Paul Ryan

The liberal mainstream media has fallen in love again. This time it’s with Wisconsin’s Republican Representative Paul Ryan and his “Roadmap for America’s Future” version 2.0.

Everything’s version 2.0 these days, but in Ryan’s case, his roadmap to “solve America’s long-term economic and fiscal crisis” is really more of a 1.1 version.

You see Newt Gingrich proposed this same plan back in the mid-1990s. You remember that whole “Contract with America” horse-hockey? Well, Ryan’s dusted off Gingrich’s old playbook and the media is lapping it up.

Ryan wants to slather the top 1 percent with huge tax cuts and slash gaping holes into the social safety net. Under his plan, the richest of the rich would see their taxes cut in half. And then he wants to, you guessed it, privatize Social Security and Medicare.

That liberal rag, The Washington Post, ran a shining profile of Ryan on Monday portraying his as the fiscal conscience of the GOP.

According to the profile, Ryan had wanted to be an economist, but decided he would have more impact in Congress, so he ran and won a seat in the House of Representatives in 1998.

Paul Krugman is an economist, and he called Ryan him a “flimflam man.” Despite Ryan’s intellectual dishonesty, Krugman said the mainstream media often describe Ryan with phrases like “intellectually audacious.”

Krugman writes:

But it’s the audacity of dopes. Mr. Ryan isn’t offering fresh food for thought; he’s serving up leftovers from the 1990s, drenched in flimflam sauce.

Mr. Ryan’s plan calls for steep cuts in both spending and taxes. He’d have you believe that the combined effect would be much lower budget deficits, and, according to that Washington Post report, he speaks about deficits “in apocalyptic terms.” And The Post also tells us that his plan would, indeed, sharply reduce the flow of red ink: “The Congressional Budget Office has estimated that Rep. Paul Ryan’s plan would cut the budget deficit in half by 2020.”

But the budget office has done no such thing. At Mr. Ryan’s request, it produced an estimate of the budget effects of his proposed spending cuts — period. It didn’t address the revenue losses from his tax cuts.

According to the nonpartisan Tax Policy Center, Ryan’s plan would reduce revenue by almost $4 trillion over the next 10 years.

“If you add these revenue losses to the numbers The Post cites, you get a much larger deficit in 2020, roughly $1.3 trillion,” Krugman said. That’s approximately the same as the budget office’s estimate of the 2020 deficit under Obama’s plan.

What Ryan is doing is he’s loading up his proposal with huge spending cuts, and having those cuts analyzed by the Congressional Budget Office, but ignoring the impact of his massive tax cuts for the wealthy.

Megan McArdle

Conservative blogger Megan McArdle jumped into bail out Ryan’s intellectual dishonesty by making the claim that it’s the Joint Committee on Taxation, and not the CBO, that scores tax cuts, but the JCT has been too darn busy to work on his proposal – convenient.

McArdle wrote:

My recollection is also that Paul Ryan couldn’t get the JCT committee staff time anyway because they were a wee bit busy doing all the forecasts for health care reform, and the Roadmap is not going to pass barring some miracle. But I was a wee bit busy with health care reform as well, so I could be wrong about that.

At any rate, the answer to Paul Krugman’s question “Why didn’t he ask” is that “He did, and they said no.”

While I remain skeptical that anything like the Roadmap is politically possible, Paul Ryan is doing exactly what any sensible congressional sponsor with limited access to CBO time does; he’s saying “Well, when this is getting close to being an actual bill, we’ll work with the CBO and the JCT to tweak the tax rates in order to provide the amount of revenue we need.” This is entirely normal.

Ah yes, the “we’re all too busy to do the math” excuse.

Kevin Drum

Mother Jones’ Kevin Drum chimed in yesterday.

Responding to McArdle’s “argument” Drum said:

Well … OK. Up to a point. But look: Ryan surely has some responsibility to make the tax side of his plan as realistic as possible, especially given his chosen role as toughminded truthteller. And the Tax Policy Center made it pretty clear months ago that he wasn’t even close to his revenue goal. It’s easy to wave this off as requiring mere “tweaks” to the tax rates, but those tweaks are exactly the place where anyone would quite reasonably be most suspicious of Ryan’s willingness to play fair. After all, two or three points of GDP is a lot of money, and a tax skeptic like Ryan is going to have a very hard time making the changes necessary to come up with that kind of dough.

