In Case You Were Wondering what the Difference is

between the Republicans and the Democrats, there was an excellent column in the Washington Post today by Matt Miller.

He met with Paul Ryan and had a discussion about what percentage of GDP the Federal Government should be spending and by implication what percentage of GDP should be raised in revenues.

For reference purposes, please remember that Ronald Reagan ran the government at 22% of GDP and over time it descended to 20% of GDP until the recession of 2008 hit.  Now that 20% includes the borrowed War on Terror for which I have repeatedly made the point that wars should be paid for with revenues dedicated to that purpose.

Since the recession hit, fiscal stimulus pushed the spending to 24% of GDP while revenues declined to 15% of GDP.

Ryan wants to reduce the Government spending to 20% of GDP and raise revenues to 19% of GDP.  He thinks economic growth will get us to 19% but many others doubt that.  However, he is ignoring that the baby boom is retiring and by definition government spending as a % of GDP is going to rise.  Ryan's basic blue print is to pay for Social Security (I thought that was already paid for), Medicare and defense.  Everything else will go to ZERO (I am not sure where the Congress, the Courts, the Treasury, FBI etc fit in).  I guess we will have no more census's.

In any case, even Ryan does not want to balance the budget, which is something I do want to do when economic activity normalizes.  And he wants to pay for the War on Terror by cutting the social safety net.  I do not consider this a Conservative Program.

So assuming that fiscal stimulus and the War on Terror run off in the normal course of events, government spending should stabilize around 22% of GDP.  If Ryan wants revenue equal to 19% of GDP and Reagan managed to have reasonable tax rates for 22% of GDP, then the Democrats are where Ronald Reagan was 30 years ago and are the true bearers of his mantle today.  The Republicans are somewhere in Elizabethan Times and trying to make the government non-functional with a far reduced safety net so they are a modern version of Scrooge.