Wednesday, April 6, 2011

Ryan Budget Proposal

Paul Ryan...Congressman from Wisconsin, released the de facto GOP budget blueprint yesterday.  You can read about it HERE.  This budget isn't as much about fiscal policy as it is about ideology.  For example, it clearly makes the case that the well off should be taxed less (dropping the highest personal and corporate tax rates).  It also basically begins a massive shift on health care costs.

The biggest flaws in the ideology here, in my opinion, are two fold:

Health Care...somehow consumers can keep medical inflation in check through the magical power "of the free market"; that's a sad, laughable joke.  Having a heart attack?  Gonna "shop" for the best quality @ lowest cost doctor?  Gonna haggle on the price of that insulin at your local CVS?  Simply put, the free market doesn't work when a consumer is captive, which is why "free market" reforms for health care don't work.  Health care costs go up at double digit rates annually simply because service and product providers want profits that go up at double digit rates annually.  Insulin, for example, isn't a commodity that lends it self to being "shopped" for; if you are diabetic, you buy insulin regardless of the price.

In addition, the Ryan plan will only increase government funding for the Medicare replacement at a rate indexed to GDP; note that health care costs have typically increased at a 10%+ rate over the past 20 or so years.  GDP may, in a very good year, increase by 3%.   So who will be paying for that cost gap?  Hint:  You and me, unless of course the "free market fairy" comes along and magically makes it better.

Tax Rates...I agree that tax rates should, in general, be lower and the tax code should be vastly simplified.  It's a crime that most American's can't even complete their own tax forms.  However, simply lowering the top and corporate tax rates...without vastly reducing tax evasion loopholes...does nothing other than give those that have even more.  Make no mistake about it:  Congress is no more interested in having corporations pay their fare share than Courtney Love is interested in personal hygiene.

Now there is this Limbaugh-esque inspired fantasy out there that somehow the United States has the enormously high corporate tax rate, which on the surface is true; however if you turn over the rock you'll see that effectively there are so many tax dodges in this country that it's probably impossible to even determine the effective, actual corporate tax rate.  There is a great article on this topic HERE.


Bottom Line:  I'm all for things like personal responsibility, but at some point you have to wonder why those that have so much need even more.  This applies to corporations, wealthy individuals and those in the health care service delivery chain.

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