The 6 Studies Paul Ryan Cited Prove Mitt Romney's Tax Plan Is Impossible

[jsr]

http://www.theatlantic.com/business/archive/2012/10/the-6-studies-paul-ryan-cited-prove-mitt-romneys-tax-plan-is-impossible/263541/

The 6 Studies Paul Ryan Cited Prove Mitt Romney's Tax Plan Is Impossible

Paul Ryan finally had enough time to go through the math of the Romney tax plan during the vice-presidential debate. He didn't use it. Ryan filibustered instead. About the most specific he got was citing "six studies" he said vindicate the plan's mathematical plausibility. Except they don't.

Romney's tax plan is a three-legged stool that doesn't stand. Here's how it works -- or doesn't. Romney wants to 1) cut tax rates across the board by 20 percent, 2) cut tax expenditures to pay for these tax cuts, and 3) maintain progressivity. The problem, as the Tax Policy Center pointed out, is there aren't enough tax expenditures for the rich to pay for all the tax cuts for the rich. Romney's plan only works if he cuts out the tax cuts for the rich, raises taxes on the middle class, or explodes the deficit. In other words, Romney can pick two, and only two, of his tax goals -- what Matt Yglesias of Slate calls the "Romney Trilemma".

That sound you hear is the three-legged stool falling down.

All this hasn't stopped a fight against the tyranny of arithmetic. The defenses of the Romney tax plan generally fall into three broad categories. The first assumes the plan will set off magic growth of the monster variety; the second assumes Romney defines "middle-class" differently than he does; and the third assumes Romney would eliminate tax expenditures he has indicated he would not eliminate. Let's briefly consider the six such "studies" that Ryan cited -- most are actually blog posts -- in turn. ...

[hfojvt]

1. Romney has no desire to "maintain progressivity"

He is looking for the Bush tax cut magic. The Bush tax cuts managed to a) give most of their benefits to the rich and yet somehow also b) leave the rich paying a higher percentage of taxes than before.

In this, of course, Bush was aided by
c) the rich are taking more of the income pie than ever before.

Further, Romney is redefining progressivity. Progressivity would mean
1. the rich pay a higher tax rate
and not
2. the rich pay a larger share of the total tax bill

Rommey might also angle for that Reagan magic of a) cut income taxes for rich people and b) increase payroll taxes on working people and then claim progressivity by looking at the share of INCOME taxes paid by rich people.

There are just so many ways to help the rich while screwing the common people and yet still be able to spin some statistics so you can deny what you are doing.

[TomCADem]

2. K&R! - The mainstream media refuses to call out Romney-Ryan On Their Lies

[jmowreader]

3. Norquist hates spending worse than taxes

To better justify eliminating government.programs, it is imperative to first eliminate the money to pay for them. Romney knows his plan will kill the country but he can't say that.

[bluestate10]

4. Biden called RYan out on the 6 study claim, unlike President Obama when Romney used that shit.

First, I want to state that the President's research team need to get it;s ass in gear, like today and come up with facts to refute any possible claim that Romney makes on Tuesday.

Biden cited three of the so called independent groups that Ryan alluded too. All were known right-wing shills. Biden went further, de-constructing their rational for their claims. Overall, Biden blunted the clam that Ryan made and didn't fucking let it hang like the President did.

[quaker bill]

5. Monster growth indeed

His "12 million new jobs in 4 years" works out to 325,000 new jobs a month on average for the entire term. Since it won't start on day one, probably closer to 400,000 jobs a month on average for most of his term. First, I do not think this is possible in a sustained manner, but more importantly, what does a potential economy look like when this happens?

If it happened and was resonably well distributed across the country (most new jobs going to places seeing high unemployment numbers, and needing the skill sets the unemployed in these locations have) the fairly slack labor market could fill the positions and things would get much better for many months. This outcome is very unlikely, but if it happened, no problems would arise for most of a year. However, at some point the current slack labor pool will be absorbed. At that point the businesses start competing for increasingly rare skilled labor and cost-push inflation begins as wages rise.

Given the recent decline in wages and benefits,a bit of cost-push inflation would be a good thing for workers, however the bankers and people on fixed incomes will not be so happy about it. This is the point where the FED steps in to start increasing interest rates. There is no model that creates 4%+ GDP growth and new job growth at this level without producing inflation above the FED's 2 percent inflation target. In short, this sort of economic growth is not sustainable over a 4 year term.

Second, the chance of growth falling out in the places where people need the jobs and matching the skill sets of the unemployed is very small. The potential for economic dislocation is high. In a normal economy, people move to the jobs. However at this moment +/- 15 million homeowners are upside down on their home loans and can only "move to the jobs" at very high cost. This curious factor in this current economy restricts labor mobility in a very large way. Folks will be given the choice of losing 50k or 100k today to make an extra 5k a year in the future and they just won't do it. This will add to cost-push far more rapidly than normal economic models would suggest, because in short the incentive would have to be far larger to get people to make the move and take the loss.

In short, you just can't get there from here.