Talking late this afternoon with THE WEEKLY STANDARD, Republican congressman Paul Ryan of Wisconsin blasted New York Times columnist Paul Krugman for his "intellectualy lazy" attack on Ryan's fiscal "Roadmap." In his Friday column, Krugman called Ryan a "charlatan" and his plan to reform the welfare state and eliminate the debt a "fraud" that is "drenched in flimflam sauce." Ryan responded to Krugman in the Milwaukee Journal Sentinel over the weekend, and elaborated on his criticisms of Krugman this afternooon.
“I realize he's a columnist and not a journalist, yet he could have easily tried to have verified his claims with a phone call or an email,” Ryan said of Krugman. “Instead he went with his confusion and chose to impugn motives,” said Ryan, “which strikes me as a very intellectually lazy exercise or style.”
Krugman attacked Ryan for not having the Congressional Budget Office officially score how much revenue his Roadmap would generate. An analysis by the Tax Policy Center, a left-leaning Brookings/Urban Institute project, showed that Ryan's tax reforms would not generate enough revenue to eliminate the deficit. But Ryan points out that it is not the CBO's role to score revenue--it's the job of the Joint Committee on Taxation.
Krugman wrote on his blog on Saturday that "Ryan could have gotten JCT to do a 10-year estimate; it just wouldn’t go beyond that. And he chose not to get that 10-year estimate." Ryan says that's not true. “We asked Joint Tax to do it," Ryan told me. "They said they couldn’t. They don’t do them long-term outside the 10 year window. They couldn’t do it in the first 10 years because of just how busy they were.” Ryan says Krugman could have cleared this confusion up with a simple phone call. "Megan McArdle figured it out on her own," Ryan said, referring to a blog post by The Atlantic's business and economics editor.
When the tax committee declined his request, Ryan took his proposal to experts at the Treasury Department who said his plan would hit its revenue target. Ryan said that the Treasury Department's numbers may, in fact, be more accurate than the Tax Policy Center's analysis. "Nobody knows the answer to this, by the way, if TPC is right or if the data we got from Treasury was right," said Ryan, who thinks Treasury's numbers are "closer" to reality. "The point is this: we made a full effort to hit revenue targets. They may hit the revenue targets and TPC may be wrong."
Ryan said that if the Treasury Department's analysis lowballed the revenue needed, there are "plenty of different ways" you "can tweak the rates and the numbers" so the numbers add up.
Ryan also responded to Krugman's claim that his Roadmap "would raise taxes for 95 percent of the population." The Tax Policy Center claims that compared to current law (with all Bush tax cuts expiring), Ryan's plan would reduce taxes for most Americans. But compared to current policy (extending the Bush tax cuts for most workers and patching the Alternative Minimum Tax every year), the Tax Policy Center says Americans earning between $20,000 and $200,000 per year would see their federal taxes increase 0.9 percent to 1.7 percent.
Ryan disputes the claim that his plan would raise taxes. The Roadmap would allow Americans to choose between filing income taxes under current tax laws or switching to a system that:
Simplifies tax rates to 10 percent on income up to $100,000 for joint filers, and $50,000 for single filers; and 25 percent on taxable income above these amounts. Also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four).
His plan would also eliminate the 35 percent corporate tax and replace it with an 8.5 percent business consumption tax. So the question is whether Americans would be better off with an 8.5 percent business consumption tax than they would be with a 35 percent corporate tax.
“There’s a lot of data that shows the burden of corporate taxation is born on the worker and the consumer, in the form of taxes being passed on through prices or being taken out of wages. So the point is this system is not designed to raise taxes on anybody," Ryan said. “I think it will result in more jobs in America, more U.S.-based corporations, and better wages.”
Ryan also responded to Krugman's criticism that his domestic discretionary spending freeze is impractical and doesn't spell out exactly which programs would be cut. “Domestic discretionary spending went up 84 percent last year," said Ryan. "There has been such a gusher of domestic discretionary spending that I think we can live with a freeze for a long time to come." The point of a spending freeze, said Ryan, is to put "strong enforceable controls in place and then make the experts, whether it be the appropriators or the agencies, come up with a way to live within their means."
Ryan also responded point-by-point to Krugman's criticism of the Roadmap's Medicare reform. As for Krugman's claim that under Ryan's Medicare reform only the wealthy could "get the care they need; everyone else would be out in the cold," Ryan said:
That’s the argument we should be using against the current Medicare fee for service cuts that they’re using to pay for this other entitlement [Obamacare]. What’s going to happen under the current plan is doctors and hospitals are going to start rationing care, cutting back on services, denying patients, and only the wealthy will be able to afford additional care. That’s the path we’re on right now. What risk- adjusted, means-tested assistance does is it targets government’s assistance to those who need it most: the poor and the sick. And the well-off have to pay more out of pocket.
Krugman also claimed that Ryan's plan would lead to higher health care costs: "we already know, from experience with the Medicare Advantage program, that a voucher system would have higher, not lower, costs than our current system."
Ryan replied that "Medicare Advantage did not attack the root cause of health inflation," saying a free-market reform would have to be applied to the entire health care sector to bring down costs. "I’m one of those people who believes that the free-market system will work in the health care sector as it has in every other sector of the economy,” he said. “We have great evidence of" the free-market doing so "where it’s been applied." Ryan said that anti-free market advocates of a single-payer system simply "don’t believe in the merits of the free market," and believe health care "is a government right that must be run, redistributed, rationed and controlled by government."
While Ryan focused on the nitty-gritty policy aspects of his Roadmap this afternoon, he suggested that the underlying argument is about principles, not facts. “At the core of this is a big ideological fight between those who believe in the Founding principles and the sense of limited government—the American idea—and those who believe in the progressivist welfare state,” Ryan said.
“The Roadmap is designed to maintain a limited government in the 21st century, and it is the antithesis of the progressivist vision which [Krugman] subscribes to. That’s fine. I understand it violates his vision for a progressivist society,” Ryan continued. "What I think is rather bizarre is his strange personal attack and ad hominem attacks based upon his confusion surrounding the scoring process, which could have been easily clarified with a simple phone call or email."
"I'm not going to descend into the mudpit with Krugman on this stuff," Ryan said. "I want to stay on policy and ideas."