on ryan and rand

            In my last blog,  I wrote a speech for President Obama that was essentially designed to draw lines in the budgetary sand that could  establish Democrat controlled parameters for future budget debates.  Last Wednesday, the President ignored my speech and gave his own. Though the cheekiness of that offends me a bit, and though his speech neglected to draw several very important lines in the sand, it did at least establish a moderate (I wouldn’t go so far as to call it liberal) position to stand in stark contrast to the John Galt vision of America that Representative Paul Ryan introduced a bit earlier and the Republicans passed in the House shortly after the President’s speech.

            If the John Galt reference doesn’t resonate for you, he is the character at the center of Ayn Rand’s novel, Atlas Shrugged, who is essentially calling on America’s financial and corporate elite to go on strike—to withdraw their services and let the nation of moochers and laggards who have been living off what the genius of their betters produces fend for themselves. 

            The novel, which took Rand 12 years to complete, was published in 1957 to generally tepid reviews, but soon developed a cult following and is today held in much the same esteem by die-hard conservatives as the Bible.  Its premise is that great minds drive business, business drives the world, and anyone or anything that stands in the way of unfettered pursuit of profit is reactionary and needs to be eliminated.

            Not surprisingly, Rep. Ryan is an Ayn Rand acolyte who credits her books (The Fountainhead is her other major work, drumming the same beat as Atlas Shrugged) for getting him interested in entering politics.  He also reportedly requires his staff to read Atlas Shrugged.

            A few numbers are perhaps a good way to start looking at Ryan’s budget proposal.  When originally introduced, it claimed over 5 trillion dollars in cuts.  Once the most glaringly incorrect numbers were pointed out, the savings claim was reduced to 4.3 trillion dollars. 

            On the revenue side, Ryan proposes cuts to individual and corporate tax rates from 35% to 25%, elimination of estate tax, near elimination of capital gains tax and the closing of unspecified deduction loopholes.  Ryan didn’t do this math in his speech unveiling the proposal, but the Congressional Budget Office did, and the total comes to 4.2 trillion dollars. 

           

            So, the Ryan (Republican) budget would lower federal expenditures by 4.3 trillion dollars (though much of this is illusory, consisting of  “cutting” funds allocated years ago but never spent—including over 400 million dollars one agency had already volunteered to give back), but it would also lower federal revenues by 4.2 trillion dollars.  The net effect on the budget deficit?  About a billion dollars, or barely one percent of the federal budget.

            It’s also worth noting that the tax rate on individuals that Ryan wants to cut is the one that the wealthiest 5% of Americans exist in.  If you earn, say, 50,000 dollars/year, cutting the tax rate from 35% to 25% will give you a whopping one percent reduction in your taxes.  If you’re making 200,000 dollars/year, the savings is 10%.

            But, Ryan’s defenders are quick to point out, cutting taxes on corporations and the wealthy will actually produce more tax revenue than the current tax structure because more jobs will be created and the economy will grow. 

            Please!

            That is the same “voodoo economics” that Reagan and his minions trumpeted in 1981 when they hammered through a giant cut for the wealthy.  The economy promptly went into a swoon and 4 years later Reagan raised taxes. 

            We went through the same idiocy again under Bush I.  Taxes were cut at the start of his administration, and even though he challenged us to read his lips, they had to be raised again to prevent a recession.

            Never one to be bothered by history, Bush II put the cuts we presently have in effect and a trillion dollar budget surplus quickly became a multi-trillion dollar budget deficit.

            That surplus was achieved in part because President Clinton and the Democrats passed a tax increase that Republicans loudly decried as poisonous to economic growth—only to watch the economy reach heights not seen before or since.

            Was it Einstein who said insanity could be defined as doing the same thing over and over and expecting a different result?  By that standard, the last 30 years worth of Republicans should be institutionalized.

            But the Randian nature of Ryan’s budget isn’t just in the windfall it directs to the wealthy and to corporations.  In both Atlas Shrugged and The Fountainhead, Rand makes it clear that the working class is a necessary evil.  Someone has to stand on the factory assembly line or behind a retail counter or keep records at the DMV, but those people should be grateful for the opportunity to do those menial things, opportunities that are created by the elite, and when they are no longer capable of standing for eight hours a day, they should hobble off somewhere and disappear.  For her, there were those intelligent and resourceful enough to rise to the top, and there were drones.  And drones were more or less equivalent to domestic livestock—their job was to serve their purpose and then die.

