BY PICKING Paul Ryan, an athletic and brainy young congressman from
Wisconsin, as his running-mate Mitt Romney has delighted Republicans and
Democrats in equal measure. To the Republican base, Mr Ryan is the
distilled essence of tea, a determined tax-cutter and state-shrinker. To
the Democrats, he makes a perfect target for exactly the same reasons.
But no one can accuse Mr Romney any longer of being unclear about what
he will do if he makes it to the White House (see
article).
There is much to like about the personable Mr Ryan. He is a brave
man: he was the first politician to produce a budget with a plausible
plan for closing the deficit, which he did in April last year. He
constantly reminds America that deficit reduction is a necessity not a
luxury; and since Barack Obama has failed to do this, his persistence is
especially welcome. He has said publicly and clearly that Medicare, the
government-run health-insurance scheme for the elderly, is unaffordable
and will, if left unreformed, go
bankrupt;
and persuaded his party to accept this. He has devised a plausible
alternative to the current open-ended, state-financed system:
government-funded vouchers toward buying insurance. He has already shown
that he can work on this issue in a pragmatic and bipartisan way,
refining his proposal by melding it with the ideas of Senator Ron Wyden
of Oregon, a Democrat.
Mr Ryan is right, too, to call for sweeping tax reform. America’s
tax code is a convoluted mess. Its marginal rates are high: American
companies pay some of the steepest in the world. At the same time, it
includes so many exemptions, giveaways and rebates that those who can
game the system pay effective rates that are too low, benefiting their
accountants and lawyers but leaving government short of cash. Mr Ryan
proposes to scrap the six different rates of
income tax
and replace them with just two bands. He says that his tax reforms will
be revenue-neutral, because he will sweep away exemptions to offset the
cost of his cuts, of around $500 billion a year.
In principle, this is laudable; but there is a worrying gap in Mr Ryan’s plan. His blueprint does not
begin
to spell out which exemptions will go, which will stay and which will
be means-tested; and exemptions are notoriously hard to get rid of.
Until he is more specific, the fear must remain that the Republicans
will deliver the spoonful of sugar but not the medicine, as they did
under George W. Bush. If that happened, the deficit would balloon, just
as it did under Mr Bush. And, with the top rate of income tax falling
from 35% to 25%, the rich would benefit while spending cuts hit the poor
disproportionately.
Let’s be clear
Mr Ryan was also wrong to vote against the proposals of the
Bowles-Simpson deficit commission, which he did on the grounds that it
wanted to close the deficit partly through an increase in tax revenues.
He believes that the gap should be closed wholly through spending cuts.
Because Mr Ryan, in true Republican fashion, wants to increase spending
on defence, everything else—poverty relief, transport infrastructure,
environmental protection and education, for instance—will have to be
squeezed intolerably.
Explore our interactive guide to the 2012
presidential election
Mr Ryan’s frankness about America’s fiscal position may put off many
voters—especially those who expect to depend on Medicare in the near
future. He may, therefore, harm Mr Romney’s chances of election. But
although his thinking is open to much criticism, his clarity is a
virtue, and increases the chances that voters will be presented with a
proper choice on the central issue of this November’s presidential
election: how big America’s government should be.
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