Romney's 98 Page Millstone, Courtesy of Rep. Ryan

Been devoting all your time to the Olympics this week? Have you, like me, been talking less about the sports and more about NBC awful coverage?  Then maybe you missed the news that Gov. Romney selected Rep. Paul Ryan to be his running mate.  Now a lot of the smart money had been on Sen. Rob Portman of Ohio, but I'm on record thinking that if Romney went "outside the box" that would lead to Paul Ryan.  Rep. Ryan is more exciting (just barely) than Sen. Portman, less confrontational than Gov. Chris Christie, less green than Sen. Marco Rubio, and more everything else than Gov. Tim Pawlenty.

But Rep. Ryan comes with one big problem for Romney.  He's very very specific about the changes he would make to federal spending and the tax code. Like, nearly 100 pages specific.  Remember a week ago when the Brookings Institute's Tax Policy Center said Romney would have to raise taxes on the middle class to make his sketch of a tax plan revenue-neutral? Remember when Romney's campaign said the study, put out by a highly respected think tank that gave every possible positive assumption to Romney, was "a joke?" Well, Romney could bob and weave on the study because conservatives have been living to discredit studies that have anyone associated with it who once breathed on a Democrat. He could have gotten past that.

But Romney's selection of Ryan suggests that he doesn't believe he can win running as "the not Obama," as Ezra Klein wrote about on Saturday, "you don't make a risky pick like Paul Ryan if you think the fundamentals of the campaign favor your candidate." I tend to agree.  And that could be true, I mean people could figure out that a good part of the reason unemployment remains so doggedly high is because the government isn't replacing jobs it's lost. So instead of playing it safe and seeing if he can knock off an incumbent beset by poor economic performance, he decides to pick Ryan and strap a 98 page millstone around the neck of the campaign. Remember when Romney's campaign was arguing revenue neutrality? You can forget about revenue neutrality the second you say, "Paul Ryan."

Why do I describe Ryan's plan as a millstone?  Take it away Washington Post:

His proposals contain three major elements:First, the Ryan plan would overhaul the entitlement programs that have grown to consume about 40 percent of the budget, reshaping Medicare coverage for the elderly, and cutting deeply into Medicaid, food stamps and other programs for the poor. Second, he would rewrite the tax code, slashing the rates paid by corporations and the wealthy. Finally, Ryan would cut spending on other federal programs and agencies, with the exception of the Pentagon. Most controversial is Ryan’s proposal to transform Medicare so that the government, rather than paying for health care for the elderly directly, would give beneficiaries a set amount of money to shop for a private health insurance plan.

Now, without a doubt, there is a certain segment of the Republican party that will get very excited about this plan, but I don't think you'll excite too many undecided independents with that plan.  Lest we forget, Newt Gingrich said the Ryan plan was "right-wing social engineering." Of course, now that Ryan's on the ticket, Newt's position on the Ryan budget plan has evolved. The point being, Romney didn't need to tap Ryan to be VP. He could have tilted toward the Ryan plan, without totally, completely embracing it and lived in an ambiguous policy space until the election.  The math was not on President Obama's side. Romney didn't need to rile up his base, considering a fair percentage of that base believes the entire Obama presidency is illegitimate anyway, and I'm even sure Ryan does that.

But what Ryan does do it change the decision making process for discontented independents.  Until this weekend it was pretty straightforward: Do we stick it out with Obama, or do we make a change to Romney? Now the decision becomes: Do we want to gut government programs and remove safety nets for the less fortunate or do we want to keep those programs?

I was tempted at the end of last week to write up a post about how petty this presidential race has been so far.  It appears we could have the sweeping ideological debate that this country needs, provided we can all be honest about what these choices mean. And I think that's good for the country, but I'm not so sure that's good for candidate Romney. But hey, if this election doesn't go his way, maybe he can go to NBC and fix their Olympic coverage in time for Sochi.  NBC sucks.

Further reading: Jacob Weisberg at Slate says what I'm saying, only better.  Why do you think I put this link at the bottom of the post?

SOTU - Initial Response

So before the post-mortem, some thoughts on the three, yes three speeches tonight.  If I get a moment, there might be a fuller analysis tomorrow.  At that point, though, the whole thing will be sullied by the pundit class.


President Obama's State of the Union
Liked it.  I thought he did a great job of reminding people of the role of government in our nation, it's ability to provide investment in roads, but also science and technology.  I thought he struck the right tone that says, "Listen we gotta make some changes and a lot of those changes are going to come from Republicans."  It wasn't transformative and I constantly feel like the rhetorical expectations of Obama are always sky-high.  He can never live up to the expectations, but I remember a time that if Bush spoke in complete sentences, he was a conquering hero.  I would have liked more specifics, but I understand why he wasn't.  Most importantly he has staked out the ground of responsible middle, which could help him get some things done over the next two years, but I wonder, if you make enemies on both sides what does that due to your re-election bid?