            In Rand’s world, what sucks society down, keeps the wealthy and successful from making it all it could be, are misguided efforts to provide for drones, to establish what we have come to call a “social safety net.”  In her world, factory workers and retail associates and file clerks don’t need an education, have no right to housing or food or medical care beyond subsistence level.  She wouldn’t have said, “Let them eat cake,” because, well, they don’t really need cake.  Flat bread is sufficient.

            As her acolyte, Ryan proposes in his budget to repeal the Affordable Care Act (that constitutes a big chunk of his supposed “savings”) and replace it with—nothing.  He does, however, have some recommendations about medical care for seniors and the poor.  For seniors, he suggests dismantling Medicare and replacing it with a $15,000 annual grant with which they could purchase private insurance.  Ryan must have nearly broken his arm patting himself on the back when he came up with that one, because it not only substantially reduces government spending on health care, it provides a huge subsidy for the insurance industry.  Two birds with one stone!

            For the poor, who are mostly covered by Medicaid, he proposes a similar block grant to states which they would be free to administer any way they wanted. 

            How Ryan came up with $15,000 as the appropriate figure for the Medicare grant is uncertain, but let’s think about that for a second.  Roughly 60% of Americans currently have some level of health insurance through their place of employment.  They don’t need Medicare (or its replacement) until they retire.  And while some folks can retire as young as 55, most of us have to work into our early to mid-60’s before that becomes possible.  If I had been forced to find a private insurance policy when I retired, I would have had to list arthritis, high blood pleasure, degenerative disk disease and hypoglycemia as existing conditions.  I would also have had to note a bout with ocular cancer 12 years ago. 

            Now keep in mind that Ryan’s budget repeals the Affordable Care Act, so, as they could prior to its passage, insurance companies would be able to deny coverage or jack up premiums and co-pays for pre-existing conditions.  It’s hardly beyond the realm of possibility that I would not be able to find insurance coverage at all under Ryan’s plan, or that, if I did, the premium along with co-pays and deductibles would be well in excess of $15,000.  And I’m more than relatively healthy for my age!  But then, I’m a drone.  I should be happy for whatever bone is tossed me.

            Ah, say Ryan’s supporters, you neglect the fact that insurance companies would be competing for your business, which would surely hold costs down.  Again, please!  Insurance companies before the Affordable Care Act were hardly knocking down the door trying to get seniors enrolled in their plans.  Seniors are not good insurance risks.  Weren’t then, aren’t now.  What incentive would insurance companies have to compete on the price level for customers they know will be filing claims—and filing them sooner rather than later.

            As for block grants to states, that is nothing more than an additional incentive for states to keep people off Medicaid rolls.  And they do a very effective job of that now.  It is also wonderfully disingenuous of Ryan and his Republican allies.  First of all, his budget proposal doesn’t say how much each state will get, or how that figure will be arrived at.  Since he’s listing that as a way of reducing the federal deficit, however, it stands to reason that he envisions the block grant being substantially less than the federal government sends to states now.  It’s cowardly not to say up front how much less.

            Second, if the federal contribution is less, states have one of three options, none of them good.  They can simply find ways to exclude people from Medicaid, they can make large cuts in other areas of their budgets in order to pay for Medicaid, or they can raise their own taxes and apply the increase to Medicaid.  The consistent thing about all three options is that they hurt people, particularly poor people.  But then, they’re drones.

           There are many other Randian elements to Ryan's budget, but dealing with them all would turn this into a book.  Suffice it to say that, measured by an standard, Ryan's budget extracts fully 2/3 of its 4.3 trillion in cuts from programs that primarily serve the middle and lower classes.  The drones.

            What worries me at the moment is that the speech Obama gave and the budget plan he unveiled, while clearly more humane (that is, less Randian) than Ryan’s, is at best a moderate, perhaps slightly left leaning proposal.  If it becomes the left pole to the Ryan budget’s right pole in the coming budget debates, the center starts off way to the right. 

            Ayn Rand is probably chuckling in hell right now, but we drones have cause for concern.