The battle between Obama and Ryan

Outside of the rhetoric and the partisanship, it is fair to say that the debate about the deficit and the debt is shaping up as a classic one over the role of government and the kind of country Americans want to build for their children. On the one side, Republican House Budget Committee Chairman Paul Ryan has been rightly commended for his audacity and courage to put his proposals forward at great risk. And, on the other, President Obama has finally made it clear where he stands and where he wants to take the country.

Both men acknowledge the need for important and drastic cuts in spending. They both recognize that the current path is unsustainable. The deficit is right now hovering at about 10 per cent of GDP and the debt is over 90% of GDP. Where Ryan and Obama differ is on the solutions. Ryan wants an overhaul of major entitlement programs such as Medicare and Medicaid, and wants to repeal Obama’s healthcare reform. The Bush tax cuts would become permanent under Ryan’s plan, which also calls for a reform of the tax code.

Obama’s approach keeps the major entitlement programs intact, but puts in place mechanisms to produce operational cuts. Elsewhere, Obama is promising to eliminate the Bush tax cuts on those earning over $250,000, calls for important cuts to defense spending, and also proposes to reform the tax code. Obama has made a compelling case for the kind of country he believes Americans want—compassionate and fair. In so doing, he may have re-energized his supporters who have found him far too compromising of late.

Meanwhile, a bipartisan group of six senators is working on a compromise solution. Its work will be inspired by the compromise spirit that prevented last week’s government shutdown, the contrasting Obama/Ryan visions, and the conclusions of the president’s debt and deficit commission led by former chief of staff Erskine Bowles and former senator Alan Simpson. This will all be added to the mix just as the Republican presidential nomination process kicks in.

The initial reactions seem to pit right against left, red against blue, small against big, and rich against less rich (i.e.the middle class). Media pundits reflect these assessments. It is highly likely that the battle lines are now drawn for the debt ceiling debate in the coming weeks, the 2011-2012 budget negotiations between the White House and the Republican-controlled House, and the 2012 presidential election.

As matters stand, Obama’s approach seems to have more potential with the electorate, which generally favours the longstanding entitlement programs. Ryan’s desire to make the Bush tax cuts on the rich permanent and to turn Medicare into a voucher program, opening the way for private insurers, makes it more daring but far more controversial and less voter-friendly.

The Republicans in the House have endorsed Ryan’s approach,  which will place an obligation on the GOP presidential challenger in 2012 ( not easy if your name is Mitt Romney and you passed a health care reform bill similar to Obama’s as Governor), Obama has succeeded in remotivating his base by what they have seen in last week’s speech as the line in the sand.The face of America is in for an historic confrontation. Let the battle begin.




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The battle between Obama and Ryan

  1. For anyone interested, here's probably the most succinct analysis of the debt issue and necessary resolutions that you'll find on the internet:
    http://www.calculatedriskblog.com/2011/04/comment

    As everyone knows, S&P issued a "negative outlook" on U.S. debt this morning. Although S&P has made plenty of recent rating mistakes, this is a reminder that there is work to do in the U.S.

    Here is the approach an effective manager would take to analyzing the deficit.

    The first step would be to divide up the deficit into several components and calculate the NPV (net present value) of each component. I'd divide the deficit into 1) cyclical portion, 2) General Fund ex-healthcare, 3) healthcare (Medicare and Medicaid), and 4) Social Security Insurance. This is nothing new – I've been pointing this out since I started the blog in 2005!

    The cyclical deficit is due to the severe recession (and was predictable in 2005). As a result of the recession tax revenues declined, and there was more spending (both stimulus and automatic safety net expenditures). The good news is the cyclical deficit will decline as the economy slowly recovers. The bad news is recoveries following housing/credit bubbles and a financial crisis are usually sluggish and choppy. This is the portion of the deficit that gets the most attention, but from a long run perspective it is the least significant.

    The General Fund ex-healthcare deficit is the most immediate problem. I've been writing about this for years.

