Paul Krugman spent Wednesday combing through the details of Tea-GOP genius Paul Ryan’s budget and in a series of blog posts utterly destroyed the Ryan budget’s phony math, implausible assumptions and unicorn forecasts. Kudos to MSNBC’s Rachel Maddow for picking this up.
Krugman once called Ryan a “flim flam” man, a virtual con artist, and yesterday, he proved it. Let us count the ways.
1. Beginning Tuesday with “Groundhog Day,” Krugman warned of a giant bait-and-switch in which the claimed goal of reducing the deficit would provide cover for what in fact would be a proposal not merely to privatize Medicare (or Social Security) but to do so in a way that actually increased costs, if not to government, then for beneficiaries. He was right.
As we’ve been saying all along [see here, here, and here], Ryan’s Medicare mandate plus vouchers would lower government costs only by shifting even more uncontrolled costs to seniors, disabled and poor people, eventually forcing them to forego treatment for which they could not afford insurance.
2. In the 2022 Medicare Crisis, Krugman echoes Matt Yglesia’s point that Ryan’s Medicare mandate and voucher system sets up an unstable, indefensible discriminatory system for seniors. Starting in 2022, those already over 65 would continue receiving traditional full Medicare benefits (and have the choice of getting the equivalent from private insurers via Medicare Advantage) but those just reaching 65 from then on would receive only private insurance that, year after year, covered less and less of the costs and care as older retirees. Ryan assumes the “savings” from this discriminatory treatment would be accepted by the disadvantaged group and that Congress would ignore the unfairness.
3. In Ryan the Ridiculous, Krugman examined Ryan’s economic assumptions on which his revenue and savings projections depend. Ryan’s budget crunchers are the right-wing Heritage Foundation. They assumed that despite major new tax cuts for wealthy Americans and corporations, federal revenues would, presumably via the hilarious Laffer curve (aka what G.H.W. Bush called “voodoo economics”), still dramatically rise. How? Because unemployment would virtually disappear: by 2020, it would fall from near 9 percent to less about 2.8 percent, a level not seen in the last sixty years when lots of men were fighting in Korea. Right.
4. A few hours later, Krugman sent out a Memory Hole Alert, after he caught Heritage trying to scrub the implausible 2.8 unemployment assumption from its website. But Paul had the before and after screen shots. Whoops.
5. Next, Krugman noticed Paul Ryan’s Multiple Unicorns. In addition to noting the large difference between the reality-based CBO unemployment projections and Heritage’s projections, Krugman picked up on Dean Baker’s calculations showing that to sustain the same health care they’d get under Medicare today, future seniors under RyanCare would have to spend most of their income on rising private health insurance premiums.
Worse, Krugman notes that Ryan’s budget savings from Medicare/Medicaid that result from shifting costs to seniors and the poor/disabled would be squandered in providing more tax cuts for the rich and corporations. So the claimed debt reduction could only come from slashing everything else, but not explaining how:
Ryan is assuming that everything aside from health and SS can be squeezed from 12 percent of GDP now to 3 1/2 percent of GDP. . . . And how is this supposed to be accomplished? Not explained.
This isn’t a serious proposal; it’s a strange combination of cruelty and insanely wishful thinking.
6. In a Housing Unicorn, Too! Krugman scours the Ryan/Heritage accounting to discover that the assumed Tea-GOP economic growth will be driven by . . . wait for it: another housing boom as robust as we had in 2006 at the height of the housing bubble! And since government debt would presumably be shrinking, the only way to finance that massive boom would be to have today’s snake-bitten consumers eagerly take on massive mortgage debts again. Next.
7. In Where the Spending Cuts Go, Krugman provides bar charts to show that “a large part — roughly half — of the spending cuts are going, not to deficit reduction, but to finance those tax cuts” for the wealthy. So there may be hidden cuts or tax increases on the middle class to account for the rest of Ryan’s claimed debt reductions. Paul concludes:
. . . the bottom line is obvious: this is not the budget of a deficit hawk. It’s the budget of a deficit exploiter, someone who is trying to use fears of red ink to push through a political agenda that includes major losses of revenue.