Representative Paul Ryan's Republican Response
Vastly better then the responses in recent years and I think Rep. Ryan did a good job staking out the Republican position.  It's a position I greatly disagree with, but it was concise, seemed legitimate, and was focused on spending which is an easy sell.  I thought he provided a great counter-point to the President, though I found wrapping themselves in the patronage of the founding fathers to be unseemly.


Representative Michele Bachmann's Tea Party Response
First, this isn't an actual party.  It's a second Republican response and I question CNN's decision to air it.  That said, I watched it.  There were charts, horribly misleading charts that ignored a fiscal crisis.  Also, who was she speaking to?  Reminds me of a Mitch Hedburg joke where everyone is looking slightly to the left.  On the whole, atrocious.  Scattered, trite, disingenuous, and backward-looking.  Quite honestly, it made Rep. Ryan and Republicans look like adults, while the Tea Party remains people stuck in a middle school civics class.


Again, the pundit class will breakdown every syllable before I wake tomorrow, but there are some initial thoughts.

Letting the Tax Cuts Expire – Doing the Math

There’s a great paper put out by the Tax Policy Center, which puts into greater detail what the effect of the Obama administration’s proposed tax plan would actually mean at different income levels. The paper determines:

The impact of the Obama proposal is virtually identical to that of extending all of the cuts for the vast majority of tax payers. Sizeable differences don’t emerge until you hit the top 1 percent of taxpayers – those households making at least $600,000.

This means that even for the administrations own rhetoric about households making $250,000 or more per year is a conservative estimate on how big a group will be impacted. The paper outlines that in the 90^th to 95^th percentile the real difference between the Obama proposal and the full extension of tax cuts is $2. That’s not a typo. Houses making on average $196,549 will receive a tax cut of $5,508 under the Obama plan, versus $5,510 under a full extension.

Take this in contrast to the 99.9^th percentile of tax payers with an average income of $8,367,274, under Obama’s plan they would lose $310,140 in tax cuts, what amounts to 3.7% of the average income for those in the 99.9^th percentile. It’s also worth noting that NO income level will see their tax liability increase to pre-2001 levels. Even at the highest percentile of earners, they will have tax cuts 1.1% great then they would if all the tax cuts were allowed to expire.

So why the uproar? It’s the same old song and dance I’m afraid. The Obama proposal will hit the folks in the top 1% of income earners, those folks making more then $1,000,000 per year, but for the other 99% the effect is shown to be minimal if nonexistent. We have long-run deficit problems in this country and the Tax Policy paper notes that this proposal is not a silver bullet, but it’s a modest first step, and a step worth making.

Alan Greenspan recently said that tax cuts don’t pay for themselves. But Majority Leader Mitch McConnell wouldn’t respond to a direct question if indeed the full extension of these tax cuts would pay for themselves. He avoided the question four times on how you pay for a full extension of the tax cuts. It’s worth noting that that Congressional Budget Office has determined a full extension of the tax cuts will add $3.7 trillion dollars to the deficit over the next ten years. You can talk about cutting spending all you want (and McConnell did) but the only actual proposal the Republicans have put forth is Rep. Paul Ryan’s “Roadmap” plan. This plan, by the way, was scored by the CBO with unrealistic assumptions and it was only because of those unrealistic assumptions (provided by Rep. Ryan’s staff) that the “Roadmap” did anything to reduce the deficit.

The Obama proposal is a limited first step in a long road to long-run fiscal solvency. To this point, we have had to ignore the short-run deficit and I would dare say that in the next four to six quarters we could continue to ignore the deficit, but letting the majority of tax cuts expire for the top 5% of earners in this country seems like a sensible step to move us down the road.

Ryan's Voodoo Economics

Much hay has been made recently of Rep. Paul Ryan's "Roadmap" to fiscal responsibility. You know, the saying goes, if it sounds too good to be true, it probably is. And guess what, it is.

Due to an assumption the Congressional Budget Office made, as requested by Ryan's staff and in keeping with the historical analysis CBO does for members of Congress, Ryan's plan has been hailed as THE Republican alternative. What is that assumption?

Ryan's staff requested the CBO assume that tax revenues would remain unchanged, despite all the changes to tax policy the plan outlines. Talk about sleight of hand. The Center of Budget and Policy Priorities has a great analysis of the plan integrating revenue changes as outlined by the Brookings Institution Tax Policy Center.

Rep. Ryan's response basically says the normal scoring bodies can't do it, so we'll just go with our numbers. Basically 2 + 2 = 5. If this is the serious Republican proposal then I feel sorry for the intellectual state of the party.