    Some politicians refuse to even address this issue, apparently because of a "no tax" pledge. This is silly and juvenile. Besides many of these politicians supported the policies that created the structural deficit, because they thought we were going to have surpluses forever. Since the forecasts for "surpluses forever" were inaccurate, reversing those policies should be a priority. There is no way to balance the General Fund ex-healthcare without gutting defense spending or reversing those earlier policies.

    If only we could get such succinct analysis in Canada.

  2. For anyone interested, here's probably the most succinct analysis of the debt issue and necessary resolutions that you'll find on the internet:
    http://www.calculatedriskblog.com/2011/04/comment

    As everyone knows, S&P issued a "negative outlook" on U.S. debt this morning. Although S&P has made plenty of recent rating mistakes, this is a reminder that there is work to do in the U.S.

    Here is the approach an effective manager would take to analyzing the deficit.

    The first step would be to divide up the deficit into several components and calculate the NPV (net present value) of each component. I'd divide the deficit into 1) cyclical portion, 2) General Fund ex-healthcare, 3) healthcare (Medicare and Medicaid), and 4) Social Security Insurance. This is nothing new – I've been pointing this out since I started the blog in 2005!

    The cyclical deficit is due to the severe recession (and was predictable in 2005). As a result of the recession tax revenues declined, and there was more spending (both stimulus and automatic safety net expenditures). The good news is the cyclical deficit will decline as the economy slowly recovers. The bad news is recoveries following housing/credit bubbles and a financial crisis are usually sluggish and choppy. This is the portion of the deficit that gets the most attention, but from a long run perspective it is the least significant.

    The General Fund ex-healthcare deficit is the most immediate problem. I've been writing about this for years.

    Some politicians refuse to even address this issue, apparently because of a "no tax" pledge. This is silly and juvenile. Besides many of these politicians supported the policies that created the structural deficit, because they thought we were going to have surpluses forever. Since the forecasts for "surpluses forever" were inaccurate, reversing those policies should be a priority. There is no way to balance the General Fund ex-healthcare without gutting defense spending or reversing those earlier policies.

    If only we could get such succinct analysis in Canada.

  3. How can the GOP expect to win based on a platform of taking away from the lower and middle class, the sick and the elderly, then giving that money to the rich?

    It's a class war alright. And the Bourgeoisie are winning handily.

  4. How can the GOP expect to win based on a platform of taking away from the lower and middle class, the sick and the elderly, then giving that money to the rich?

    It's a class war alright. And the Bourgeoisie are winning handily.

    • How can the GOP expect to win based on a platform of taking away from the lower and middle class, the sick and the elderly, then giving that money to the rich?

      By convincing the lower and middle class, the sick and the elderly, that one day they'll be rich.

      Admittedly, this might be a harder sell for the elderly.

      • Politicians have been selling "The American Dream" for decades. One would think that, sooner or later, people would realize that this "American Dream" is an oasis. Fortunately for the politicians, when a new generations comes through, they have a bunch of new people to sell the "American Dream" to.

        With Love and Gratitude,

        Jeremiah

    • Do the math. Find all the billionaires in the USA, Take all their money. You've made a dent… this year.

      What about next year? Find all those worth $500 million or more. Take all their money. Fine and good, and the food stamps and welfare program expenses for these new subscribers are worth the revenue generated.

      Uh-oh. Where have all the jobs gone? Look at all the new demands on the public treasury! Geez, looks like we have to line up all those worth only a million or more. Take all their money….

      • Sure, but what does that have to do with Huzzah's point?

        Huzzah didn't even suggest taking more money from the rich, let alone taking all of their money.

        • Huzzah said: How can the GOP expect to win based on a platform of taking away from the lower and middle class, the sick and the elderly, then giving that money to the rich?

          Huzzah's "giving money to the rich" is distasteful code for tax breaks, also known in the reality-based community as "taking less money from the rich." And my point was that you could bleed the rich all you like, and you're still in the hole. The USA does not have a revenue problem. It has a spending problem. Taking less from the middle and more from the rich cannot possibly solve that problem. Was my point.

          • Oh, I got your point, it just seemed to me that it wasn't all that related to Huzzah's. Can one not believe that the problem in the U.S. is a spending problem and not a revenue problem and ALSO believe that the U.S. should tax the rich more?

