From everything I have seen and read about Rep. Paul Ryan (R-WI), it’s clear that he’s a good man and wants the best for America. But there’s a big difference between being good and being qualified to handle a nation’s finances. In a CNBC interview, Rep. Ryan, who chairs the House Budget Committee, proved that he simply is not qualified to man such an important post. He lacks the very most basic understanding of our monetary system. Let’s just quickly touch on a few of his outrageously inaccurate quotes from the CNBC interview:
Spending is the problem. If we don’t get a handle on spending, we will have a debt crisis.
The US issues debt in a currency that only it can create. It is simply impossible for the US to “run out of money." There is no such thing as the US undergoing a debt crisis unless Congress decides not to raise the debt ceiling. This is an entirely political constraint and not an operational constraint.
Ryan is indirectly using the euro crisis to try to imply that we are somehow near our Greek moment (an embarrassing comparison that he proudly flaunts on his website). That’s total nonsense. Greece is a currency user and the US federal government is a currency issuer. Comparing the two (which Ryan is quite fond of doing) proves that you do not understand what you are talking about. Comparing a currency user to a currency issuer proves you are entirely unqualified to hold such an important financial position in our government.
We haven’t receieved anything from the other side [regarding a budget plan and the debt ceiling].
The issue of the debt ceiling is a result of policy that has already been voted on. The only reason the debt ceiling is ever hit is because politicians have previously voted on policies that would result in more debt. For instance, late last year when we passed the tax cut, I said it would result in us hitting the debt ceiling that much sooner. The time to have these discussions is not after the fact, but before you pass this sort of legislation in the first place. Putting the American economy at risk by playing Russian roulette with this political debate on the debt ceiling is irresponsible, to say the least.
What we want is more economic growth and more growth in jobs and spending cuts.
This is more politics. On the one hand, Ryan is fond of comparing us to Greece. But we all know that austerity and spending cuts are contributing to the economic collapse in Greece. I predicted it long ago and it’s now common knowledge that you can’t cut your way to growth in a balance sheet recession. So if we are at risk of becoming Greece (as Ryan so often claims), then why is he attempting to take us down the exact same road via spending cuts? He is either clueless or disingenuous. Again, I think he’s just playing politics and is largely ignorant on this subject. There is nothing even remotely honest about this flat-out contradiction.
We will prevent [Medicare insolvency].
Again, there is no way the US can run out of money. It is simply impossible. Could Medicare spending get so out of control in the future that it causes high inflation? Yes. But that’s not the point Ryan is making. He is again comparing us to Greece and claiming that we can somehow be forced into insolvency. It’s total nonsense. It’s impossible for the US to not be able to meet its obligations – all of which are denominated in a currency which only it can produce.
Get spending under control to show that we have borrowing under control so we can take pressure off of interest rates.
The previous comments were bad, but this one is just a flat-out attempt to feed into the fearmongering misconceptions we so often hear from politicians who don’t understand how our monetary system works. Ryan is slyly attempting to make the old “crowding out” argument, which says that government spending causes interest rates to rise as the private sector is forced to compete for borrowed funds.
Any MMTer knows this is total nonsense, as the US government never “funds” itself, but this should be raising some eyebrows in other areas of the economic world for one simple reason: Long bond rates aer at record lows despite this supposed "spending binge" we are on. The facts simply do not match this fearmongering rhetoric.
In my opinion, these comments prove that Ryan does not understand our monetary system and has no business manning such an important post in our government. As voters, we should be outraged by this. As I said about Tim Geithner and Larry Summers, this man should step down immediately and pretend to be an expert in some other office in our government (or outside of government). He is part of the problem, not part of the solution.