Ryan: EU contagion will spread to the US

posted at 10:55 am on May 10, 2010 by Ed Morrissey

Could the instability in the EU with the failure of Greece spread to the US?  Rep. Paul Ryan believes it to be inevitable if we stay on our current path.  The credibility of sovereign debt has diminished considerably over the last two years of financial crises, and without a rational path to retire our debt and curtail our spending, we will be on the way to becoming Europe. Challenged again on Robert Reich’s statement that taxes will have to get raised, Ryan objects, saying that the problem in the US is not a revenue crisis but out-of-control spending. The Right Scoop has the video:

The econ blog E21 concurs, amplifying Ryan’s warning on the devastating effects tax hikes would have on the already-bruised economy. They also confirm Ryan’s diagnosis on spending:

Here, let’s simply discuss the ostensibly equitable posture that tax increases and spending restraint should occupy similar places on the negotiating table. At first glance, this would seem to establish a reasonable symmetry between negotiating positions.

But that picture would be very wrong. The merest glance at the numbers reveals a very different reality. First, let’s look at the long-term budget picture under current law as seen by the Congressional Budget Office (CBO).

A quick glance at this graph reveals that the long-term problem is not one of inadequate revenues. If we don’t change the law so as to reduce tax growth, Americans will be taxed as they have never been taxed before.

Here’s the chart, which does indeed make the problem rather obvious:

Even without the debt service payments, we’re escalating spending in relation to GDP.  We’ll also be pulling an ever-increasing percentage of GDP out of the economy and into the hands of Washington even without tax hikes, thanks primarily to a still-unreformed AMT that will start biting the middle class in the next few years.  We don’t need more taxes on top of that; we need a lower cost of governing.  And if we don’t get it from the so-called “deficit commission,” we’ll need to get it from a much different Congress than we have at the moment.


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But I want my free stuff!!!

Daggett on May 10, 2010 at 10:57 AM

Someone want to tell me how they expect us to believe spending will go DOWN between now and 2015 before it rises again?

Kelligan on May 10, 2010 at 10:59 AM

USA! USA!

Rae on May 10, 2010 at 11:04 AM

Pay attention to the oracle that is Paul Ryan….or else.

Roadmap

Fletch54 on May 10, 2010 at 11:06 AM

The annual deficit will be slightly reduced (compared to 2009) year by year through 2012 so that Obama can claim he “reduced” the deficit in his usual disingenuous way.

He will forget to tell you that these will be the four most outrageously overspent years in American history.

God save Paul Ryan. A voice crying in the Washington wilderness.

Edouard on May 10, 2010 at 11:06 AM

My money is that our federal and state governments will just dawdle around and we will be voyaging on tempestuous seas in the next decade.

WashJeff on May 10, 2010 at 11:06 AM

A lone voice of reason in a forest of insanity.

trs on May 10, 2010 at 11:06 AM

Someone want to tell me how they expect us to believe spending will go DOWN between now and 2015 before it rises again?

Kelligan on May 10, 2010 at 10:59 AM

If Obama is still in office, he guts the military. Big one-time cut.

jwolf on May 10, 2010 at 11:07 AM

Very impressive interview; Ryan is articulate, smart and engaged.

chaswv on May 10, 2010 at 11:08 AM

The problem is the Democrat Party.

They get elected by promising more free stuff.

Higher taxes aren’t going to solve that. They’ll just use the excess (if one even occurs) to promise more free stuff and to run more deficits.

Republicans can’t become tax collectors for the welfare state.

Promise to abolish the Department of Commerce and the Department of Labor and then do it. Save billions and show how neither of them contributed anything of value to the country.

Then continue. Ax the Department of Education, the Department of Energy next.

Drill offshore, drill Alaska, drill, drill, drill.

NoDonkey on May 10, 2010 at 11:08 AM

Ryan gets it

jp on May 10, 2010 at 11:09 AM

If Obama is still in office, he guts the military. Big one-time cut.

Agree – the only agency that the feds should be overseeing and that’s effective.

But the Department of Labor? Energy? Commerce?

Untouchable. Democrats pull this crap every time at the state level too.

Don’t cut the worthless middle administrators, threaten to cut police and fire services.

NoDonkey on May 10, 2010 at 11:11 AM

This guy should be the future of Republican party.

ulyses on May 10, 2010 at 11:11 AM

I like Ryan’s arguments…the problem is all this “free stuff” that the government gives out. Too many people have become accustomed to receiving all these services for nothing, and weaning the public off this is going to be challenging…especially since that is how the Democrats curry votes.

search4truth on May 10, 2010 at 11:12 AM

I like Ryan’s arguments…the problem is all this “free stuff” that the government gives out. Too many people have become accustomed to receiving all these services for nothing, and weaning the public off this is going to be challenging…especially since that is how the Democrats curry votes.

search4truth on May 10, 2010 at 11:12 AM

aka Greece.

