Middle class: prepare to be alienated

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Paul Ryan a Bold VP Choice but Romney/Ryan Plan Will Hammer the Middle Class
By Henry Blodget, August 13, 2012

Republican candidate Mitt Romney made a bold choice in picking Rep. Paul Ryan (R-WI) to be his VP candidate.

According to the New York Times, based on his Congressional voting record, Ryan is one of the most extreme VP candidates in the past century, on either side of the aisle. The standard political strategy is for the VP candidate to be closer to the center, but the Romney campaign is betting that energizing the right-wing "base" of the party will help the ticket win in November.

Bold choices are also risky choices, however, and Romney-Ryan's views on how the country should deal with its budget deficit may alienate many Americans, especially those in the middle class.

Before diving into the details, it's important to note that Paul Ryan deserves credit for publishing a specific deficit reduction proposal. Unlike other Congress-folk, who eagerly condemn America's budget mess but offer no specific solutions for it, Ryan was brave enough to actually publish a plan.

Ryan's basic premise in his budget proposal is right: The country's current fiscal path is unsustainable and if we do nothing, we're screwed. You can disagree with Ryan's future assumptions and how he proposes to solve the problem (many Americans will very much disagree), but at least he's acknowledging the problem and offering a solution. The Democrats, meanwhile, and even Mitt Romney, just keep making vague references to the need for deficit reduction.

It's time both sides acknowledge the fiscal crisis, publish their respective proposals and start making hard choices. Ryan deserves credit for sticking his neck out.

So what will the Romney-Ryan plan mean for average Americans?

The pair have not released a unified economic proposal, but combining the details of their prospective plans gives us a general picture.

The Romney-Ryan economic plan will likely:

• Cut income and corporate taxes
• Eliminate at least some tax deductions (neither candidate has mentioned specific ones)
• Preserve defense spending
• Cut Medicare spending
• Trim other government spending
• Gradually shrink the budget deficit but not balance the budget for a least a decade

At a more detailed level, the Romney-Ryan plan will likely lead to the highest-income Americans paying less in taxes, while making lower- and middle-income Americans pay more (through elimination of tax deductions that disproportionately help these Americans). Earlier this year, the Tax Policy Center found that Romney's tax plan would reduce effective tax rates for the the richest Americans and raise them for the poorest.

The Romney-Ryan plan will also likely cut Medicare benefits, which disproportionately help lower- and middle-class Americans. According to a Congressional Budget Office analysis of Ryan's proposal, the Medicare reform could lead to higher out-of-pocket healthcare costs for seniors, reduced access to care, reduced quality of care, increased efficiency and less investment in higher-cost procedures.

There is no question that the country's current budget deficit and spending trajectory is unsustainable, and Romney and Ryan deserve credit for acknowledging this and putting forth specific proposals to deal with it. The Democrats should now do the same thing. And then an open debate can begin about which hard choices the country wants to make.

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