Ryan’s Roadmap is 70 pages long and obviously the result of a lot of work. So why not put in a little more work and bring the tax side of the plan into the realm of reason? Is it really that cynical to think it’s because he’s trying to get credit for being a deficit fighter without having to give up the dramatic tax cuts for the rich he so obviously has his heart set on?

But now that the mainstream media is singing to Ryan’s tune, who knows what will happen with his plan to gut the social safety and lay fat tax cuts on the wealthy. If the Democrats lose control of the House in November, anything is possible.

Mort Zuckerman

Mort Zuckerman is a liar. Like the vast majority of conservative commentators he lies through his teeth on a regular basis and his sloped-forward mouth-breathing readings go, “Yup. Uh-huh.”

Well today, Paul Krugman calls out Zuckerman for a recent op-ed he wrote in the Financial Times. Zuckerman sprinkles right-wing lies throughout the entire story, but one Krugman found particularly interesting was his total bullshit out-of-context accusation that President Obama was bashing the business community in a recent speech.

Here’s what Obama said:

Too much regulation or too much spending can stifle innovation, can hamper confidence and growth, and hurt business and families. A government that does too little can be just as irresponsible as a government that does too much — because, for example, in the absence of sound oversight, responsible businesses are forced to compete against unscrupulous and underhanded businesses, who are unencumbered by any restrictions on activities that might harm the environment, or take advantage of middle-class families, or threaten to bring down the entire financial system. That’s bad for everybody.

Nothing shocking here, right? Well, here’s what Zuckerman wrote:

The predilection to blame business was manifest in one of President Barack Obama’s recent speeches. He was supposed to be seeking the support of the business community for a doubling of exports over the next five years. Instead he lashed out at “unscrupulous and underhanded businesses, who are unencumbered by any restriction on activities that might harm the environment, take advantage of middle-class families, or, as we’ve seen, threaten to bring down the entire financial system.”

This kind of gratuitous and overstated demonization – widely seen in the business community as a resort to economic populism on the part of Mr Obama to shore up the growing weakness in his political standing – is exactly the wrong approach.

Obama wasn’t “blaming business.” What he said is that without some government regulation, we’ll have a race to the bottom. One company may want to do the right thing by the environment, but if their competition doesn’t care and doesn’t have to incur the costs associated with caring, well, the good company can’t compete. This is pretty basic stuff. It’s something that the Financial Times should be able to recognize.

Here’s what Krugman had to say:

I think this is telling. This is the only actual example of Obama’s alleged demonization of business that Zuckerman offers — and it’s essentially a mini-Breitbart, a quote taken out of context to make it seem as if Obama was saying something he wasn’t. That’s typical of the whole argument.

Oh, and one more thing: are there no copy editors at the FT? When I quote someone in my column, I supply the source material, and my copy editor checks, not just to be sure that the quote is accurate, but that it’s not taken out of context. But I guess such rules don’t apply if you’re a conservative.

Paul Krugman economist

Paul Krugman sheds a bit of light on the charges the Securities and Exchange Commission have lobbed at Goldman Sachs.

The main moral you should draw from the charges against Goldman, though, doesn’t involve the fine print of reform; it involves the urgent need to change Wall Street. Listening to financial-industry lobbyists and the Republican politicians who have been huddling with them, you’d think that everything will be fine as long as the federal government promises not to do any more bailouts. But that’s totally wrong — and not just because no such promise would be credible.

For the fact is that much of the financial industry has become a racket — a game in which a handful of people are lavishly paid to mislead and exploit consumers and investors. And if we don’t lower the boom on these practices, the racket will just go on.

Read Krugman’s column in its entirety on The New York Times

Senate Minority Leader Mitch McConnell (R-Ky)

When I hear Mitch McConnell (R-Ky) speak I want choke him. I’m not necessarily a violent person, but when I see McConnell’s greasy white face on TV I want to punch him in the throat.

The Senate minority leader is the current GOP hitman. It’s his job to lead the attack to kill every bill the Democrats bring to the Senate floor with lies, lies and more lies – three in the back of the head.

Now he’s making the utterly mind boggling claim that regulating Wall Street will hurt Americans on Main Street.

McConnell said that the current financial regulation bills winding their way through Congress “actually guarantees future bailouts of Wall Street banks … endless taxpayer bailouts of Wall Street banks.”

