Paul Ryan Doesn’t Know What Austerity Means

Paul Ryan, Very Serious Person, went on a Sunday Show this weekend. Here’s the question posed to him:

MR. GREGORY: Chairman Ryan, let me start with you. This question of austerity in Europe. They had failing economies, nearly depressed economies, the answer throughout the region was to slash their budgets. Has it failed?

A good question! And an important one to ask someone like Paul Ryan. Here’s his answer:

REP. RYAN: Well, no, David, I would say they’ve also raised taxes, they have–this is a cautionary tale of what happens when politicians who make a lot of empty promises end up running out of the ability to borrow money at cheap rates and now they’re broken promises. It’s a cautionary tale of what will happen to us if we stay on the path we are on. What we’re saying is let’s get on growth and prevent austerity. The whole premise of our budget is to pre-empt austerity by getting our borrowing under control, having tax reform for economic growth, and preventing Medicare and Social Security and Medicaid from going bankrupt. That pre-empts austerity. The president, his budget, the fact the Senate hasn’t done a budget in three years, puts us on a path towards Europeanlike austerity. That’s what we’re trying to prevent from happening in the first place.

Someone maybe should tell Paul Ryan that reducing domestic discretionary spending by 80% doesn’t pre-empt austerity, it is austerity. As is raising taxes, by the way. And austerity measures, as Europe has proven, don’t work out so well. The story, being told by Ryan here, goes like this. Impose harsh austerity measures (but call them something else!) and then investors will gain confidence in you and borrowing costs go down and then its off to the races. But the reality is that once you impose the austerity measures the investors realize you just scuttled your economy and they demand higher rates, and yields rise. See Spain, Italy, et al. Paul Ryan’s Very Serious strategy is, basically, the beatings will continue until moral improves.

To close, here’s my favorite line from the transcript, it beautifully sums up the entire thing:

REP. RYAN: (Unintelligible)

Perfect.

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