Paul Ryan’s “New” Austerity Budget
America is currently plagued by people making bad personal choices. But, the worst decisions rendered are not those of everyday Americans treading water in order to keep their heads above water, but by politicians like Paul Ryan. Exhibit A: his latest budget.
As Mark Twain noted, while “history does not repeat itself, it does rhyme.” Congressman Ryan’s budget proposals echo the past in that they reprise the policies designed to fight the last ‘war’ (the economic crisis of the 1970s). Not all economic crises are created equally. Some are mostly supply-side (not enough resources, e.g., oil), such as the 1970s. Meanwhile, others are primarily demand-side (insufficient wages to purchase what can be made), such as in the Great Depression of the 1930s and now. Ryan’s budget proposal tenders supply-side solutions (austerity) to deal with a mostly demand-side crisis. It then further doubles-down on the austerity policies introduced in 2011 by Tea Party governors and congressmen. Such prescriptions have been like medieval medicine that bleeds an ailing patient. Then when said patient refuses to fully recover from previous rounds of austerity imposed, the pontiffs of austerity declare the patient’s virtue in question and prescribe a round of flagellation to get ‘his mind right.’
None of this has proved effective as an economic cure, but it relieves the austerians of the need to confront their policy failures, while simultaneously conferring the benefit of raining down ever more subsidies and tax cuts to their patrons (now able to give near unlimited campaign contributions in light of recent Supreme Court decisions).
Ryan’s budget contains many aspects of Reagan’s budgets, but with even more severe cuts to education, health and research, of which the last generates tomorrow’s innovations and economic growth. To be more accurate, Ryan’s budget combines the harshest Greek-style social cuts of recent years (far more draconian than Reagan’s), but combines those cuts with a Reagan-style ‘military Keynesianism’ that dramatically increases military spending. Ryan’s budget would add nearly a trillion of new military spending over the next decade. One would think we learned our lesson regarding tax cuts for the wealthy and simplistic supply-side nostrums that fueled Wall Street excesses and ultimately the biggest crash of our economy since the Great Depression. But, just as one takes solace that we finally learned from our past errors, like the movie Ground Hog Day, we seemed doomed to awake each morning and try the same failed policies, but only harsher with each incarnation.
Moreover, austerity simply does not work, as amply demonstrated by Greece. In Greece, the result of massive budget cutting proved to be a whopping 25% cut to national income.
Furthermore, Ryan’s budget fails to recognize simple math. Instead, we get Horatio Alger tropes that his budget “empowers recipients to get off the aid rolls and back on the payrolls.” But, with three job seekers existing for every really existing one job, Ryan fails to explain how this musical chairs game on his Titanic results in employment? One answer might be to offer a government as employer of last resort jobs program, but that assumes that his interest is actually in creating jobs and not just cutting taxes for his campaign contributors.
Worse yet is Ryan’s intellectual dishonesty. Ryan asserts his budget cuts are in fact small and don’t represent austerity at all. This slight of hand trick results from arguing the budget is only modestly cut, but this fails to mention that his cuts to health and research are massive. Thus, overall spending cuts are only smaller because of his massive proposed increase to military spending. Moreover, Ryan’s ‘orange-alert’ warnings about Medicare drowning in debt have to be re-thought in light of rapidly declining growth of healthcare costs. Indeed, the past five years have shown the slowest increase in health costs since records were kept.
Jeffrey Sommers is Associate Professor of Political Economy & Public and Senior Fellow, Institute of World Affairs of the University of Wisconsin-Milwaukee and Visiting Faculty at the Stockholm School of Economics in Riga. His new book new book (with Charles Woolfson), The Contradictions of Austerity: The Socio-economic Costs of the Neoliberal Baltic Model is available from Routledge.