Or as Ryan himself admitted: “This is not a budget, it’s a cause.”
8. Finally, in the Puzzle of Gullibility, Krugman takes the media to task for swallowing complete nonsense, including these Beltway myths:
Paul Ryan is an honest, deeply serious thinker who really cares about the deficit.
The Ryan plan sets a new standard of seriousness.
Yep. The Tea-GOP’s budget genius, the man conservative pundits hope will become President and the current President says has good ideas, the man who keeps lecturing everyone else about avoiding demagoguery and acting like grownups, that man is a complete charlatan. That’s why Krugman calls Paul Ryan, “Flim flam Man.”



80 Comments

I watched Rachel last night and saw that piece.
As I see it Ryan is put out their as the wild man on the extreme right to allow the others like Boehner and Obama to look reasonable. If Ryan proposes to gut social security, Obama and Boehner look moderate when they water it down.
Heh. Paul Ryan, liar or ignoramus? Or both?
Discuss.
Both.
The insanity just gets worse.
But he’s shrill, so we don’t have to take him at all seriously, right?
Definitely the goal post mover!
Here’s the thing. People tend to forget that Krugman, along with other well-trained economists, do this for a living. It used to be the case that graduate training in economics involved practice in digging up facts and analyzing them (today maybe not so much). Paul’s work veered to the theoretical at an early stage in his career, but he never forgot how to do the basics, which is sitting down and reading through the argument, and evaluating the evidence supporting it. It isn’t much different from the kind of work a good lawyer does.
You can make stuff too complicated, and a lot of modern economics has done just this, in part because complicated gets you promoted within academia, whereas simple doesn’t. In the area of national income accounting, the basic stuff is actually pretty simple. All it takes is a bit of time and effort to dig out the data and arrange it into meaningful categories.
Ryan made a big mistake. He would have been better to claim pie in the sky the way Reagan did, which is immune to criticism because it means nothing. Ryan needs as better ad agency.
Excellent Post, Scarecrow!
The backstep by the Heritage Foundation is just too good. I’m afraid they fail to realize how massive the pushback from the public is going to be on social security/medicare.
Shrill? Those were the halcyon days when the nuts were content with name calling. They’ve moved well beyond that into wholesale theft. Bankster bailout worked, so encouraged them to go for the whole pot of gold.
Well Chuck Todd has been wallowing in an orgy of poll numbers about political matters. S’pose he’ll ever get around to dissecting the unicorn factor of those numbers?
Nah, I don’t think so, either….
Yes, but I am still working on them for my share. They got Tarped, they made a ton and were bonused for three years in a row, plus they rewarded the stock holders to a degree.
However…as a stock holder in my retirement account/401K, they have failed to replace my loses and I’m still mad as hell about it. Do they think that all of us out here on main street don’t see this?
Joke Line calls him “politically courageous”. Does anybody still pay attention to that guy?
Mr. Dean Baker is one economist that delves and sees the truth. In fact, he posts here at FDL on issues that directly affect us.
“…this is not the budget of a deficit hawk. It’s the budget of a deficit exploiter, someone who is trying to use fears of red ink to push through a political agenda that includes major losses of revenue.”
as though being a deficit hawk is anything other than pushing a political agenda.
both parties are fear mongering the so-called “red ink.”
the republicans don’t care about the current federal deficit. and neither should democrats.
These are good points which take us to the next assessment. Ask Krug to assess the steps Boehner and O are trying to pull off as reasonable and make sure we have a strong counter plan that passes the CBO snuff.
As more Dems jump off the OBAMA band wagon before it goes over the cliff, the less important Paul Ryan becomes
As more Dems line up behind Bernie Sanders, to save face with the Dem Base, the less influence Obama has.
Again I thank the people of Wisconsin for taking over the direction of the Dem Party.
I also thank Gov. Walker for destroying the idea of the mythical middle which wiped out OBAMA
It is no longer cool for Dems to work with idiots call GOPers because the GOP does not work with Dems.
Chuck Toad? Nah, he is just on the tv while they show clips.