I know, it makes no sense. How can we prevent another economic collapse if we don’t regulate the banks that created it? And yes, the problem was created by Wall Street.

GOP Pollster Frank Luntz

But according to Frank Luntz, the GOP word guy, the financial collapse wasn’t caused by Wall Street but rather by Washington, DC.

In his document titled “Language of Financial Reform,” Luntz told Republican lawmakers and spindoctors that “Words that Work” sound like this.

“If there is one thing we can all agree on, it’s that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated.”

See? We can’t regulate Wall Street because regulators are part of the government and the government is always bad, wrong and evil.

Luntz wrote that this is “your critical advantage.”

“Washington’s incompetence is the common ground on which you can build support.”

Of course, McConnell is a US Senator, he voted for the Big Bank bailouts, and he’s very much a part of the “Washington” that Luntz is saying should be blamed for the financial crisis so …

Luntz claims that Americans aren’t just saying “no” to financial regulation, they’re saying “hell no.” He wrote this in January, so this should sound familiar to you by now. But it’s not the “American people” who are saying “hell no,” but rather McConnell, Congressman John Boehner (R-OH) and Sarah Palin who are saying it.

But as far as Luntz is concerned, the rejection of any government action to prevent another economic collapse is “rooted in the simple belief the government cannot effectively regulate the financial markets at any level.”

So the logic is that because the government, under the control of a Republican White House and a Republican Congress, can’t regulate financial markets at any level, they shouldn’t even try to. Remember, the GOP hates the government, wants it to go away, and so, when they’re in power, they actively work to make sure government doesn’t work for the people.

Of course, if the government isn’t going to regulate Wall Street, that means no one is going to regulate Wall Street – that should work about as well as it did in 2007, or during the hedge fund crisis in the ’90s and the Saving and Loan debacle in the ’80s.

New York Times columnist Paul Krugman wrote today, “It’s worth remembering that between the 1930s and the 1980s, there weren’t any really big financial bailouts, because strong regulation kept most banks out of trouble. It was only with Reagan-era deregulation that big bank disasters re-emerged. In fact, relative to the size of the economy, the taxpayer costs of the savings and loan disaster, which unfolded in the Reagan years, were much higher than anything likely to happen under President Obama.”

But that history doesn’t matter to the GOP. Luntz is telling the Republicans to link any attempt to regulate banks with the bank bailout, which everyone hates, and like I said, McConnell voted for.

“Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout,” Luntz said.

In another “Words that Work” section he wrote, “Taxpayer-funded bailouts reward bad behavior. Taxpayers should not be held responsible for the failure of big business any longer. If a business is going to fail, not matter how big, let it fail.”

It’s all a dog-and-pony show.

“It’s a truly shameless performance,” Krugman said, “McConnell is pretending to stand up for taxpayers against Wall Street while in fact doing just the opposite. In recent weeks, he and other Republican leaders have held meetings with Wall Street executives and lobbyists, in which the GOP and the financial industry have sought to coordinate their political strategy.”

According to Krugman, Wall Street isn’t lobbying to prevent future bailouts. “If anything, it’s trying to ensure that there will be more bailouts.” Wall Street likes the paradigm in which they reap the rewards and the taxpayer covers their losses – that works well for them.

McConnell and his GOP henchmen are firmly on the side of Wall Street and not Main Street. Without effective government regulation, we’ll continue with a boom and bust economy and higher and higher unemployment.

McConnell’s hometown newspaper had this to say, “While the intricacies of financial regulation are complicated, McConnell’s calculus is pretty obvious.”

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Mitch McConnell’s Homestate Paper Thrashes Him For ‘Unabashedly Courting Wall Street Bankers For Political Money’ Huffington Post

Former Chairman of the Federal Reserve Paul Volcker

Regulating the health insurance was a big effing deal, but reigning in the the banks is arguably far more critical to US economic stability. As usual, Economist Paul Krugman is your guide to all things economic, and today he broke down financial reform in simple and easy to understand terms.

There are three groups of people involved in this process. There are those that don’t want any regulation of any banks under any circumstances. We’ll call them Republican members of Congress. Then there are two groups that want to regulate banks but differ in how it should be done. One group we’ll call the Volckers and the other we’ll call the Krugmans.

