The New York Times's David Brooks takes on Paul Ryan:
Substantively, it does not address the structural problems plaguing the American economy: wage stagnation, inequality, declining growth rates.
Mr. Brooks doesn't think cutting the corporate and individual top federal tax rates to 25% and getting the federal budget under some control would help growth rates?
Ryan would cut Pell grants back to their 2008 levels. This is not the horrendous monstrosity some liberals are screaming about. But the economic challenge from China and India demands that we spend more on Pell grants, scientific research, early childhood education and other investments in human capital than Ryan proposes.
Mr. Brooks assumes that Pell grants actually increase access to education, rather than considering the possibility that the grants are consumed by educational institutions that raise tuition by the amount of the grant and use the proceeds to pay higher salaries to football coaches and college presidents, like Columbia University's $1,753,984-year Lee Bollinger and Ohio State University's $1.8 million-a-year Gordon Gee. Or to build ever-fancier cafeterias, student centers, and luxurious student housing.
we can't let the oldsters get off scot-free. As my colleague David Leonhardt reported in The Times, two 56-years-olds with average earnings will pay about $140,000 in dedicated Medicare taxes over their lifetimes. They will receive about $430,000 in benefits. This is an immoral imposition on future generations. The Ryan budget wouldn't touch this generation.
That Leonhardt report is based on an Urban Institute study that assumes a 2% real rate of return on the taxes paid and that doesn't include examples of very-high-income taxpayers. A lot of public pension funds are being criticized for assuming an 8% rate of return, but it seems to me that a 2% real rate of return is pretty stingy for this sort of assumption. Even if one does assume that today's taxpayers are going to have to subsidize Medicare a bit with their non-Medicare tax dollars, it's hard to assess by what moral system that rises to the level of "immoral." Is it immoral to help pay for your sick parent or grandparent's health care? I guess the problem is that what's going on now is that the children and grandchildren aren't paying for their sick parent or grandparent's health care, they are borrowing from the Chinese to do it in quantities that are so vast that the borrowers' own children and grandchildren are going to be stuck paying it back. Or that will trigger some kind of harmful default or inflation.
Remember, too, that the Medicare spending is a little like the Pell Grants. Students may benefit some from the Pell Grants, but the money also flows in the end to college presidents and professors. In Medicare, the patients benefit, but a lot of the money ends up in the pockets of the doctors, the hospital executives, and the pharmaceutical companies.