Democrats don’t care about the deficit either. They are also looking to loot the entire USG to reward their rich donors. They’re just doing it behind the cover of the Rs.
Yep. Baker does it the way it should be done. Of course, not being an academic economist, he has more liberty to do the right thing.
Ryan’s goal in releasing his budget isn’t enact it, but rather TO MOVE THE GOALPOSTS further to the right. With the Dems (led by Obama) showing a willingness to compromise/cave on key issues and the media being so terrified of being called “liberal” when discussing objective facts that they present all things Republican without any substantive critical analysis, why on earth would Ryan do anything different?
“Or as Ryan himself admitted: “This is not a budget, it’s a cause.”
Yet the media news fails again miserably on all facts.
“unemployment would virtually disappear: by 2020, it would fall from near 9 percent to less about 2.8 percent”
Anything below 4% is fantasy. Or as PJ O’Rourke said years ago “5% unemployment isn’t bad – I mean, 5% of my lazy friends wouldn’t get jobs even if it paid $100/hour and consisted of doing inventory for a blind liquor store owner”.
The corp media isn’t failing. They’re doing exactly what they are supposed to do in today’s U.S.
well, that is true. So, can we now force them to change their name from news organizations to 24/7 pundit views?
I personally would really like to start talking about the money that was “borrowed” from social security, those funds were promised to be returned with dividends
I want my money back and I want it from the people who enjoyed those middle class assets
I want my money back with interest, otherwise I want the people and companies who enjoyed those funds to be placed into bankruptcy so we can at least get something back on our investments
that’s the way this discussion needs be directed
and when they start talking about “borrowing from pension plans” the democrats BETTER get paper on that for the people these funds are “borrowed” from, and they need asset guarantees against that loan
that’s the kind of talk the democrats need to be walking
24/7 pravdagandists. Pundits is much too classy a designation.
great point echan, they’ve been bought up and are not serving owners agenda
Do your lazy friends vote repug or are they too lazy to vote?
Absolutely! Also, like I said above on the Tarp and Banker bonuses, I want my 401K to be put back to what it was before they started yanking from it for their derivites shell games!
If the Democratic Party was not corrupt to its core, this is what it would be offering the American people right now!
1. Never Renew Bush Tax Cuts
2. End Political Corruption – enact the Fair Elections Now Act. Strictly voluntary. Matching funds. $100.00 maximum donation. Ban politicians from becoming lobbyists
3. End The Wars – (another form of corporate welfare). Immediately pull out of Iraq, Afghanistan, Libya, Yemen
4. End Bank Monopoly – break up the big banks, strengthen the Volker Rule, end the foreclosure crisis by giving bankruptcy judges the power to order reductions in mortgage principal owed
5. End National Addiction To Oil – begin with a carbon tax to reduce consumption, increase energy efficiency and make alternative energy more cost-competitive. Revenues generated should go to reducing payroll taxes to stimulate employment
6. Put Millions Back To Work – Federal government invest $2 trillion over 10 years through a national infrastructure bank (run by engineers, not politicians) to create jobs now and increase productivity later. Fund with a millionaire’s tax
7. Keep Social Security Solvent For Generations – raise the ceiling on income subject to the Social Security tax to $180,000. Congress could gradually slow the growth of benefits for middle and high earners while still allowing these benefits to rise in terms of absolute dollars and purchasing power. Lower-wage earners would receive everything they are now promised. Eliminate $4.8 trillion long-term deficit
8. Balance The Budget – over time by cutting the defense budget, end agricultural subsidies, stop corporate welfare, raise taxes on the super-rich, contain the explosion of health-care costs by adding the public option, allow Medicare to purchase drugs, give MEDPAC wider authority and allow drug re-importation
9. Encourage Upward Mobility In Society – make higher education free to families that can’t afford it. Fund with a financial transactions and bank tax
Broader point.
All this analysis is useless. I used to do it for a living & there is a relatively honest way to do it, and as Knut says above, it’s not rocket science.
But no one inside the beltway is paying attention to actual economic analysis, just like they aren’t paying any attention to real climate science.
