Dear Arthur,
While listening to Ryan's acceptance speech, it was clear his numbers didn't add up.
When you include Ryan's "simple solution" of "spending no borrowed money," his budget plan becomes a prescription for destroying the "full faith and credit of the United States."
Why?
In the absence of tax hikes, economic collapse is inevitable. (Simpson Bowles knew this and their insistence on tax hikes was why Ryan refused to ratify the document even though he was a member of the committee that created it.)
Consider...
If foreign creditors - chiefly China - decided to stop lending money to the United States, there would be hue and cry across the political establishment - right, left and center.
Paul Ryan, on the other hand - and prostrate at Ayn Rand's altar - insists Washington should take this same initiative and refuse to borrow another penny. http://paxonbothhouses.blogspot.com/2012/08/ayn-rand-patron-saint-or-soulless.html (It is easy to be bold when someone else's purse is open. In the absence of tax hikes, however, we need Chinese support just to pay interest on our debt. Wishful thinking and ideological pandering do not make this "go away."))
Reagan Budget Director, David Stockman, observed that Republicans -- "under pain of death" -- could not propose $50 billion (fifty billion) in budget cuts, much less balance the budget.
"(Extending the Bush tax cuts is) rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves... The Republican Party has totally abdicated its job in our democracy, which is to act as the guardian of fiscal discipline and responsibility. They're on an anti-tax jihad -- one that benefits the prosperous classes."
Furthermore, the repeal of Obama's so-called Medicare "cuts" would, with a single stroke of Romney's pen, re-add $716 billion dollars to the deficit.
In fact, Medicare "cuts" are "cost savings," diligent "fat cutting cum pork trimming" agreed upon by Medicare service providers, the single most beneficial federal government accomplishment in half a century.
Were it not for "conservatism's" active cultivation of Aggressive Ignorance, the clear benefits of Obama's Medicare "cuts" would be seen as boon, not bust.
But back to Ryan's speech in which he declared his party's flat promise to limit the federal budget to 20% of GDP - in addition to spending NO more borrowed money.
Here is how Ryan's promise - coupled with "the numbers" - plays out.
Or... to be more precise... here is how Ryan's "non-borrowing plan" fails to play out.
In 2012, America's GDP was $15.3 trillion.
Ryan's 20% cap on federal spending (as a percentage of GDP) amounts to $3,063,300,000,000 - approximately $3.1 trillion.
Here's The Missing Piece: Total Federal Revenues for Fiscal Year 2012 were only $2,468,600,000,000 -- approximately $2.5 trillion -- while the total Federal Budget for 2012: $3.796,000,000
Using Ryan's 20% cap and extrapolating current revenues (which are probably heftier this year than they will be in 2013) reveals minimum deficit spending of $594.7 billion dollars according to Ryan's budget plan.
There are two ways to deal with Ryan's budget shortfall.
1.) Either the United States will default on $595 billion dollars -- trashing the full faith and credit of the U.S. government -- which, in turn, would have the immediate effect of reducing U.S. Bonds to "junk status," or
2.) The GOP's $595 billion deficit will -- in the absence of tax hikes -- be paid with borrowed money.
Since Ryan swears the federal government will operate with NO borrowed money, the only alternative (according to the iron dictates of Ryan’s plan) is to reduce U.S. bonds to “junk” and the credibility of the federal government to that of Bernie Madoff.
Last but not least...
No matter how Ryan's budget cuts contribute to debt amortization, they will - as night follows day - engender massive cuts in government spending on goods, services and salaries, that, in turn, will create a walloping Double Dip Recession, which - without prospect of another stimulus - will catapult the United States into multi-decade hardship that makes The Great Recession penny ante.
Ryan says he and Etch-a-Sketch will not dodge the hard questions.
Yet here are two hard questions he won't answer even now.
1.) How can a Romney-Ryan administration not borrow money without also evoking an economic catastrophe on par with "The Great Unraveling" of 2007-2008?
2.) How can we dig ourselves out of the hole already dug -- or out of the deeper hole Romney-Ryan plan to dig -- without ravaging social services (including Medicare), or, alternatively, without more federal revenues accruing from higher taxes? (God forbid mention of tax hikes or the additional $716 billion dollar deficit Romney-Ryan propose by repealing Obamacare.)
Question #2 is at least partially rhetorical for there will be higher taxes and anyone who says there won’t is non compos mentis.