Fletch54 on May 10, 2010 at 11:13 AM

The Bush tax cuts expire next year. The Obamacare taxes kick in, so Obama can claim he is “reducing” the deficit.

Wethal on May 10, 2010 at 11:13 AM

Ryan/Christie 2012.

Jim-Rose on May 10, 2010 at 11:13 AM

Someone want to tell me how they expect us to believe spending will go DOWN between now and 2015 before it rises again?

Kelligan on May 10, 2010 at 10:59 AM

If Obama is still in office, he guts the military. Big one-time cut.

jwolf on May 10, 2010 at 11:07 AM

Maybe it’s just the end of the ‘stimulus’ spending.
I’m more wondering how they expect tax revenues to jump like that. Do they really think that revenues will go up when the tax rate cuts expire at the end of this year?

Count to 10 on May 10, 2010 at 11:14 AM

The problem is the Democrat Party.

They get elected by promising more free stuff.

NoDonkey on May 10, 2010 at 11:08 AM

I know a young couple who decided now would be a good time to start a family. Both of them are unemployed and pretty much have no prospects for any decent jobs in the near furture, but they decided that she should get pregnant. They reasoned that most of their expenses would be picked up by the state, and they are right. Heck all of her and the babies medical expenses will be covered with no pesky co-pays. They even eat better now because she gets WIC benefits and food stamps. Plus they get extra help with their rent due to section 8 housing program now that she is pregnant. All of this on my tax dime. Free stuff indeed.

Johnnyreb on May 10, 2010 at 11:16 AM

Someone tell me why I should listen to a guy about conservative fiscal spending from a guy who voted for TARP, auto-bailouts, and AIG taxed bonuses.

Notorious GOP on May 10, 2010 at 11:16 AM

Ax the Department of Education, the Department of Energy next.

Drill offshore, drill Alaska, drill, drill, drill.

NoDonkey on May 10, 2010 at 11:08 AM

I’d agree with busting the Department of Education down to a national educational standards board, but the problem is that the US hasn’t had an energy policy in the past few decades, not the existence of a Department of Energy.

Count to 10 on May 10, 2010 at 11:17 AM

Paul Ryan is THE man.

Oink on May 10, 2010 at 11:18 AM

I don’t know why he’s talking about the “future”.

California is in the same shape as Greece right now. New York, a bunch of other “blue” states, are in big trouble right now.

And if the 0bama regime bails them out, as he’s certain to do, that’ll put the entire republic in crisis, one that he will take advantage of to completely transform America into a socialist/fascist state.

That has been his plan all along, and it’s not some future possibility – it’s happening right now.

Rebar on May 10, 2010 at 11:20 AM

If the entitlement cuts were made that should be made, and the corruption and theft investigated and prosecuted as it should be, our inner city riots would make Greece look like a Sunday afternoon picnic.

kam582 on May 10, 2010 at 11:21 AM

“It’s my money and I want it NOW !!!”

… modern American.

BowHuntingTexas on May 10, 2010 at 11:23 AM

So after watching the threat of contagion in the EU send the world rushing to US Treasuries…he’s going to sound alarm bells about contagion in the US? I like Ryan, he’s got great fiscal plans…but extrapolating his deficit reduction shtick onto macroeconomic developments isn’t as simple as he’s making it out to be.

ernesto on May 10, 2010 at 11:26 AM

Pay attention to the oracle that is Paul Ryan….or else.

Roadmap

Fletch54 on May 10, 2010 at 11:06 AM

But the Ryan plan would take seven long decades to restore American indebtedness to pre-financial crisis levels.

Rae on May 10, 2010 at 11:26 AM

Look at the interest payments. What kind of an idiot chooses to waste billions on interest where you get nothing for your money.

This alone should make the taxpayers go wild, but with Obama, the number of taxpayers is less than 50%.

This is complete madness.

saiga on May 10, 2010 at 11:27 AM

ernesto on May 10, 2010 at 11:26 AM

Says the resident commie. Shouldn’t you be in Greece right now putting up those hammer and sickle banners? You’re slacking off.

Fletch54 on May 10, 2010 at 11:29 AM

Fletch54 on May 10, 2010 at 11:29 AM

Resident commie? Please. Anyway, given past contagion events, specifically the giant Asian financial crisis…what parallels would you draw? Please, show examples…there should be plenty.

ernesto on May 10, 2010 at 11:31 AM

Look, we all know that spending in D.C. never goes down. Countries never pay down there debt, ever, they just roll them over as they come due with more debt or they default. Soon(may have already started) the FED will have to start buying treasuries as there is not enough foreign and domestic money to buy our rolling mega debt. The EU just announced that they are going to start buying there own debt. Face it this experiment in fiat money is over. We are dead countries walking and it is just a matter of time before the house of cards comes crashing down. Last weeks market crash was just a small preview of the near future.