The Volckers, named after former Chairman of the Federal Reserve Paul Volcker, want to regulate the size of banks. For them, the solution to our banking problem will be in eliminating “too big too fail” banks. The theory is that if we just break the banks into smaller pieces, and if some of them fail, the free market will kick in to solve the problem and prevent another taxpayer bailout. Unfortunately history doesn’t support this claim (e.g. The Great Depression).

The Krugmans believe that to fix our banking crisis we need to regulate what banks do – not how big they are.

Opposing the Volckers, Krugman wrote:

Here’s how I see it. Breaking up big banks wouldn’t really solve our problems, because it’s perfectly possible to have a financial crisis that mainly takes the form of a run on smaller institutions. In fact, that’s precisely what happened in the 1930s, when most of the banks that collapsed were relatively small — small enough that the Federal Reserve believed that it was O.K. to let them fail. As it turned out, the Fed was dead wrong: the wave of small-bank failures was a catastrophe for the wider economy.

Paul Krugman economist

According to the Krugmans, the same could happen today, so rather than bailing out a few big banks, the taxpayer would be bailing out lots of smaller banks. The end result would be another taxpayer bailout.

Here‘s the Krugman solution.

After all, the U.S. banking system had a long period of stability after World War II, based on a combination of deposit insurance, which eliminated the threat of bank runs, and strict regulation of bank balance sheets, including both limits on risky lending and limits on leverage, the extent to which banks were allowed to finance investments with borrowed funds. And Canada — whose financial system is dominated by a handful of big banks, but which maintained effective regulation — has weathered the current crisis notably well.

What ended the era of U.S. stability was the rise of “shadow banking”: institutions that carried out banking functions but operated without a safety ne

t and with minimal regulation. In particular, many businesses began parking their cash, not in bank deposits, but in “repo” — overnight loans to the likes of Lehman Brothers. Unfortunately, repo wasn’t protected and regulated like old-fashioned banking, so it was vulnerable to a pre-1930s-type crisis of confidence. And that, in a nutshell, is what went wrong in 2007-2008.

So why not update traditional regulation to encompass the shadow banks? We already have an implicit form of deposit insurance: It’s clear that creditors of shadow banks will be bailed out in time of crisis. What we need now are two things: (a) regulators need the authority to seize failing shadow banks, the way the Federal Deposit Insurance Corporation already has the authority to seize failing conventional banks, and (b) there have to be prudential limits on shadow banks, above all limits on their leverage.

From a banker’s perspective, they’d rather have the Volcker regulation than the Krugman one – or even better no regulation at all. Under the Volcker plan, banks merely have to break up into smaller chunks but could still do business as usual. But under Krugman’s plan, banks would have to dramatically adjust how they’ve been doing business, and that they don’t like.

The question is, can Congress fix this problem? If health care reform is any gauge, the answer is maybe.

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Financial Reform 101 by Paul Krugman

Paul Krugman economist

New York Times columnist and economist Paul Krugman takes a stab at disproving three of the most popularly believed myths about Obama’s health care reform.

1. It’s a government takeover of health care.
2. ObamaCare will do nothing to reduce cost.
3. Health care reform is fiscally irresponsible.

Health reform is back from the dead. Many Democrats have realized that their electoral prospects will be better if they can point to a real accomplishment. Polling on reform — which was never as negative as portrayed — shows signs of improving. And I’ve been really impressed by the passion and energy of this guy Barack Obama. Where was he last year?

But reform still has to run a gantlet of misinformation and outright lies. So let me address three big myths about the proposed reform, myths that are believed by many people who consider themselves well-informed, but who have actually fallen for deceptive spin.

http://www.nytimes.com/2010/03/12/opinion/12krugman.html

Paul Krugman economist

Here we go again. Just like in 2003, groupthink is sweeping the nation. When the war drums were beating their loudest to attack Iraq, the media and pundits were onboard with the Bush administration lies. No one challenged what everyone knew to be true – that Saddam Hussein had weapons of mass destruction and he was going to attack the US. Now seven years later, we’re back at it again, but this time it’s that deadly deficit that will surely kill you and your family before the year is through.

Economist Paul Krugman has been calling for more deficit spending since the recession began. He wrote that “running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs.”

And according to Krugman, he’s not a lone ranger supporting deficit spending.