And the glory of their method is at least twofold. Not only do they get away with raiding the treasury, they also discredit all legitimate analysis in the process. So anyone who is still doing real work on the subject is rejected out of hand.
completely agree re D party leaders and pols.
just hoping the base wasn’t buying the bs we’re being sold — including by krugman
Well, we’re not really talking about my friends. The quote was from a humorist added as a funny way to back up my point that Rayn’s projection of 2.8% unemployment was fantasy.
We really did need that Lock Box….
re krugman:
Paul Krugman gets it wrong…. Again.
http://my.firedoglake.com/selise/2011/03/26/paul-krugman-gets-it-wrong…-again/
Why Paul Krugman, and we, need to take MMT economists seriously.
http://my.firedoglake.com/selise/2011/03/29/why-paul-krugman-and-we-need-to-take-mmt-economists-seriously/
james galbraith had a great piece on that:
Who Are These Economists, Anyway?
http://www.nea.org/assets/docs/HE/TA09EconomistGalbraith.pdf
Today’s Repub talking point: Compromise is a dirty word to Republicans.
I guess I’m a Repub too.
These economic “plans” are like showing someone a blank canvass and then telling them where you are going to put all the colors in your abstract painting.
Or…paint by numbers.
Not Chuck. Joe Klein.
Thanks for the synopsis Scarecrow, much appreciated.
Although this is old news to those following Wisconsin’s election Tuesday night, it is worth pointing out that Ryan’s home county went 60-40 in favor of Kloppenburg over Prosser/Walker/Ryan.
Ryan will likely lose his seat in 2012. The Tea-GOP is whistling past the graveyard, if they think they will not be struck dead by touching the third rail.
Some would argue that there is no “right” to receive Social Security, even though you’ve paid in for years.
The Heritage Foundation has since disappeared that little bit of fiction down the Randian rabbit hole.
Bullshit. Taking my money and not giving it back AS PROMISED is called “theft”. Some would argue that the banks have no “right” to steal my fucking money that I’ve been paying in.
selise,
Galbraith uses way too many words. Just like genuine economic analysis is useless inside the Beltway nuthouse, so is history of thought.
The short version is that only 3% of U.S. economists self-define as neoclassical/neoliberal, they are the ones in charge of all of Western econ policy: USG, IMF, WB, exported in past days to countries like Chile, now increasingly in western European govts.
The survey that revealed the 3% number was written by a neolibrul who castigated the rest of the profession for being so primitive (or something) in their thinking.
H/T Smith in econned.
I have a paper copy of the article, which was published in an expensive journal accessible only to subscribers, but I can’t lay my hands on it right now, nor resurrect the ref from econned.
The neolibruls have succeeded not just in putting real economists into the veal pen, but headed down the chute for slaughter, at least intellectually.
Maybe I wasn’t clear.
Some would argue that there is no “contractual” right to receive Social Security payments, even though you’ve paid in for years.
I guess the reasoning is, the money you paid in is no longer YOUR money much the same way that the money you paid for a lotto ticket is no longer your money. But that’s just a guess on my part.
Seems I read a piece by Galbraith where he lamented that his own son was planning to go to Wall St. with the intent to get in on the ‘Financial Innovation’.
It’s hard to see how we can convince T-GOPers to get real if even with James Galbraith’s life-long guidance his son chooses to join the ‘innovators’.
No you were perfectly clear. I tried to be the same. Some would call that theft, me being one of those people.
Oh, and it’s not analogous to a lottery ticket. Nobody forces you to buy a lottery ticket with a promise of a return.
Found the ref in econned, p. 107: Journal of Economics and Sociology, 2007, “Is There a Free Market Market Economist in the House? The Policy Views of American Economic Association Members.”
8% endorsed this position but only 3% were strong supporters.
Good point about the lottery ticket.
But no matter how much the liberals stamp their feet and expose Eddie Munster’s plan to eviscerate Medicare, OilyBumbler will hit the hippies in the bread basket and spit in our faces, saying if we are to have “an adult conversation” (screwing the working person) we must, we must I tell you! make sacrifices so the big jowled white man corporatists and Kock Brothers add more to their already seemly filthy lucre.
