I am concerned about Paul Ryan's budget plan for many reasons. Hailed by the ill-informed as a formula that will eliminate deficit spending, balance the budget, and get everybody back to work; it is in actuality a thinly veiled tax cut for the rich (regular rich people) and the uber rich (aka corporations, who apparently are people, too).
Didn't we learn anything from the last unfunded tax cuts which contributed approximately $4 trillion to the national debt over the last 10 years, or the unfunded Medicare Part D plan costing $1 trillion, or the two unfunded wars totaling $3.2 trillion (to date)? There you go, $8.2 trillion in unfunded debt, and now we are going to give additional tax cuts to those who need it the least? Does that sound fiscally conservative or responsible to you?
President Bush instituted two big tax cuts, one in 2001 and another in 2003.
The first was implemented amid rosy predictions of a 10-year, $5.6 trillion surplus; the second was enacted after the economy appeared to stumble after the Sept. 11, 2001, attacks.
Those secondary tax cuts failed to spur much growth while greatly increasing the budget deficit, shifting more of the tax burden from the rich to the middle and working classes, and further exacerbating income inequality levels in America not seen since 1928. Does that year ring a bell?
In 1928, the top 1 percent was taking in 23.9 percent of earnings. With that degree of inequality, there is not enough income and wealth available within the bottom 99 percent to sustain prosperity and an economic crash was inevitable. By 1934 tax rates for the rich went back up (from 25 percent up to 80 percent) and an economic recovery was imminent.
Since 1979 wealth amongst the top 1 percent have increase by 281 percent while the wealth of the bottom half has been a meager 16-25 percent.
Today, the top 1/10 of 1 percent have 11 percent of the wealth in this country. Essentially, the top 400 earners now have more wealth than the 150 million at the bottom. The top 1 percent has 23.5 percent and the top 10 percent have 50 percent of America's wealth. Any economist will tell you that this is not a healthy economic scenario.
According to the Gini Index, which measures global income gaps, the separation between the rich and poor in America is among the worst in the world and widens by the day.
The income gap doesn't just impact those middle-class families whose income growth has stagnated; it also impacts the ability of the U.S. economy to get back on track.
Without increases in income, middle-class families have less to spend and attempt to save more which is a death sentence to a market-driven system. Until the middle class has more disposable income to invest back into the economy, growth will be unachievable. Additional income to the lower and middle classes is not part of the Ryan scheme.
Several interesting studies have come out recently analyzing the relationship between growth and income inequality and nearly all of them come to the same conclusion. Economist Andrew Berg, whose study appears in a recent issue of Finance & Development, (a quarterly journal of the International Monetary Fund) compared major economic variables across the world's economies, and concluded that equality of incomes was the "most important factor in preventing a major economic downturn."
A June, 2012 study by the Joint Economic Committee calculated that an average middle-class married couple can expect to pay an extra $1,300 per year under Ryan's plan, while those earning more than $1 million could see a tax-cut of nearly $290,000. So, during this time of economic strife and deficit spending we are going to give a raise to the rich and place the burden on those who are technically poor and this is the "true" definition of class warfare.
Even Fox News reports that government spending under the Ryan plan increases almost every year for the next decade; that tax and other revenues rise year after year and; the 10-year deficit is will still be $3 trillion per year.
Under the plan, the budget would grow from $3.6 trillion this year to $4.9 trillion per year in 2022. The only years in which spending would dip are 2013 and 2014. Feel free to look it up.
And what do we get for this increased deficit? We get less education, less health care, less infrastructure, less services for women, children and the poor, and a lot more defense spending. All that hardware isn't going to help us against China if we have to borrow money from them to fight a fight.
Don't get me wrong, I stand to get back a very nice chunk of change each year under this plan, but I'm not going to be employing anybody with it, and I can certainly get by without it so I probably won't even spend it.
Here is the tax breakdown under the Ryan plan by income: Less than $10,000 per year is a 2 percent increase in taxes; 10-20 is a 1.2 percent increase; 20-30 a .2 percent increase; 30-40 a .6 percent decrease; 40-50 a 1.3 percent decrease; 50-75 a 1.8 percent decrease; 75-100 a 2.3 percent decrease; 100-200 a 2.5 percent decrease; now here is where it gets interesting; 200-500 a 4.8 percent decrease; 500-1M an 8.8 percent decrease; and over 1M a 12.5 percent decrease.
These are Fox's numbers. I have seen higher estimates on each end of the spectrum.
So, as we sit back and watch our dysfunctional representatives squabble over party-line ideology, remember to take a good look again at the figures above and ask yourself; "am I even a part of this debate?"; "is this fight worth the fiscal cliff and further downgrade of our national credit rating?"
The median household income in Dickinson County is approximately $40,000 per year. Based upon the percentages reported by Fox News, the "average Joe" can expect to see a whopping $240 per year tax decrease under the Ryan mantra at the expense of trillions of additional dollars to our national debt and major cuts to social services.
Are we a community of Americans that take care of one another, or are we just a bunch of greedy sociopaths in it for ourselves and buying snake-skin oil from corporate headquarters?
I am not a proponent of all of Obama's budget plans either, but at least his do not contain a windfall for the rich while maintaining current tax levels for the middle and lower incomes. We have to get our house in order, but not on the backs of the average Joe.
David "not related to Paul" Ryan
Former, future Kingsford resident