EconBob

Well, so much for dodging entitlements. This year’s trendy complaint, shared by the left and the tea party, that Republicans hadn’t tackled the toughest budget issues was blown away yesterday with the release of House Budget Chairman Paul Ryan’s budget for 2012. We’ll now separate the real reformers from the fiscal chickenhawks.

Mr. Ryan’s budget rollout is an important political and policy moment because it is the most serious attempt to reform government in at least a generation. The plan offers what voters have been saying they want—a blueprint to address the roots of Washington’s fiscal disorder. It does so not by the usual posturing (“paygo”) and symbolism (balanced budget amendment) but by going to the heart of the spending problem, especially on the vast and rapidly growing health-care entitlements of Medicaid and Medicare. The Wisconsin Republican’s plan is a generational choice, not the usual Beltway echo.
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That choice is clear enough by comparing the Ryan blueprint with the 2012 budget that President Obama rolled out only two months ago. The nearby charts show the difference in federal outlays overall and as a share of GDP over the next decade. Mr. Ryan proposes to spend $6.2 trillion less, return spending to its modern average of roughly 20% of GDP, and add $4.7 trillion less to the national debt.

Mr. Obama would keep spending at 24% of GDP even before ObamaCare fully kicks in, while running annual deficits of $600 billion a year or more despite trillions of dollars in tax increases.

Senior Economics Writer Steve Moore highlights the tax and spending differences between the GOP and the White House and John Fund analyzes the judicial election in Wisconsin that may seal the fate of Gov. Scott Walker’s spending reforms.

Some House conservatives are grousing that Mr. Ryan’s proposal doesn’t cut spending enough to balance the budget in 10 years. This is a foolish complaint. Mr. Obama will be happy to balance the budget too—at 24% of GDP, which means far higher taxes. Republicans should keep their eye on what Milton Friedman understood was the real burden of government, which is spending.

The Ryan plan would chop $179 billion from the 2012 White House budget and another $241 billion in 2013. This would be the largest two-year savings since the demobilization of the military after World War II. Mr. Ryan would cut funding for corporate welfare and hundreds of ineffective programs, reform agriculture subsidies, reduce the federal work force by 10% and repeal ObamaCare, among other good ideas.

Mr. Ryan’s budget would reduce federal borrowing to 2% of GDP by 2017, which is a manageable level of new debt and a huge improvement from the roughly 10% of GDP the Treasury is borrowing now. Given the epic hole we are in, this would be a historic achievement.

As for entitlements, the House GOP wants to let the states run Medicaid in return for an annual fixed payment or “block grant,” letting Governors experiment with ways to save money and provide better care. This is the way welfare was successfully reformed in the 1990s, and it would give states more control over their fastest-growing budget item.

On Medicare, the Wisconsin Republican would phase in reforms for Americans under 55 years old. Medicare currently pays doctors and hospitals directly on a fee-for-service model that is price-controlled and increasingly unaffordable. Fewer doctors want to see Medicare patients and, among other deficiencies, it lacks true catastrophic coverage.

Mr. Ryan would create a “premium support” system in which government would pay a subsidy of roughly $15,000 to private insurers chosen by seniors. This means at age 65 you would be able to keep your same insurer, with the feds paying for that insurance instead of your employer. That would slow the growth of spending over time through competition and senior choice, rather than continue on Medicare’s current path of government-rationed care.

Tackling Medicare is the politically riskiest part of this budget, as Democrats are already returning to their old stand of denouncing any change as a “war on the elderly and poor” (as Illinois Democrat Jan Schakowsky put it). These are the same Democrats who oppose smaller spending cuts on grounds that entitlements are where the real money is. The truth is they want only token spending cuts of the kind that Mr. Obama’s budget offers.

For that political reason, Mr. Ryan decided not to walk point on Social Security, though everyone knows that retirement entitlement is also unsustainable with $17 trillion in unfunded liabilities. As a policy matter, Social Security is also the easiest problem to solve—change the benefit formula, means test benefits, raise the retirement age, and more. But you can’t blame Republicans for dodging at least one political buzzsaw if Mr. Obama is going to continue to dodge all fiscal responsibility.

Unlike many Republicans and some in the tea party, Mr. Ryan understands that the budget can’t be balanced with spending cuts alone. Above all, we need faster economic growth to drive higher incomes and more revenues. So Mr. Ryan also proposes a tax reform that would cut the U.S. personal and corporate tax rate to 25%, in return for eliminating loopholes and credits that allow companies like Whirlpool and General Electric to pay little tax.

