Response to False Democratic Accusations of Lies by Paul Ryan

I was recently asked by a political activist to respond to a Democratic set of talking points that criticized Rep. Paul Ryan of Wisconsin in his remarks at the time of his recommendation by former Massachusetts Mitt Romney to be his running mate.  Romney and Ryan are the Republican nominees for President and Vice President of the United States.  The Democrats in their talking points falsely accuse Ryan of a number of lies.  I decided to post my response to this blog.

The first false Democratic claim in their talking points is that Ryan blamed President Barack Obama for the downgrading of the U.S. credit rating.  The Democrats blame the downgrade on a Republican “threat” not to increase the debt limit (the borrowing authority of the federal government).  The Republicans insisted on spending cuts in exchange for increasing the debt limit, which was already over $14 trillion. The Republicans offered to raise it if Obama and the Congressional Democrats agreed to spending cuts without raising taxes.  Obama and the Democrats insisted on raising taxes, which, by the Democrats’ reasoning, was a threat not to raise the debt limit.  The resulting political impasse is what led to fears hyped by the media that the government would not be able to meet its financial obligations temporarily, even though it still could have kept pace because of incoming revenue. 

The fact that the debt limit was as high as it was and yet had to be raised even higher was a major factor of the credit downgrade.  Although the U.S. would not default on its debt because the Federal Reserve could print more money, the resultant inflation because of the devaluation of the dollar would make such an option economically and politically undesirable.  Therefore, doubts arise about the fiscal solvency of the U.S. to service its debt and meet its financial obligations.

The Democrats contend that Ryan was misleading because he pointed out that the General Motors plant in his hometown of Janesville, Wisconsin closed after Obama was elected.  The plant was, in fact, idled after Obama was elected, but before he took office.  Note the plant was idled, not closed.  Regardless of whether it was idled because of a lack of confidence in the incoming President, it could have been reopened had the economy recovered sufficiently under Obama.  Therefore, it is true that the plant is not currently open at least in part because of Obama’s policies. 

Obama and the Democrats’ claim to have prevented more plant closures because he “saved” GM and Chrysler is specious, as a structured bankruptcy would not have meant that the automobile companies would have gone out business and that all of their plants would necessarily have closed.  It would have meant debt consolidation in order not to have lost everything to creditors while the creditors would not have lose everything.  Obama’s takeover of the automakers meant that the bondholders – in an extraordinary intervention of the government and in violation of the legal protection of contracts – lost everything, thereby undermining investor confidence in holding corporate bonds, while his supporters in the United Auto Workers were protected from losing benefits.  Also, Obama’s closures of thousands of GM and Chrysler dealerships caused the loss of over 100,000 jobs.

The Democrats claim that Ryan is wrong to say that Obama claims to have created jobs.  Obama implies that his policies created jobs: the jobs created are thus, according to him, either fully or partially the result of his interventionist government policies, instead of because of the private decisions made in a free market.  Presidents Ronald Reagan and George W. Bush, by contrast, did not claim that the government directly created jobs, but that their tax cuts and other fiscally responsible policies unshackled the market and sparked economic recovery and prosperity, which, in turn, allowed the private sector indirectly to create jobs.  The only jobs the government creates are government jobs.  The rest are created by the private sector.  Regardless, I note the figure Obama cites of 4.5 million jobs created during his administration fails to keep pace with population growth, meaning that the size of the labor force, even counting the increased number of people working only part-time as employed, is not increasing, while millions have given up looking for work, not including those who left the workforce for non-economic reasons.  Obama’s figure is thus evidence of the weakest jobs recovery since the Great Depression.

I pause here to note something about these first three Democratic accusations: they reflect the liberal view that everything economic is the result of government policies, which is why they make too much of who was president at what exact point.  They are right that both the Legislative and Executive Branches share in the responsibility for government policies and the consequences those policies have on the economy, something they neglected to acknowledge during the last two years of the Bush Administration when candidate Obama, who was then a Senator in the majority Democratic Congress, blamed President Bush and his Republican Party for everything bad in the economy the last two years of the Administration while ignoring the prosperity of the several years before Obama’s Democratic party won control of the Legislative Branch. 

Finally, the Democrats claim in their talking points that the $716 billion in Medicare cuts that are part of Obama’s federalization of health insurance are not “cuts” to Medicare for patients, but decreases in reimbursements to healthcare providers.  It is true that the $716 billion would be from reductions in Medicare reimbursements, but it is also true that these are cuts to Medicare.  Without adequate reimbursement, doctors would be even less likely to see patients on Medicare, meaning that these patients would be less able to receive healthcare.  Medicare is a welfare entitlement program that operates essentially as a subsidy for healthcare providers to treat patients enrolled in it.  Therefore, a cut in the subsidy to healthcare providers to treat Medicare patients is necessarily a “cut” to Medicare.