Friday, February 17, 2012

Ryan v. Geithner: Thrilla with Manila (folders)

At a House Budget Committee hearing on Obama's proposed budget, Representative Paul Ryan and Treasury Secretary Tim Geithner exchanged a few body blows:

The essential point of contention in the brief exchange is the following chart, based on a chart taken from--of all places--the Administration's proposed budget (Analytical Perspectives, p. 58):

The blue and red lines show the past totals of public debt and the projection of that debt into the future by the Administration, based on the 2013 budget. That's right, the budget Obama is trumpeting, the one that will "cut the deficit to less than 3 percent of GDP, and stabilize the debt-to-GDP ratio" by 2018 leads to this out-of-control exponential growth well before 2018 even arrives.

Geithner argues--in the clip--that this growth is a consequence of costs associated with the millions of Americans that will be retiring in these years (the Baby-Boomers) and admits that more work still needs to be done, but still maintains that the 2013 Budget is a responsible one, that it's a good first step.

Ryan's rebuke is simple and can be restated as "Look at the bones!" The chart says it all and the future is so bad, the Administration cannot even fudge the numbers to make it look palatable. And let's not forget this point: numbers are routinely "massaged" by government offices--like the OMB--by assuming best-case types of scenarios. So the reality here is likely even much, much worse. But Ryan doesn't even need to go there, since things look catastrophic anyway.

Now, the green line in the chart shows the future if Ryan's plans are followed. And no doubt, it's equally idealized. But even so, look at the difference in outcomes. Ryan's plan hinges on a critical idea: start fixing things now, this year, not ten years down the road. The Obama Administration--like previous ones--is trying to table responsibility, is seeking to keep spending mostly at current levels and even increase it, while playing accounting games with the debt, then promising to reduce it in the future, even thought it will no longer be in power in that future.

And frankly, Geithner knows this. His last words to Ryan in the clip:
We're not coming before you to say we have a definitive solution to our long-term problem. What we do know is we don't like yours.
Strange, isn't it? For three years, we've been hearing from the Democrats, the Administration, and the liberals that the Republicans "have no plan." Yet apparently, it's just the opposite.

Cheers, all.

1 comment:

  1. We wonder here, will it by my children, or theirs that end up calling this the second Great Depression? And just how criminally stupid will our generation look to them.

    I remember the cold war, and thinking how stupid the Russian people were to believe what their leaders and what their "press" was feeding them. Turns out, we are not so very different.