“Many economists take a much calmer view of budget deficits than anything you’ll see on TV. Nor do investors seem unduly concerned: U.S. government bonds continue to find ready buyers, even at historically low interest rates,” Krugman said in his Feb. 4 column.

So what’s all the fuss about deficits? It’s politics of course. The GOP and their talk radio and Fox News echo chamber have created the illusion that deficit spending is bad and needs to stop now.

Krugman wrote that “the current sense of panic is that deficit fear-mongering has become a key part of Republican political strategy, doing double duty: it damages President Obama’s image even as it cripples his policy agenda.”

And like the media’s duck-walking in lockstep with Bush’s push for war with Iraq, Americans will suffer if deficit spending is stopped now. Americans need jobs and they need them now. State governments can’t run deficits, but the federal government can.

“For the fact is that thanks to deficit hysteria,” Krugman said, “Washington now has its priorities all wrong: all the talk is about how to shave a few billion dollars off government spending, while there’s hardly any willingness to tackle mass unemployment. Policy is headed in the wrong direction — and millions of Americans will pay the price.”

Read Krugman’s column Fiscal Scare Tactics.”

Paul Krugman economist

In the past, the insurance industry’s power has been a major barrier to health-care reform. Most notably, the industry paid for the infamous “Harry and Louise” ads that helped kill the Clinton plan. But times have changed.

Read Krugman’s column

Paul Krugman economist

Paul Krugman won a Nobel Prize in Economics last year and he’s apparently one of the only economists who knows what’s going on with our economy. In today’s column he takes on the Federal Reserve and the old-school mentality that interest rates should go up at the same time unemployment is increasing.

If the Fed does raise interest rates, and unemployment continues going up, the possibility of another Great Depression is real. Krugman believes we’ve avoided a depression, but the signs are there that maybe we haven’t. The economy is teetering on the edge of total failure, with Goldman Sachs firmly in charge, it certainly should give us all pause.

Read Krugman’s column “Misguided Monetary Mentalities”

Think about just how bizarre it is for Republicans to position themselves as the defenders of unrestricted Medicare spending. First of all, the modern G.O.P. considers itself the party of Ronald Reagan — and Reagan was a fierce opponent of Medicare’s creation, warning that it would destroy American freedom. (Honest.) In the 1990s, Newt Gingrich tried to force drastic cuts in Medicare financing. And in recent years, Republicans have repeatedly decried the growth in entitlement spending — growth that is largely driven by rising health care costs.

Read Krugman’s column

Paul Krugman economist

Paul Krugman has moved past the current health care reform debate and onto the next big problem – global warming. Kudos to Krugman for trying to stay ahead of the game of political discourse and trying to push the case for real environmental reform, but getting American capitalists to pollute less is going to make the health care debate look like a stroll through Central Park on warm summer day.

But the larger reason we’re ignoring climate change is that Al Gore was right: This truth is just too inconvenient. Responding to climate change with the vigor that the threat deserves would not, contrary to legend, be devastating for the economy as a whole. But it would shuffle the economic deck, hurting some powerful vested interests even as it created new economic opportunities. And the industries of the past have armies of lobbyists in place right now; the industries of the future don’t.

Nor is it just a matter of vested interests. It’s also a matter of vested ideas. For three decades the dominant political ideology in America has extolled private enterprise and denigrated government, but climate change is a problem that can only be addressed through government action. And rather than concede the limits of their philosophy, many on the right have chosen to deny that the problem exists.

So there you have it, like health care reform, the green economy President Obama said he wants to create will remain underrepresented in Washington. But maybe, just maybe, Obama can provide the much needed leadership to take on the Elite who like things the way they are, to give the innovative new companies a chance to change our path to destruction into one of salvation. He just better not leave it up to Congress like he did with health care reform or we’re all screwed.

Read Krugman’s column The New York Times.

Books by Paul Krugman on Amazon
The Return of Depression Economics and the Crisis of 2008
The Conscience of a Liberal
The Great Unraveling: Losing Our Way in the New Century
Essentials of Economics

The Huffington Post published an investigative story on how the Federal Reserve controls what economists think, write and missed the obvious housing bubble burst.

This is a good start, but I can’t help but think there’s a lot more to this story than what the Huffington Post was able to get. The problem, even for a popular online publication like this, is they lack access to power players.

Read the Huffington Post story