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The Ryan Road to Ruin

March 28th, 2012 · No Comments · Capitalism, Economics, Health Care, Politics, Populism, Social Security, Taxes, The Budget

Paul Ryan had the courage to put his name on a budget that was announced last week. This budget will change his image from one of a sincere, small town Republican congressman to that of a pandering, foolish, pretentious, faux-economic hack. His goal seems to be to move the country from Recession to Depression and from Depression to total Devastation for anyone who is not in the top ten percent of the income structure.

Why are we so harsh on Ryan? We dislike him because we know that he is at least smart enough to know that he is being conned and used by Right Wing billionaires. They are using him, and he seems quite willing, to push through an agenda that includes the structured removal of the safety net that even Ronald Reagan said was an essential part of our society.

Billionaires in Wall Street promoted a speculative bubble in the real estate market and expanded it to an outright swindle on a scale never before seen in this country. Then they deliberately shut it down. The goal, we now know, was to basically bankrupt the people of the United States by taking away their one single most important asset…the equity in their homes.

Is it really a conspiracy? Well, when you have an income of a billion dollars, it becomes difficult to expand it beyond that. But what you can do…if you can control Wall Street with enough leverage to cause a Recession…is make everything worth less, including the equity in people’s homes and their 401Ks and the cost of labor.

In the 1980s the Regan Administration, as a part of many regulations that were changed or dropped in order to help an ailing Savings and Loan Industry, added a piece of legislation to make it easier and cheaper to borrow against the equity in your home than it was to borrow on credit cards or personal non-secured loans. That was step one.

In the early 2000’s the mortgage industry began to offer riskier and riskier loans. By 2005, people could actually acquire a home through an interest-only loan or a no-documentation loan. Everything was done to make home ownership easier and much, much riskier. The real estate business boomed with prices going sky high. Then everything collapsed.

There were millions of home foreclosures in which millions of Americans lost their entire equity or were stuck with homes whose value had quickly dropped below the value of the mortgage they held. Those who did have equity saw it drop dramatically. Even before the Stock Market Crash of October 2008, slightly more than 50% of homeowners owed as much on their property as the equity they had in their property. This was the first time nationally in the history of recorded housing statistics that a majority of homeowners had this little equity in their homes.

So what’s the point? The point is that there is a very good argument that can be made, and should not be ignored, that a large number of Republican legislators, people like Paul Ryan have been co-opted by large corporate interests, such as oil companies and multi-millionaires and billionaires, like the Koch family. The rich have used campaign contributions to get Republicans in Congress to work for them rather than for their constituents.

That is important in the context of the Republican Budget Proposal for 2013. It is time to start looking at their proposals with the suspicion that the plan is to de-fund the United States government, including such long-time and essential programs such as Medicare, Social Security and Medicaid. (that we citizens, not merely the Billionaires, pay for.)

Those are all important programs that will cost us a lot…for a little while. Why only a little while? Because, even though as far back as Reagan and Tip O’Neill’s talks and modifications on Social Security we had knowledge of the amounts of money we would need. But those funds were basically borrowed for wars and tax cuts and never replaced.

It all began in the second Bush Administration. They had surpluses and they spent them. Now the current crop of Republicans…who were there, most of them, to spend the money, say…“tough luck.” They took the money for wars and cut revenues by giving out tax breaks. The Republicans lied us into the Iraq War. Most Democrats were against it. The war in Iraq caused what was supposed to be a short war in Afghanistan to last for over ten years, the longest war in our history …still going on!

The Bush tax cuts went overwhelmingly to a segment of the rich who had already had their taxes cut by 50% by Ronald Reagan. Those Reagan tax cuts had already resulted in unbalanced budgets that accumulated $5 trillion in debt before Clinton was able to balance the budget once again. Bush and Cheney came to office, added two more tax cuts and another $8 trillion (EIGHT TRILLION DOLLARS) on top of that.

    The Seven Trillion Dollar Swindle

By deliberately deregulating Wall Street, the anti-regulatory Bush Administration helped the swindlers to another $7 trillion of the taxpayers’ money. Where does the $7 trillion come from? That represents the equity lost in your home. In other words the loss of value between 2007 and what it was after the crash and what the value is now, which is undoubtedly even lower. What is the value of your 401K versus what it was in 2007? Here’s what happened.