            Your point is about solving the American deficit/debt problem, and it's an excellent point. The thing is, Huzzah wasn't talking about solving the American deficit/debt problem. So, your "you can take that plan to any extreme you like, it's not going to solve the problem of the debt" argument is fair enough, except for the fact that Huzzah presented no plan whatsoever, and wasn't discussing the problem of the debt.

          • Huzzah was declaring a class war. I was warning that defeating the rich in that class war makes everyone lose.

            I believe it was Finance Minister Michael Wilson who once famously said "Canada doesn't have enough rich people," or something like that. And the predictable howls followed from the usual suspects who prefer outrage over thought.

          • OK.

            I'm not sure that Huzzah was actually "declaring" a class war so much as pointing and saying "Hey, look, a class war" but I take your point.

            I also agree that defeating the rich in a class war makes everyone lose. However, that said, I am cautious of the fact that this reality is sometimes used by the rich (and their supporters) to argue that the non-rich simply aren't losing badly enough, so could they please bend over a little more.

          • In situations where the top (small-number) per cent of taxpayers by income kick in (huge number) per cent of all government revenues, and where (huge number) per cent of taxpayers at the lower income scale contribute nothing at all to government revenues, you really want to describe the current system as asking the lower-income folk to please bend over a little more?

          • In the context of cutting social services for poor people to ensure that we can continue to increase corporate welfare for companies already making billions of dollars in annual profits?

            Why not?

            Don't get me wrong, I'm agreeing with your premise that when the rich lose, arguably everybody loses, I'm just cognizant of the fact that this argument is often used in the context of rich and successful companies and individuals who have their hand out. I don't mind the guy who has to decide which of his kids gets to eat tonight having his hand out, but when the guy who has to decide which plane he's going to fly back to the Hamptons in has his hand out too, it irks me.

          • Well, I am almost certain no one wants to get me started on the corporate welfare bums discussion…

          • LOL, true.

      • right wing is out to protect rich which is what you like .

        • Then you don't know me well at all.

          • All you spew is right wing gibberish , madeyoulook.

  5. How can the GOP expect to win based on a platform of taking away from the lower and middle class, the sick and the elderly, then giving that money to the rich?

    By convincing the lower and middle class, the sick and the elderly, that one day they'll be rich.

    Admittedly, this might be a harder sell for the elderly.

  6. Do the math. Find all the billionaires in the USA, Take all their money. You've made a dent… this year.

    What about next year? Find all those worth $500 million or more. Take all their money. Fine and good, and the food stamps and welfare program expenses for these new subscribers are worth the revenue generated.

    Uh-oh. Where have all the jobs gone? Look at all the new demands on the public treasury! Geez, looks like we have to line up all those worth only a million or more. Take all their money….

  7. good post . Obama is a winner on this one . Ryan messed up by not taxing very rich . Class warfare emerging .

  8. good post . Obama is a winner on this one . Ryan messed up by not taxing very rich . Class warfare emerging .

  9. "…makes it more daring…"

    First time I've seen the word "daring" used as a synonym for brain-dead.

  10. "…makes it more daring…"

    First time I've seen the word "daring" used as a synonym for brain-dead.

  11. Ryan is playing with his numbers . it won't balance the budget . He is using it to reduce government and protect the rich . Totally crass and heartless.

  12. Ryan is playing with his numbers . it won't balance the budget . He is using it to reduce government and protect the rich . Totally crass and heartless.

  13. Ryan's plan isn't perfect, but Obama has his head in the sand. It is nice that there is a politician that is raising important issues. We need someone like that in Canada. Wake up the other politicians.

  14. Ryan's plan isn't perfect, but Obama has his head in the sand. It is nice that there is a politician that is raising important issues. We need someone like that in Canada. Wake up the other politicians.

    • On that point , I agree.

  15. Politicians have been selling "The American Dream" for decades. One would think that, sooner or later, people would realize that this "American Dream" is an oasis. Fortunately for the politicians, when a new generations comes through, they have a bunch of new people to sell the "American Dream" to.

