Monday, April 9, 2012

James Stewart, Financial Writer Emeritus, Gets the Paul Ryan Virus

What is it About Economic Gibberish of Republicans That Turns Good People into Economic Zombie

The journalism of economics suffers from what is currently an affliction affecting almost all journalism in the age of pretend objectivity.  After being under assault for decades by Conservatives for being biased (there is no anti-Conservative bias in reporting, the problem erupts when the reporting reports facts and actual statements by Conservatives) the recent trend has been for journalism to present Conservative dogma and fantasy as actual news. 

Nowhere is this phenomena more prevalent than in reporting on economics, finance and taxes.  This is in part because most reporters who report on those topics do not understand economics, finance and taxes.  But even those who have demonstrated an understanding seem to come under the spell that economic alchemy becomes serious thought and policy when presented by Conservatives.

This brings us to a proposal by Rep. Paul Ryan, a Wisconsin Republican who keeps presented fantasy as serious policy. Mr. Ryan has recently made another proposal, and it’s falsity can be explained in the very simple points.

  1. The Plan would cut taxes and increase defense spending, but still move towards a reduced deficit by cutting spending and privatizing Medicare.  The privatization of Medicare would of course destroy the program as it currently stands, and as far as cutting spending is concerned there is no identification of a single cut.
  2. The Plan would replace current tax rates with two rates, a 10% rate and a 25% rate.  This would result in a massive tax reduction for the very wealthiest taxpayers, but according to Mr. Ryan the plan would be revenue neutral.  This is accomplished by eliminating various deductions and exemptions and preference items.  Not a single one is identified.

So it is impossible to have a rational discussion about Mr. Ryan’s proposals, because the lack of detail means the issues cannot even be identified.  But this does not stop an eminent financial writer, James Stewart from praising the plan as a good starting point (for what, we don’t know). Really, that’s what he says.

First up is Mr. Stewart’s belief (supported by the total lack of detail in the Plan) that the tax changes would raise taxes on the wealthy.

As I pointed out a few weeks ago, Mr. Ryan’s tax plan, which calls for lowering top rates to 25 percent and 10 percent, would actually raise taxes on the ultrarich, since on average they, like the wealthy presidential candidate Mitt Romney, pay substantially less than an effective tax rate of 25 percent, and nowhere near the current tax code’s top marginal rate of 35 percent. 

Really, here is an experienced financial writer thinking that a Republican tax plan would raise taxes on the rich.  What stupendous ignorance!

On the spending side Mr. Stewart thinks the Ryan Plan would reform (read cut) Social Security.

And on the spending side, the Ryan plan has many elements of the earlier bipartisan plan from a White House commission that said, “We must make Social Securitysolvent and sound, reduce the long-term growth of health care spending, and tackle the nation’s overwhelming debt burden.”

Apparently Mr. Stewart has written his piece without even examining the Ryan Plan.  It does nothing with Social Security.  And Mr. Stewart does not comment on the proposed spending cuts because, well because Mr. Stewart like everyone else has no idea what those spending cuts are.

Mr. Stewart ends with gushing praise of Mr. Ryan,

But so far, attacks on Mr. Ryan from both right and left seem to have raised his public profile and transformed the 42-year-old congressman into a much-talked-about potential running mate for Mr. Romney and even a future presidential candidate in his own right.

And notes this about the soon to be Republican nominee

After winning the Wisconsin primary this week, Mr. Romney called Mr. Ryan a “great leader” and, in a speech to the American Society of Newspaper Editors in Washington, praised him for “the courage to offer serious solutions to the problems we face.”

Great, now if Mr. Ryan could just tell us what those ‘serious solutions’ are we could have a real discussion on their merits.  Except he can’t or he won’t or he is afraid to, take you pick.

1 comment:

  1. It's amazing that they are still giving him a pass on those tax loopholes. He's had a full year to come up with loopholes to close and he has not come up with a single loophole.

    Also, Ryan is not taxing capital gains and dividends at 25% so Stewart's statement that the rich would pay an effective tax rate of 25% is flat out wrong.

    Ryan's plan eliminates the alternative minimum tax, as well as taxes on unearned interest, capital gains and dividends. According to the document published by the IRS on the top 400 tax payers, that means the rich would face an effective tax rate of on average .4 x 25% or 10% since only 40% on average is subject to the 25% rate. The rest of their income is capital gains, dividends and interest.