Wall Street bought mortgages that they knew were worthless. They then sold them to other people. How many? Trillions and trillions of dollars worth. When people found that they were worthless, they tried to get rid of them. But something worth $100 suddenly became worth $5. Losses by banks and investment companies were in the trillions. All that money is passed along to you. Your home, once worth $500,000 is now worth $275,000. Your 401K, with a variety of stocks which had been going up and up…is now down by half.

All that cumulative value that was lost comes to around $7 trillion. Those are the estimates. Our GDP is only $15 trillion. So you can see what happened. We crashed. Remember the bank bailout? It was supposed to be $350 billion. It never came to that and most of the money loaned was returned. What does that mean? It means that those major banks, the ones selling all this phony investment in flim-flam mortgages, had actually sold a lot of it off. Someone got it, the bad stuff…lots of it. We did, through pension funds and mutual funds and others who lost a lot of money.

So now, as we have all lost so much money, businesses shut down and put 8 million more people out of work…overloading our social services. Any sensible person would say, let’s just cut as much as we can afford to from government and add back some of those taxes that we cut. Let’s tax some of those people who sold the bad mortgage securities and banked that money.

That is not what Paul Ryan and the Republicans are saying with this budget. CBO, the bipartisan federal bureaus tasked with analyzing the costs of any legislation on which it is asked to render an opinion, did so on this budget. And they were not happy with it. While it reduces the national debt to 10% of GDP by around 2050, it does it on the backs of the poor and middle class.

First of all, Ryan and the Republicans attack Senior citizens with a vengeance. In 2022, the current Medicare system would be scrapped and Senior citizens would get one single subsidy for Medicare in the form of a voucher…basically a check. This would reduce costs, according to the CBO to 6% of GDP…what Europe currently spends.

    The Republicans Will Repeal Obamcare…then Medicare.

The first thing the Ryan plan does is repeal Obamacare. So, for example, this means that your kids, if under 26, will go off your insurance after they leave college. It means you will go back to paying more for prescription drugs. And it means that you will not even be guaranteed health insurance at all. And there is no guarantee that you will be able to get health insurance after age 65 on the Ryan plan because these vouchers are for private health insurance companies that will have no obligation to insure sick people.

The wealthy paid a 74% top rate the day Reagan walked through the door. They had been paying that rate or higher for about 40 years. Truman, Eisenhower, Kennedy, Nixon, Ford and Carter all had top income tax rates that were at 74% or more.

Measure that against the current top rate of 35%. See any difference in those numbers? Let’s say we cut your pay from $740 per week to $350 per week? Do you think you could cut enough out of your budget to keep living in a remotely similar lifestyle? Of course not. And that is why we are $15 trillion in debt. Why would anyone seriously consider a budget prepared by these Republican big spenders and economic morons?

Even their presidential candidate is cut from the same cloth. He made $225 million in personal wealth. That is success. For him. But he did it by closing down plants and firing people, often sending their jobs to China and India. You don’t measure the success of a country by how many people you lay off or how you balance a budget when the people are starving. A country is its people. That’s what a country is…a place where people live.

In 2013, Ryan’s plan would kill the Obamacare procedure of competitive insurance exchanges. That would allow the insurance companies to continue to monopolize each state market with little or no competition, thus raising the prices on consumers again. This is good for health insurance companies, especially the CEOs earning an average of $14 million a year.

The Ryan plan switches Medicaid funds to a block grant to the states. Here’s the problem with that. The Confederate States still have enormously racist governments wherever they are Republican…which is most of them. When it is a choice between taking care of poor black people or balancing the budget, which do you think they will do? Of course, let black people die.

Governors like Walker of Wisconsin, Daniels of Indiana or Scott of Florida, Snyder of Michigan or Kasich of Ohio can simply use those funds to balance the budget while giving tax breaks to wealthy businesses. The money not going to the Treasury from corporate taxes is replaced by money from the federal government that was supposed to go to health care for the poor.

Under the Ryan plan, this is how Medicare will be eliminated. The Ryan budget proposes to cut government non-Social Security spending from its current 12% down to 6% in 2022 and down to 3.5% by 2050. As the other government spending is expected to remain relatively stable, the only conclusion one can make is that the cuts in spending will come in large part from the money you put into Social Security.

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