Chairman Dave Camp has been pushing a similar reform in the tax-writing House Ways and Means Committee, and he deserves credit for letting Mr. Ryan roll it out as part of the budget. Republicans will have a better chance of winning the fiscal argument if they keep explaining that their reforms are essential to reviving growth and raising middle class incomes.
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Since they only control the House, Republicans can’t expect to pass all or even most of these reforms this year. But in rising to meet our main fiscal challenges, they are honoring their pledge to voters last year and offering voters a serious governing platform. Mr. Ryan is showing Americans that there is an alternative to Mr. Obama’s vision of the U.S. as a high-tax, slow-growth, European-style entitlement state.

The GOP political bet is that this debate won’t be another replay of 1985, 1995 or 2005 because the political times have changed. Our fiscal problems are far deeper, and Mr. Ryan’s hope is that the American people realize this and are willing to reward politicians who address those problems, rather than politicians who say we can keeping spending and borrowing ad infinitum.

Republicans in Congress will need to rise to Mr. Ryan’s occasion, and in particular so will GOP Presidential candidates. The first voter test for those candidates should be which of them are missing in action from the debate that House Republicans are kicking off. If we fail to reform the entitlement state now, we will do it eventually. But the price and pain will be so much greater.

Nothing

American Politics:

Dialogue –
Emperor Trumka – Why this war on my clan you ungrateful worms? We royals need more, more, MORE!

Commoner – My dear Emperor Trumka, if you need more, than we common people should pay our fair share But, I’m afraid that we have no more to provide.

Emperor – you better go out to get 5 extra jobs to feed us, otherwise we’ll drop our silver spoons and walk out of our golden palace to teach you a lesson!

Commoner – We will do our best to moonlight – but what happened to the 14 servants loyal to the emperor -are they still in Illinois?

Emperor – The very bold 14 are still in Illinois, showing their bravery and allegiance to us! 0As for me and my family, we will cling to the throne and wait for the tribute to pour in!

(Davis, CA and Seattle, WA – for immediate release, 2/14/11) Responding to overwhelming demand from the public, EconBob has done an exclusive, thorough investigation and the verdict is in:  various batches and boxes of Cheez Its™ are NOT the same!

Background -

EconBob received hundreds of emails, faxes and hand signals from our readership requesting an investigation. Fans wanted to know: do Cheez Its taste different, depending on factors like freshness, cooking level (well done, medium, rare) and factory of origin.

Response -

We set out to do a double-blind taste test. Subjects were chosen at random from 2 shopping centers: Coddingtown Mall in Santa Rosa, CA and Northgate Mall in Seattle. Diverse locations were chosen to avoid any regional bias. 1001 shoppers tasted the crackers and filled out surveys; results “degree of confidence” reached 95% with a +/- 3% fudge factor.  Here are the results:

• 532 shoppers preferred crackers from the 12 oz. box
• 635 shoppers said “well done” crackers taste better (this analysis was based on texture and color, the latter test based on the work of James Clerk Maxwell, see also http://en.wikipedia.org/wiki/James_Clerk_Maxwell)
• 802 shoppers said that Cheez Its taste great with green grapes!

In summation, each box features its own distinct and unique attributes. So opening a new box is always an adventure!

GoAnimate.com: Cheez Its Research by seattlebob
        
Like it? Create your own at GoAnimate.com. It’s free and fun!

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Make avatarSpace Needle photo source: BarefootJay

Last week, during his speech in Arizona, Pres. Obama had a lot of gray in his hair. I think it looked good, distinguished and mature.

But this week his hair is black again. What’s up with that?

China Economy China Economy News Financial financial planner corporation finance. Pages. Home · Directory.

The rest is here:
Of Android2.3 Google Nexus S starting evaluation » China Economy

I read this great insight into history today: See the speech by Pres. Kennedy on YouTube: http://www.youtube.com/watch?v=0rpG2ZM1vi0
and the text from the JFK Library archives: http://bit.ly/9nUamQ

Warren Kozak: Remembering JFK in an Age of Terror – WSJ.com

online.wsj.com

In The Wall Street Journal, Warren Kozak writes on the anniversary of JFK’s assassination that President Kennedy offered no apology for our strength—and yet the world still admires him.

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I read this great insight into history today: See the speech by Pres. Kennedy on YouTube: http://www.youtube.com/watch?v=0rpG2ZM1vi0
and the text from the JFK Library archives: http://bit.ly/9nUamQ

Warren Kozak: Remembering JFK in an Age of Terror – WSJ.com

online.wsj.com

In The Wall Street Journal, Warren Kozak writes on the anniversary of JFK’s assassination that President Kennedy offered no apology for our strength—and yet the world still admires him.