John Taylor asserts that President Obama's budget plan is continuing the spending bridge of the last several years while the Ryan budget removes that binge. Of course, this simple chart does not take into account that GDP has not returned to a full-employment level which is was when the share of government spending was below 20%. Mr. Taylor also does not acknowledge that the Ryan budget achieves this lofty goal bu shifting the burden to consumers, especially the poor and middle class. However, it is a solution.
let's do a thought experiment. Suppose you are at the top of the grand Canyon and want to get to the bottom. You have two choices; you can drive or you can jump of the cliff. The following chart shows the time it takes to reach the bottom.
As we can see, it takes significantly less time to reach the bottom by jumping rather than driving. If we apply Taylor's logic, jumping is the preferred strategy. Of course, there is a downside.
Let's consider the Ryan budget. Shifting the costs of Medicare and Medicaid to the poor and future retirees will help reduce the budget, but there is a downside. A major downside. Simplistic arguments such as we are hearing on the right generally do not address them or assume unrealistic conditions such as those health insurance companies will magically decide to compete on price, driving down costs and prices. It has not happened yet. Nor should we expect this miracle to occur anytime soon. Therefore, the cost of health insurance will rise (as the Congressional Budget Office has concluded) and future seniors and the poor will be hard hit.
