But that's OK. The Ryan plan is exactly the kind of bad idea that our national immune system ought to be able to handle. Liberals should savage its underlying values (Rand is always a hard sell); centrists and independents should spend their time pointing out the endless ways that the numbers don't add up and the evidence contradicts the basic arguments; respectable conservatives should damn it with faint praise or simply avoid the topic. The Republicans would then come back with a new budget, hopefully a proposal based on valid numbers and defensible assumptions, but at the very least one that obscures its flaws and makes a cosmetic effort at advancing its stated goals.
For Ryan's proposals to maintain their standing as serious and viable, the system has to have broken down in an extraordinary way. Specifically, the centrists such as James Stewart have had to go to amazing lengths to make the budget look reasonable, up to and including claiming that Ryan intends to take steps that Ryan explicitly rules out (from James Kwak):
Stewart is at least smart enough to realize that a 25 percent rate is only a tax increase if you eliminate preferences for investment income (capital gains and dividends, currently taxed at a maximum rate of 15 percent):These distortions aren't just journalistic laziness or rhetorically overkill on Stewart's part; it's essential to a narrative that writers like Stewart have built their careers on.
“Despite Mr. Ryan’s reluctance to specify which tax preferences might have to be curtailed or eliminated, there’s no mystery as to what they would have to be. Looking only at the returns of the top 400 taxpayers, the biggest loophole they exploit by far is the preferential tax rate on capital gains, carried interest and dividend income.”
So give Stewart credit for knowing the basics of tax policy. But he is basically assuming that Ryan must be proposing to eliminate those preferences: “there’s no mystery as to what they would have to be.”
Only they aren’t. Stewart quotes directly from the FY 2012 budget resolution authored by Ryan’s Budget Committee. But apparently he didn’t notice this passage:
“Raising taxes on capital is another idea that purports to affect the wealthy but actually hurts all participants in the economy. Mainstream economics, not to mention common sense, teaches that raising taxes on any activity generally results in less of it. Economics and common sense also teach that the size of a nation’s capital stock – the pool of saved money available for investment and job creation – has an effect on employment, productivity, and wages. Tax reform should promote savings and investment because more savings and more investment mean a larger stock of capital available for job creation.”
In other words, taxes on capital gains should not be increased, but if anything should be lowered.
Here's Paul Krugman:
But the “centrists” who weigh in on policy debates are playing a different game. Their self-image, and to a large extent their professional selling point, depends on posing as high-minded types standing between the partisan extremes, bringing together reasonable people from both parties — even if these reasonable people don’t actually exist. And this leaves them unable either to admit how moderate Mr. Obama is or to acknowledge the more or less universal extremism of his opponents on the right.The point about self-image and professional selling points is remarkably astute and when you combine those with the decline in fact-checking, diminishing penalties for errors, and a growing trend toward group-think, you get a journalistic system that loses much of its ability to evaluate policy ideas.
And for a democracy that's a hell of a loss.