Last month, the Center on Budget and Policy Priorities report "What the 2010 Trustees' Report Shows about Social Security " by Kathy Ruffing and Paul N. Van de Water contained this graph:
along with the admonition that "Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat."
Naturally, Versailles has done its level best to ignore this. But the few conservatives who have none-the-less stumbled across it have all had their heads explode. Trying to put them back together again has been a rather humorous silent-movie sort of affair, but Brad Delong somehow misses the humour as he wails Did Megan McArdle Really Graduate from a Business School?:
I had wanted to write a post today about the pathetic Versailles attempt to manufacture a new generation of "serious" "responsible" conservative politicians on budget matters, referencing what real economists have to say about the likes of Paul Ryan and Mitch Daniels. But in googling around to pick up some dropped threads, I came across an extremely disingenuous attack on Paul Krugman by Megan McArdle at The Atlantic (a followup to an earlier, equally disingenuous attack), and decided I should say something about her first.
The two attacks I just mentioned are attempts to discredit Krugman's attacks on Paul Ryan's so-called "Roadmap for America's Future". The main problem here is that it's not Krugman's attack. Krugman is simply attacking Ryan with the failings of his plan as analyzed by others, most notably, the Tax Policy Center, which produced a devastating critical analysis last March that Ryan has never seriously responded to. Most notably:
In his provocative Roadmap for America's Future, Representative Paul Ryan (R-WI) figures that his broad tax code overhaul would eventually generate about 19 percent of Gross Domestic Product in revenues. But the Ryan plan would produce hundreds of billions of dollars-a-year less than that-about 16.8 percent of GDP-a decade from now, according to new Tax Policy Center estimates. Moreover, the plan would give a huge tax cut to the wealthy, while cutting taxes by little or nothing (and in some cases even raising taxes) for low- and middle-income people.
As a result, Ryan would likely fall far short of meeting his goal of balancing the budget and paying off the national debt by 2080, even if government spending were slashed to 1951 levels as he proposes....
TPC found Ryan's plan generates much less revenue than he projects. If all taxpayers chose the simplified system, it would produce about 16.8 percent of GDP by 2020, far below the 18.6 percent he figures for that year. If taxpayers chose the system most favorable to their situation, the Ryan plan would produce even less revenue-about 16.6 percent of GDP.
What does that mean in dollars? CBO's most realistic projection of revenues (assuming most Bush tax cuts are extended and many middle-class families continue to be exempted from the Alternative Minimum Tax) figures the existing tax system would raise about $4.2 trillion in 2020. By contrast, Ryan's plan would generate about $3.7 trillion, or $500 billion less in that year alone.
While TPC didn't model the Ryan plan beyond 2020, the pattern of revenues it generates suggests it would be decades before it reaches his goal of 19 percent of GDP-very likely sometime after 2040.
Top-bracket taxpayers would overwhelmingly benefit from Ryan's tax cuts. By 2014 people making in excess of $1 million-a-year would enjoy an average tax cut of more than $600,000. To put it another way, their after-tax income would rise by nearly 30 percent.
So, McArdle's game is to avoid the substantive problems identified by the TPC, and try to tangle up Krugman in alleged misrepresentations of how Ryan went about presenting his plan.
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