RobD on May 10, 2010 at 11:36 AM

What kind of America do we want to be? It depends on who “we” are. Obama is working at breakneck speed to turn “we” into welfare addicts. Unions, government employees, illegals, and the other victim classes.

Where is the outrage?

saiga on May 10, 2010 at 11:38 AM

The only “rich” liberals are lottery winners of one degree or another. Movie stars, rappers, athletes, and really lucky business people.

I don’t know a single “rich” liberal that has had to bust their ass and take big personal financial risks to get their money. Inheritance is also a big one. Somehow, having to sweat out major life ruining obsticals makes consevatives and easy money makes liberals.

saiga on May 10, 2010 at 11:45 AM

Ryan gets it

jp on May 10, 2010 at 11:09 AM

Indeed… which is why he must be DESTROYED!!!!!!

Seriously, common sense and responsible policy the likes of which he advocates for is doomed with this Congress. We need to get more like minded people like him elected this year and beyond before we can even dare to dream of enacting such policy.

Yakko77 on May 10, 2010 at 11:54 AM

Keep proclaiming it Paul,noone else is.

ohiobabe on May 10, 2010 at 11:54 AM

So why did he support TARP and the auto bailout? While he is talking a good game now, can we trust him to stay the course and not fold to pressure? I want to believe in Ryan but I’m afraid to let my guard down with some of these Republicans…….

Redneck Woman on May 10, 2010 at 11:54 AM

Pay attention to the oracle that is Paul Ryan….or else.

Roadmap

Fletch54 on May 10, 2010 at 11:06 AM

But the Ryan plan would take seven long decades to restore American indebtedness to pre-financial crisis levels.

Rae on May 10, 2010 at 11:26 AM

Bad fiscal policy has been going on for decades so I wager it’ll take decades to fix. You got to start somewhere.

Yakko77 on May 10, 2010 at 11:55 AM

Ain’t Obamanomics wonderful?

GarandFan on May 10, 2010 at 12:00 PM

The Bush tax cuts expire next year in 8-1/2 months.

Wethal on May 10, 2010 at 11:13 AM

.
It’s a-coming.

mrt721 on May 10, 2010 at 12:02 PM

Sure glad they passed Obamacare to add a few more trillions in unsustainable costs to this gigantic fiscal problem.

Magical Thinking, Dem style.

profitsbeard on May 10, 2010 at 12:08 PM

Does anyone really think that the ‘bail out’ money to Greece is going to fix anything? As Stuart Varney said this morning, all it does is buy a little time if the Greek gubmint won’t drastically cut spending and entitlements, which it won’t.

So Euro socialism will bring down Greece, then Spain, Portugal… And Obama will position us squarely in the middle of it so that we’ll go down too.

petefrt on May 10, 2010 at 12:11 PM

Contagion is the wrong word. Our problems are almost totally home grown. Some are trying to picture this as a problem for us because of what the EU, Greece and others have done wrong. This is not true. Our spending is responsible. Greece has not worked for over two millenia. The USA would be no worse off if Greece sank below the sea with its population. A big fraction of their economy is from US tourists. The only thing I can think of off hand that we buy from Greece is a little bit of olive oil.

burt on May 10, 2010 at 12:17 PM

Ryan/Petraeus 2012

Green Muse on May 10, 2010 at 12:20 PM

The only party Ryan should a presidential/vp nominee for is the Democratic Party. Quit acting like this guy is some sort of conservative hero.

Notorious GOP on May 10, 2010 at 12:24 PM

Someone tell me why I should listen to a guy about conservative fiscal spending from a guy who voted for TARP, auto-bailouts, and AIG taxed bonuses.

Notorious GOP on May 10, 2010 at 11:16 AM

Because he’s just about the only person kicking around ideas that might just work, and might have a chance of being implemented?

Because what he’s saying makes sense?

Because we’re in some pretty deep manure, and he’s at least coming up with positive suggestions?

notropis on May 10, 2010 at 12:28 PM

If Obama is still in office, he guts the military. Big one-time cut.

jwolf on May 10, 2010 at 11:07 AM

If that happens, problem solved. We won’t have a country to worry about.

hachiban on May 10, 2010 at 12:30 PM

Because he’s just about the only person kicking around ideas that might just work, and might have a chance of being implemented?

Because what he’s saying makes sense?

Because we’re in some pretty deep manure, and he’s at least coming up with positive suggestions?

notropis on May 10, 2010 at 12:28 PM

So apparently voting as a liberal on 3 important fiscal spending issues isn’t what he’ll be doing in the future? We should just forget about his votes?

Hopefully the voters of Wisconsin give him the same treatment they did Bennett.

