A Fiscal Conservative Destroys the Ryan Plan and Obama's Plan

link here to article

David Stockman was in charge of Reagan's budget team. He is a true fiscal conservative and not one like the current crop in the GOP who are using budget deficits for political purposes. He wrote a book on the Reagan administration that was critical of its fiscal policy because it did not pay for tax cuts with spending cuts. Reagan started the GOP trend of paying for tax cuts by borrowing. In this article he points out the flaws in both the Ryan plan and the Obama plan for achieving fiscal responsibility. Neither plan will bring long term spending in line with tax revenues. Ryan refuses to consider raising taxes, and in fact , he wants to reduce taxes as a percent of GDP even further. His plan does nothing to reduce healthcare inflation and his focus on cutting discretionary spending is not workable. He is critical of the Obama plan because he only wants to increase taxes for the wealthy and that won't increase revenues enough to bring he budget in balance. Obama's longer term plan on healthcare is better than the Ryan plan but it is light on cost reduction.

Stockman points out the problems that we face longer term by depending on the central banks of the world to fund our debt. Over $4 trillion of our debt is held by central banks, and that represents about half of our debt. Private investors have only needed to fund half of our debt. He does not believe that this is sustainable. The central banks cannot continue with this policy forever and then we have to deal with private investors who might demand higher yields.

Stockman has some suggestions on what needs to be done but his most important contribution has been to show us that neither party has a plan to fix our long term fiscal problems.