The Ryan Roadmap Versus the Road to Ruin

Congressman Paul Ryan’s Roadmap has suddenly become the focal point for debating how America should get its economic house in order. Fred Barnes of the Weekly Standard says to embrace it. Paul Krugman of the New York Times says to reject it. And all the pundits are predicting what the plan would do, including Krugman who says it “calls for steep cuts in both spending and taxes.” So how are you going to decide? I suggest that you read the plan.

It’s only 87 pages long–about the same length as a good book on the economic crisis–and there are some great charts.

I put together some charts to get started. In these charts I compare the Ryan Roadmap with the road America is currently on, according the CBO’s latest estimate of June 30, 2010. CBO calls the current road the Alternative Fiscal Scenario. Road to Ruin is a better description.

The first chart compares federal debt as a share of GDP under the CBO Alternative with the Roadmap; the Roadmap obviously makes more sense.

The second chart shows spending and taxes under the Roadmap and the CBO Alternative; the Ryan Roadmap focuses on controlling the growth of spending as a share of GDP, which makes sense because that is where the growth of the deficit is coming from.

The third and fourth charts show how the Ryan Roadmap takes action to control non-interest spending now and thereby dramatically reduces interest payments on the debt in the future.

There are alternative plans of course, but at the very least the facts shown in these charts demonstarte that the Ryan Roadmap is a big improvement over the road we are on now.

About John B. Taylor 117 Articles

Affiliation: Stanford University

John B. Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University and the Bowen H. and Janice Arthur McCoy Senior Fellow at the Hoover Institution. He formerly served as the director of the Stanford Institute for Economic Policy Research, where he is now a senior fellow, and he was founding director of Stanford's Introductory Economics Center.

Taylor’s academic fields of expertise are macroeconomics, monetary economics, and international economics. He is known for his research on the foundations of modern monetary theory and policy, which has been applied by central banks and financial market analysts around the world. He has an active interest in public policy. Taylor is currently a member of the California Governor's Council of Economic Advisors, where he also previously served from 1996 to 1998. In the past, he served as senior economist on the President's Council of Economic Advisers from 1976 to 1977, as a member of the President's Council of Economic Advisers from 1989 to 1991. He was also a member of the Congressional Budget Office's Panel of Economic Advisers from 1995 to 2001.

For four years from 2001 to 2005, Taylor served as Under Secretary of Treasury for International Affairs where he was responsible for U.S. policies in international finance, which includes currency markets, trade in financial services, foreign investment, international debt and development, and oversight of the International Monetary Fund and the World Bank. He was also responsible for coordinating financial policy with the G-7 countries, was chair of the working party on international macroeconomics at the OECD, and was a member of the Board of the Overseas Private Investment Corporation. His book Global Financial Warriors: The Untold Story of International Finance in the Post-9/11 World chronicles his years as head of the international division at Treasury.

Taylor was awarded the Alexander Hamilton Award for his overall leadership in international finance at the U.S. Treasury. He was also awarded the Treasury Distinguished Service Award for designing and implementing the currency reforms in Iraq, and the Medal of the Republic of Uruguay for his work in resolving the 2002 financial crisis. In 2005, he was awarded the George P. Shultz Distinguished Public Service Award. Taylor has also won many teaching awards; he was awarded the Hoagland Prize for excellence in undergraduate teaching and the Rhodes Prize for his high teaching ratings in Stanford's introductory economics course. He also received a Guggenheim Fellowship for his research, and he is a fellow of the American Academy of Arts and Sciences and the Econometric Society; he formerly served as vice president of the American Economic Association.

Before joining the Stanford faculty in 1984, Taylor held positions as professor of economics at Princeton University and Columbia University. Taylor received a B.A. in economics summa cum laude from Princeton University in 1968 and a Ph.D. in economics from Stanford University in 1973.

Visit: John Taylor's Page, Blog

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