Personally I would accept as a political partner someone (Krugman) who got to the same selise actionable thought (Ryan is full of bs) by a different reasoning path.
I’m not sure fighting over the usefulness of MMT to project future prosperity, or even if one can do such a projection, is productive politically. But that is just me.
Besides, in a world where the 14th Amendment’s prohibition on any law that would cause or allow the US to default on a contract, we are about to fight over a max debt limit law – one that on its face seems Un-Constitional. This coming after Ryan pushes increased tax revenue from lower tax rates despite Reagan’s massive tax cuts in the Aug 1981 budget bill resulting in two years of poor economic results – the only GOP response being it would have been worse without those cuts and look at 1984 and later and note the growth. The delay leading to the standard GOP economist explanation that tax cuts like monetary policy has a delay of unknown length, but we can match our recommendations to a later economic growth period if you give us wide latitude as to the length of any particular delay.
Logic discussions on economics in the political area ended under Reagan – I doubt your passion for MMT will bring a desire for a discussion about economic logic back into the political discussion in the near future (albeit I am interested in MMT beyond the obvious truth that default is impossible if we issue our own currency – but I need a FAQ on why on a worldwide basis asset values in the US relative to value of assets in other countries, each valued in our country’s currency, does not drop when the amount of our currency is increased), but I hope MSM will note Krugman’s comments and not just give Ryan a free ride.
PJ tried for humor – I laughed knowing how right wing PJ is and who his friends are – but PJ missed the economic truth.
There is indeed a delay as new population is absorbed in the workforce – but below 4% unemployment is achievable – we did it during the Clinton years in many areas of the country and are still doing it in parts of the population (college educated).
Your guess is the GOP assertion that a social insurance premium collect as a payroll deduction is just another annual tax. Indeed that GOP assertion is the reason the GOP want to add a “means” test to Social Security – or to get rid of the cap on wages considered for payroll deduction but to retain the cap on wages used to determine benefits. By making those changes they can claim Social Security is just welfare – an entitlement and not a paid for insurance benefit payment.
And Democrats are falling for the trick. We need better educated Democrats! :-) (I’ve given up on better educated GOP since with more education and a bit of ethics and morals they become liberals and progressives :-) )
The above is what happens when English as a second language folks do not spell check and proofread. sigh …
This thinking is typical thinking of con-artists. If you came up with the money for their scam, then it was “extra” money that is as much theirs as yours (more so theirs, since they are obviously smarter than you are).
Interestingly, this exact mind set is what the ruling class (currently the GOP) thinks about our money (i.e. Social Security).
there are some who are not in any veal pen… as galbraith describes in the link — they have payed a big price professionally, but they exist. they work and they teach.
and while i don’t expect what galbraith writes to have any impact on the beltway nuthouse, i also don’t expect that to be the case for us. i didn’t leave that link for the deecee crowd. i left it for scarecrow and his readers. if even i can find those economists (more than a year before galbraith wrote that paper), then they can’t be that hard to find.
just because the neoliberal crowd — both freshwater and saltwater (which includes krugman) — is in charge doesn’t mean they are the only ones worth listening to. in fact just the opposite.
i’m not suggesting ryan be given a free ride. not in the slightest…
it’s the dems and their mouthpieces (see krugman) that i don’t think should be given a free ride either.
because when they say something like: “the bottom line is obvious: this is not the budget of a deficit hawk. It’s the budget of a deficit exploiter, someone who is trying to use fears of red ink to push through a political agenda that includes major losses of revenue.”
the unsaid implication is that, unlike the republicans, the dems ARE serious about deficit reduction. and deficit reduction is madness.
He eCAHN, what economists, living and dead, do you like?
Interesting new Koch Bros. post I stumbled onto yesterday.
http://www.alternet.org/news/150520/you_thought_the_koch_brothers_were_bad_turns_out_they%27re_even_worse_than_you_thought/
One of the claims made describes Paul Ryan’s agenda is entirely designed to sevre Koch Industires by fully exploiting the misery and uncertainty in the US and the world. I’m horrified that we gotta sit still while these fanatical SOB’s commit a full spectrum of crimes against all forms of life. http://www.alternet.org/news/150520/you_thought_the_koch_brothers_were_bad_turns_out_they%27re_even_worse_than_you_thought/
Sorry for linking twice. My bad.