Notorious GOP on May 10, 2010 at 12:31 PM

Johnnyreb on May 10, 2010 at 11:16 AM

Wonderful. So while me and my girlfriend have had to shelve any plans for life together whatsoever, people like those two get a free ride for everything from A to Z.

Dark-Star on May 10, 2010 at 12:35 PM

Hopefully the voters of Wisconsin give him the same treatment they did Bennett.

Notorious GOP on May 10, 2010 at 12:31 PM

Well, first of all, your question was why you should listen to him, not why you should elect him president or something.

And secondly, what in the world did the voters of Wisconsin do to Bennett?

notropis on May 10, 2010 at 12:39 PM

Someone tell me why I should listen to a guy about conservative fiscal spending from a guy who voted for TARP, auto-bailouts, and AIG taxed bonuses.

Notorious GOP on May 10, 2010 at 11:16 AM

I forgot about the AIG bonus tax. Thanks for the reminder. Yeah, Ryan’s voting record doesn’t really match his rhetoric. I hope he’s learned his lesson but I’m still not convinced this guy would come through in a pinch. He admitted he felt pressured on the AIG bonus tax so what will he feel prssured on next? He held his own on healthcare but he had the majority of the American people behind him–not exactly a difficult vote.

Redneck Woman on May 10, 2010 at 12:39 PM

They get elected by promising more free stuff.
NoDonkey on May 10, 2010 at 11:08 AM

Once non-taxpayers got the right to vote, democracy’s days were numbered.

The past eighty years of deficit spending isn’t a momentary lapse; it is a very advanced ADDICTION. And there is only one possible cure: going cold turkey.

For only the second time in America’s history, we’re experiencing a taxpayer rev0lution. Make no mistake: What happens next is going to be extraordinarily painful, and ugly, for everyone involved. There is no way around that.

When the smoke clears, the only question is: Who will be dead, the parasite or the host?

logis on May 10, 2010 at 12:44 PM

So apparently voting as a liberal on 3 important fiscal spending issues

Ryan explains this here

Ryan would be a serious contender to Obama.

Green Muse on May 10, 2010 at 12:45 PM

Brewer-Christie or Christie-Brewer, ticket with Ryan at Treasury seems a rational solution right about now.

Archimedes on May 10, 2010 at 12:59 PM

So apparently voting as a liberal on 3 important fiscal spending issues

Ryan explains this here

Ryan would be a serious contender to Obama.

Green Muse on May 10, 2010 at 12:45 PM

Looks like he was laboring under false assumptions about financial collapse with TARP, says he was given a catch 22 for the auto bailout, was thinking the bailout bonus tax would limit crony capitalism, and his district is liberal.

Count to 10 on May 10, 2010 at 1:15 PM

Our future has been on display for weeks now in the Greek Tragedy. Yet, the lapdog media and the WH refuse to make the connecttion. And they call themselves “elites”.

gitarfan on May 10, 2010 at 1:20 PM

Ryan / Palin 2012

epluribusunum on May 10, 2010 at 1:21 PM

Here’s Samuelson on the same point:

http://www.realclearpolitics.com/articles/2010/05/10/the_welfare_states_death_spiral_105503.html

r keller on May 10, 2010 at 1:48 PM

Nothing to see here America……just keep moving.

Kids soccer game at 6:00
Charity Benefit at 7:15
Brandi has her piano lessons at 7:30
How am I going to get to McDonalds with the kids in time to meet Ms. Warren at 7:45
Debt crisis in Greece? Huh, whatever…where was I? Oh yeah..
Mom coming over to pick up Shari 8:00
Showers at 8:30
Homework is due when for Sam’s Science project?

PappyD61 on May 10, 2010 at 1:53 PM

Soon(may have already started) the FED will have to start buying treasuries

Already happened. In Feb 09 the Fed monetized $1 trillion in debt. there was much concern about inflation when the economy recovered but it won’t happen because the economy will never recover.

lonesomecharlie on May 10, 2010 at 2:03 PM

there was much concern about inflation when the economy recovered but it won’t happen because the economy will never recover.

lonesomecharlie on May 10, 2010 at 2:03 PM

Always one to find a silver lining….

notropis on May 10, 2010 at 3:47 PM

Notorious GOP on May 10, 2010 at 11:16 AM

Really? But he scares The One half to death.

And anyway, in a country raised in female headed households with credit card balances exceeding the price of base new cars and third mortgages, nobody will listen to him with his present message.

Even if we have a debt burden for a century, at least the economic disaster of healthcare was averted by Obamacare and ALL those savings headed our way!

IlikedAUH2O on May 10, 2010 at 3:55 PM

Why isn’t he willing to run for President?

Oh, that’s right….he voted for TARP & the auto bailouts.

PappyD61 on May 10, 2010 at 10:36 PM