The Right Questions for Paul Ryan

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Rep. Paul Ryan, the Republican wonk who's as idolized by conservative think tanks as he is disparaged by liberals, was on CNBC this morning to plug his bold plan for America's budget.  Ryan outlined his plan, the hosts cooed, and Pat G. from Wonk Room summed up: "Not passing my tax raising, benefit cutting budget plans will result in tax increase and benefit cuts."

Pat's analysis is both fair and unfair. Ryan and I might disagree dramatically on the proper size of government and distribution of taxes, but I give him a lot of credit for introducing the most audacious re-imagining of American tax and spending policy in the last few years, by far. At a time when most Republicans can't move beyond tax cuts, Ryan actually finds an additional $1.6 trillion of government revenue every year by creating a 8.5% national consumption tax and eliminating $800 billion in tax expenditures (the money the government purposefully leaves untaxed, like mortgage interest). But he eventually slashes overall taxes by killing the corporate income and capital gains tax and moving the top one percent's effective tax rate down by 14 percentage points.

One of the CNBC hosts quotes a report from Citizens for Tax Justice that found Ryan's plan loses $2 trillion over a decade while raising taxes on 90 percent of taxpayers. Ryan laughs, and the host apologizes and throws his hands up in the air as if to say, "Hey I wouldn't invite those wackos over for chips and pinot, I'm just quoting their report in the interest of fairness!" (Well he might not be saying all that. But it's a communicative hand gesture!) Too bad. There are some really good questions to ask Ryan about his Roadmap, including:

1) You said you disagree with the CTJ methodology. But the Urban Institute also found that the Ryan Roadmap would raise effective tax rates on the middle 60% of the country. What do your numbers say?

2) According to the Tax Policy Center, the  richest 0.1 percent of Americans -- those whose incomes exceed $2.9 million a year -- would receive an average tax cut of $1.7 million a year under your plan. Does your analysis dispute that? Would it be wrong to describe this outcome as anything other than a windfall gain for the rich?

3) Under your plan, the richest 1 percent of Americans see their tax burden cut in half even as the nation struggles to balance spending obligations with tax revenues. How would you defend that outcome?

4) By eliminating the capital gains tax, would your plan make hedge fund managers' salaries almost entirely untaxable? Would you consider that an acceptable outcome?

5) By cutting capital gains taxes from 15 percent to zero, might you also introduce a rash of income reclassification across industries that could cost the federal government even more tax revenue?

6) You replace Medicare with a voucher program that grows slower than medical inflation. In other words, the belt size stays the same, but the belly it's trying to contain keeps growing. Would you call this rationing?