Economic Outlook: Ryan's stripes

By ANTHONY HALL, United Press International  |  Aug. 13, 2012 at 12:59 PM
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If there is an ideologue out there representing the Republican platform on the economy, it is Mitt Romney's choice for a running mate.

On the positive side, Wisconsin Rep. Paul Ryan's economic views are well known, as he took it upon himself to craft, in effect, a federal budget when the argument on whether or not to raise the debt ceiling coagulated in Washington a year ago.

This was the debate that showed credit rating agency Standard & Poor's that gridlock in Washington was so severe it had to be, essentially, tucked into the numerical equation on the U.S. credit rating. So polarized had things become that the government was at risk of a debilitating stagnation.

Inertia is the stuff that keeps moving things in motion and stagnant things in stasis. S&P saw that glass as half empty. Washington was stuck.

That said, the first consideration on Ryan is that he is not someone known for working both sides of the aisle. You want partisan? You've got partisan.

Far more is known on Ryan's position and his stake is driven into the sand far deeper than that of his would-be boss.

Romney's commitment is to wag-the-dog politics. Follow the bumper stickers and the polls and Romney will be scratching out a populist theme to match. At least Ryan's opposition to Obamacare, in other words, is genuine.

Although strident and dogged, Ryan's version of budgeting is straight out of the Republican handbook. Cut back on Medicaid and food stamps, shape taxes to favor the wealthy, protect defense spending. Across the board, Ryan favors a simple tax program that drops business taxes from 35 percent to 25 percent and closes loopholes.

Federal debt conscious taxpayers should be asking which loopholes Ryan would close. Therein lies the difference between a tax program that answers to Ryan's primary pet peeve -- the federal deficit -- and one that does not. But the beauty of politics is to shout vague arguments now and scratch out specifics after November.

Ryan also plans to shift Medicare from a system in which the government pays a share of the benefits to one in which the government pays a share of the healthcare premiums.

He would then privatize the system, opening it up to competition, which he expects will keep the costs down.

Government would set its contribution at a level equal to the second lowest private company premiums and cap increases to 0.5 percent above the rate of inflation.

Ryan proposes spending cuts that Think Progress says hit social programs that benefit lower- and middle-class Americans, while offering tax breaks to the wealthy. He also advocates privatizing Social Security by putting the funds into stocks and bonds, a system that carries the same risks as any private investment and would have sunk the country's retirement system had it been in place before the most recent recession.

But the real problem is that an economic strategy is supposed to do more than carve out a social identity. Tax the wealthy or don't -- corporations are fairly rich right now and that hasn't moved the unemployment rate any lower in recent years. The role of the federal government should be to define how the U.S. economy competes with Asia and Europe and not so much how individual states compete with the federal government. Where are we on that score? With both parties, that is what lies most unattended.

In international markets Monday, the Nikkei 225 index in Japan was flat, dropping 0.07 percent, while the Shanghai composite index in China shed 1.51 percent. The Hang Seng index in Hong Kong slipped 0.27 percent while the Sensex in India rose 0.43 percent.

The S&P/ASX 200 in Australia added 0.14 percent.

In midday trading in Europe, the FTSE 100 index in Britain shed 0.16 percent while the DAX 30 in Germany gained 0.12 percent. The CAC 40 in France rose 0.2 percent while the Stoxx Europe 600 fell 0.12 percent.

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