The Reverse Robin Hood: Paul Ryan and the Politics of Plutocratic Power

School children are taught, approvingly, that Robin Hood stole from the rich to give to the poor. It is an interesting commentary on contemporary society that Congressman Ryan has produced for his Republican colleagues and their financial backers a US budget proposal that does the opposite. That it was deemed 'serious' by many observers because it proposes eliminating social programs for the middle class and poor that date back to the 1930s while proposing tax cuts for the wealthiest, leads one to wonder what this says about a society that was already suffering from 30 years of income stagnation before the Great Recession. What does it mean for the economic future of the US that this is politically palatable. As one observer commented, it IS serious when politicians propose eliminating programs for the people least able to protect themselves so that they may proffer tax cuts to the wealthiest members of society who already enjoy the largest income gap in American history.

Alan Blinder is a professor of economics at Princeton and former Vice Chair of the US Federal Reserve. He offered his assessment of the Ryan budget proposal in the Wall Street Journal:

"Why do I oppose Rep. Paul Ryan's plan for reducing the federal budget deficit, the one House Republicans approved overwhelmingly last week? Let me count the ways. Actually, since there is not enough space on this page to count them all, let me just hit the highlights.

Worst things first. The plan threatens to eviscerate Medicare by privatizing it—with vouchers that, absent some sort of cost-control miracle, would fall further and further behind the rising cost of health insurance. And to make that miracle even less likely, House Republicans want to repeal every cost-containment measure enacted in last year's health-reform legislation.

Medicare would not die a sudden death under the Ryan plan—people over 55 are grandfathered. It would, instead, succumb slowly to a debilitating illness as the growing gap between the vouchers and the cost of private health insurance priced more and more seniors out of the market. This fate evokes conservative activist Grover Norquist's famous image: to keep on shrinking the government until it's small enough to drown in the bathtub. And who would go down the drain with it? Not prosperous Americans, whose huge tax cuts would more than compensate for their higher health-insurance bills, but middle-class people who really need Medicare.

Then there's Medicaid, which is a lifeline for the poor. House Republicans want to turn it into a block grant, underfund it, and let the 50 states figure it out. Make your own judgment about how well your state would cope. I come from New Jersey. Mr. Ryan comes from Wisconsin.

The sums involved are huge. The Congressional Budget Office (CBO) estimates that the House Republican budget would reduce federal health-care spending by more than two-thirds by 2050. (No, that's not a misprint.) Did someone say, "We have to destroy Medicare to save it?"

According to the Center on Budget and Policy Priorities, about two-thirds of Mr. Ryan's so-called courageous budget cuts would come from programs serving low- and moderate-income Americans, while the rich would gain from copious tax cuts. That's courage?

This reverse-Robin Hood redistribution is bad enough in the abstract. Coming on the heels of 30-plus years of rising inequality, it is breathtakingly mean-spirited. But was such class warfare necessary to make the budget numbers work? Absolutely not. Both President Obama's plan and the Bowles-Simpson plan achieve comparable deficit reduction without further gilding the New Gilded Age.

It gets worse. The House Budget Committee's own rack-up of changes from the CBO baseline displays the much-ballyhooed $5.8 trillion in spending cuts over 10 years. But it also displays $4.2 trillion less in tax revenue. How many Americans know that 72% of Mr. Ryan's claimed budget cuts would go to fund tax cuts that overwhelmingly benefit the rich?

Actually, it's much worse. Astute budget analysts noticed two errors in the $5.8 trillion number. First, Mr. Ryan's staff made a miscalculation, which overstated interest savings by $200 billion. Second, $1.3 trillion of the advertised savings come from dropping the (silly) assumption that the wars in Iraq and Afghanistan will go on forever at current spending rates, rather than phasing down in accord with current policy. The total overstatement of $1.5 trillion leaves just $4.3 trillion in genuine savings over 10 years—barely enough to cover the tax cuts. So, when it comes to reducing the deficit over the next decade, the Ryan plan is not a lion, but a lamb—and a rather heartless lamb at that.

But follow the numbers out for decades, and the Ryan plan does turn into a lion. The CBO's scorekeeping shows federal spending under the House Republican budget falling to just 14¾% of GDP in 2050. (It's now 23¾%.) That sounds great—until you think about it.

For openers, the last time federal spending was that small a share of the economy was 1951—before Medicare and Medicaid, before the Departments of Health and Human Services, Housing and Urban Development, Education, Energy, Transportation, Veterans Affairs, and Homeland Security. You get the idea. Somewhere, Mr. Norquist is filling his bathtub.

There's more. The CBO report on the House Republican budget gives only decadal data. It shows federal spending dropping from 20¾% of GDP in 2030 to 18¾% in 2040 and 14¾% in 2050, when the data stop. Fortunately, Mr. Ryan's January 2010 "Roadmap" ran the spreadsheet out to 2083. Those numbers show federal spending as a share of GDP dropping another 8.6 percentage points between 2050 and 2083—and they're still falling when the spreadsheet ends. Were that to happen, you wouldn't need a bathtub. A soap dish would do.

Under the House Republican budget, deficits don't just shrink, they turn into surpluses around 2040. By 2050, when the CBO's analysis ends, the annual surplus is up to 4¼% of GDP and rising. The national debt is down to 10% of GDP and falling. On that path, the national debt turns negative by about 2053—and keeps on falling.

Now, none of this will happen, of course. So why look at such long-run projections? Because they reveal the underlying aspiration. While the House Republican plan achieves too little genuine deficit reduction over the next decade, it calls for much too much in the long run. The not-so-hidden agenda is clear: to shrink the government drastically.

The Ryan plan has received vastly too much praise from people who should know better. For a while, it was even celebrated as "the only game in town," which it never was. It was preceded by both the Bowles-Simpson and Domenici-Rivlin plans, which are vastly superior in every respect. Within days of Mr. Ryan's announcement, President Obama chimed in with his own ideas on deficit reduction—another huge improvement over the Ryan plan. Now we await the Senate Gang of Six's entry.

No, the House Republican plan is not the only game in town. It's only the worst.