    With Love and Gratitude,

    Jeremiah

  16. On that point , I agree.

  17. We will see where this leads . Cuts will have to be deep . Tinkering won't do this time.

  18. We will see where this leads . Cuts will have to be deep . Tinkering won't do this time.

  19. The US already has one of the most progressive tax regimes in the world. They can certainly increase taxes, but selling their current setup as "taxing the poor/middle classes to give to the rich" is inaccurate.

  20. The US already has one of the most progressive tax regimes in the world. They can certainly increase taxes, but selling their current setup as "taxing the poor/middle classes to give to the rich" is inaccurate.

  21. Sure, but what does that have to do with Huzzah's point?

    Huzzah didn't even suggest taking more money from the rich, let alone taking all of their money.

  22. Huzzah said: How can the GOP expect to win based on a platform of taking away from the lower and middle class, the sick and the elderly, then giving that money to the rich?

    Huzzah's "giving money to the rich" is distasteful code for tax breaks, also known in the reality-based community as "taking less money from the rich." And my point was that you could bleed the rich all you like, and you're still in the hole. The USA does not have a revenue problem. It has a spending problem. Taking less from the middle and more from the rich cannot possibly solve that problem. Was my point.

  23. Oh, I got your point, it just seemed to me that it wasn't all that related to Huzzah's. Can one not believe that the problem in the U.S. is a spending problem and not a revenue problem and ALSO believe that the U.S. should tax the rich more?

    Your point is about solving the American deficit/debt problem, and it's an excellent point. The thing is, Huzzah wasn't talking about solving the American deficit/debt problem. So, your "you can take that plan to any extreme you like, it's not going to solve the problem of the debt" argument is fair enough, except for the fact that Huzzah presented no plan whatsoever, and wasn't discussing the problem of the debt.

  24. Huzzah was declaring a class war. I was warning that defeating the rich in that class war makes everyone lose.

    I believe it was Finance Minister Michael Wilson who once famously said "Canada doesn't have enough rich people," or something like that. And the predictable howls followed from the usual suspects who prefer outrage over thought.

  25. OK.

    I'm not sure that Huzzah was actually "declaring" a class war so much as pointing and saying "Hey, look, a class war" but I take your point.

    I also agree that defeating the rich in a class war makes everyone lose. However, that said, I am cautious of the fact that this reality is sometimes used by the rich (and their supporters) to argue that the non-rich simply aren't losing badly enough, so could they please bend over a little more.

  26. right wing is out to protect rich which is what you like .

  27. In situations where the top (small-number) per cent of taxpayers by income kick in (huge number) per cent of all government revenues, and where (huge number) per cent of taxpayers at the lower income scale contribute nothing at all to government revenues, you really want to describe the current system as asking the lower-income folk to please bend over a little more?

  28. In the context of cutting social services for poor people to ensure that we can continue to increase corporate welfare for companies already making billions of dollars in annual profits?

    Why not?

    Don't get me wrong, I'm agreeing with your premise that when the rich lose, arguably everybody loses, I'm just cognizant of the fact that this argument is often used in the context of rich and successful companies and individuals who have their hand out. I don't mind the guy who has to decide which of his kids gets to eat tonight having his hand out, but when the guy who has to decide which plane he's going to fly back to the Hamptons in has his hand out too, it irks me.

  29. I realize that this is because of how complicated the plans are of course, and the differing ways the cuts are found, but when one guy wants to cut $4 trillion, and the other guy wants to cut $6 trillion, it really is too bad they couldn't just cut $5 trillion and call it a day.

  30. I realize that this is because of how complicated the plans are of course, and the differing ways the cuts are found, but when one guy wants to cut $4 trillion, and the other guy wants to cut $6 trillion, it really is too bad they couldn't just cut $5 trillion and call it a day.

    • lol . love ya lordy !

  31. Well, I am almost certain no one wants to get me started on the corporate welfare bums discussion…

  32. Then you don't know me well at all.

  33. LOL, true.

  34. All you spew is right wing gibberish , madeyoulook.

  35. lol . love ya lordy !

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