9 Unicorns.
Enacting even three of those would prevent the average US citizen from becoming completely enslaved, what fun would that be?
It is called Debt Peonage. Not a whole lot different from what we saw in the Middle Ages.
I can’t wait until they enact “right of the first night”.
Gingrich is drooling for that one…
“ I doubt your passion for MMT will bring a desire for a discussion about economic logic back into the political discussion in the near future ”
well, if we can’t have a discussion about economic logic here at fdl then i have very little hope for our country.
still, to quote galbraith again, we don’t need hope to persevere.
p.s. have you tried asking your questions? iirc, i gave you some links a few days ago.
That is a very good article confirming both my suspicions and what I had been told. Having studied a real science and knowing what a real theory looks like, I had always found economists pretensions absurd. On the one hand, they like to quickly move the conversation to theory. On the other hand, their mathematics isn’t all that impressive. Professionalisation of the university and the destruction of the humanities strikes again. Fucking world of idiots.
LOL. me too: “Having studied a real science and knowing what a real theory looks like”
Right compare it with physics. Freshman are taught one simplifying assumption–frictionless surfaces–which the next year they learn how to do without. Economics assume frictionless this and frictionless that well into their professional careers. The result is ideology in the strict sense of the term–systematically biased thought.
I’m pretty sure that’s why they created 401K’s. It’s one great big cookie jar for the bankers.
Papau, I think you are absolutely correct that:
“Logic discussions on economics in the political area ended under Reagan ”
It’s one of the big reasons that the left has been losing battle after battle. And until we have conversations which challenge the present establishment model of economics, we will continue to lose battle after battle. We’re fighting from the low ground right now.
Krugman, he represents the left extreme of that failed economic model. So he is sometimes part of the problem.
Anyway, I’d recommend James Galbraith’s book, The Predator State. It’s a well written primer on the fallacies of the current economic system.
http://www.amazon.com/Predator-State-Conservatives-Abandoned-Liberals/dp/141656683X
Of course PJ fails to mention that his friends wouldn’t even be counted in the statistics because they would also be too lazy to prove that they were looking for work and couldn’t find it.
Even if all of PJ’s friends (I assume he has at least a few) were out of work, we could officially be at 0% unemployment.
eblair, excellent analogy re physics. i’m inspired now… to transcribe another of galbraith’s talks (and ask him if i can post it). only tangentially related to the discussion here, but i think important (and interesting, maybe especially for those with backgrounds in physics or biology).
They moved the underlying physical assets offshore and hid all the damage that cause by inflating a massive credit bubble.
Since the mid 1990′s, our 401K’s have been living in a bubble.
It is also cover IMHO to enact the “Adult” Bowels Simpson plan. This guy is an a**hat. I hope everyone can see what is happening here. I am sure you do.
captjjyossarian, amen to this:
Interesting, Paul Volcker said the very same thing about his grandson. Tail end of this Bloomberg interview:
http://www.youtube.com/watch?v=O3ROf8ln9rg
Never heard that story regarding Galbraith’s son, are you sure it was w/regard to the son of James K Galbraith?
Recall!!!!!!!!!!!!!
Go Wisconsin. Recall the ever so serious Mr Ryan.
Consider Paul Ryan is just a nasty, self-righteous prick.
Great article. Thank you.
A great reason to 1) money out of politics and Federal funding of elections, and 2) Time to drain the wealth swamp–Eisenhower tax rates and wealth clawback taxes. Oh, 3) Investigate, investigate, investigate and prosecute, prosecute, prosecute!
Alas, I suspect our country will be gone, as any form of a democracy founded upon the liberal ideas of the enlightenment and all men are created equal with unalienable rights, before that happens.
You can’t link enough to this!!!
Perfect. That is exactly what Ryan is being used for. He’s the thug hockey player, not real talented, who is put into the game to beat up opposing players. Then, enter the Savior, and god help us, it’s O, who will beat us up a little less severely. But not by much.