s plan in order to methodically break him down. Democrats dismantled the road map point by point over the past week, framing it as a radical shift back to George W. Bush economics...

House Republicans sought to put some distance between themselves and Ryan’s plan. It is just one proposal from one member, the House’s top Republican said Thursday.

“We have a lot of members who have spent really a lot of time creatively looking at how [we] solve the nation’s problems,” House Minority Leader John Boehner (R-Ohio) said. “Paul Ryan is [the] ranking member on our Budget Committee, who has done an awful lot of work in putting together his road map. But it’s his.”
Democrats and Republicans are providing unsustainable policies while decrying true reform as costly.  Why?  You must either believe that politicians continually trick voters or that they are providing the policies voters want.  I'll take the latter option, politicians are giving us what we want.   

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