Posted on September 3, 2012 · Posted in Uncategorized

Why does it matter that Paul Ryan has such trouble with the truth?

The Republican’s want this Presidential election to be about the economy, as they through their lies, will define it.  They think that because things are bad, if they make a bunch of promises about how cutting taxes for rich people will guarantee more jobs for the middle class, they can win.  They think that if they buy enough TV ads telling people it is Barack’s fault that there is no GM plant in Janesville, the particularly poor informed who make up the undecided’s in this election, will vote for them.  They don’t care about the truth, they just want to persuade 1-2% of our electorate who are still confused. With that, they can win.

There is an odd dynamic involved in this American presidential election, one that comes up every four years, but is this year, far more dramatic than most.  What makes this year more bizarre than any of its predecessors is that Republicans and rich people like Mitt Romney are entirely responsible for the economic mess that they cite as the reason we should vote for them.

The United States has two political parties, one that supports the middle class, the poor, women, blacks, Hispanics.  The Democratic Party, the party of the 99%.  A broad based coalition of those with little money to invest in politics, but a lot of power if they come out and vote.

The other political party, the Republican Party, is the party with all of the money, but seemingly few votes, because it truly is the party for the 1%.  The Republican party is essentially the party for the rich bankers, Wall Street manipulators and those who have amassed great fortunes, like its Presidential nominee, Mitt Romney.

For example, here is what is in the Paul Ryan budget, as stated by Major Garrett, White House correspondent for National Journal at beginning at 37:10:


OK, lets look at the Paul Ryan budget, not in microscopic ways, but in broad strokes:

Two tax rates 25 and 10% and very low taxes on dividend and investment income. Lower than Mitt Romney has proposed having because Paul Ryan, as a follower of  economists like Milton Friedman believes that lower taxes on investment, believe lower taxes on investment, create more investment, more productive investment, more jobs, more engines for revenue and growth. So he would have a more aggressive tax cutting posture than even Mitt Romney has put forward.

That would redound to the wealthiest?

Statistically of course (that would redound) to those who are wealthiest  There is no question about that, none whatsoever.

Medicare. He would preserve it for those on Medicare now,  but scale back the shrinking of the Medicare donut hole coverage that is in the Presidents health care law. Even seniors now would have some benefits taken away from them. But the structure remains for anyone 55 and older, at enactment.  But for those younger, you have a choice get a voucher, take that cash, go in private sector, pursue your own health insurance coverage. If it is sufficient, you might be happy.  If it is not sufficient, you may have to accept higher premiums, lower coverage and be less satisfied than the traditional Medicare recipient.

If you receive Medicaid, (you are a poor American protected by Medicaid health coverage) your governor would get a lump sum. There would be not be this federal dictate, as to what the benefit structure would be.  There would be this lump sum.  The governors could create whatever funding mechanism and coverage scheme best to serve their Medicaid needs.

Substantial changes in those domestic entitlement programs.  He would scale back domestic spending each single year, meaning less to spend on education, space exploration, environmental regulations, things like that. He would not provide, or even near similar cuts to Defense.

That is the Ryan Budget. That is the broad strokes.

In a democracy, one would think this is no contest.  Lower taxes for the rich, paid for by taking money away from seniors, the poor, education, environment protections, technological development.  Less regulation on Wall Street? How could the 99% of those who are worse off with the average person with above a million dollars in taxable income paying $400,000 a year in taxes, vote for such a platform? It would be like the predominantly Shiite Iraq, electing a Sunni government. Can’t happen, right?

Well in the United States, despite the clear policy directions of each party, somehow the party of the rich has had success getting the middle class to vote for them. So instead of an overwhelmingly Democratic Electorate, American elections have hovered very close to the 50/50.  How have the Republican’s managed to pull off this miracle of getting middle class people to vote against their own self-interest?

They historically have done it by promising that if more money is given to rich people, that will make the business climate so much better, it will “trickle down” to more jobs for the middle class.  They don’t worry about the poor, because they are going to vote for the Democratic Party anyway. (Note the huge cut to Medicaid.) It is those people who want better jobs in the middle that can be mislead into voting for the party of the rich.

Now, that has been the basic equation that has kept parity in the United States presidency over the last 32 years since the “trickle down policies” of Ronald Reagan beginning in 1980.  As the election of 2008 approached, the concept of “trickle down” exploded, with what was about to become the “Second Great Depression.”  The world banking system was on the verge of collapse, which might have resulted in a world-wide catastrophe on the scale of a science fiction novel.

The reason the world economy hung on cliff in 2008, was that the rich guys ran amuck.  They turned the banking system into a game of high stakes gambling far more complex than Baccarat, built on the foundation of a bet that the American housing market would always go up in value.  They bet on those odds so heavily that they didn’t even care who they lent money to as long at it was purportedly invested in American real estate. But they didn’t just invest in the American dream, they bet against that investment, and insured against that bet, and then hedged the insurance on that bet, with something called a “credit default swap.”  What that essentially meant was that if there was a $1 trillion  fluctuation in the value of our homes, $20 trillion in asset value in the world’s largest banks could disappear.

Some of us can sort of understand the first phase.  Traditionally, you needed a 20% down payment to buy a home.  But then something called private mortgage insurance (PMI) was invented, and if you paid a premium of about .5% on your mortgage, you could borrow as much as 95% of the house.  That is the first part of the Wall street bet. Sell PMI insurance.  The extra layers of risk taking are beyond explanation without a Mitt Romney chalk board and unfortunately, an MBA from Harvard or a Ph.D. in physics.

When the inevitable happened and the value of homes didn’t keep outpacing inflation and housing prices started to moderate (in other words, houses across the board weren’t worth 95% of what they had been appraised for) the banks suddenly were forced to pay off the bets.  In an equivalent to a 1930’s run on a bank, they were out of cash.  Market theory would argue that they should have been left to die, but the consequences of letting the “too big to fail,” fail, was so scary that even the Republican’s stepped up with money to save them. Of note, Mitt Romney was in favor of this bailout.  Of course he was.

But as these banks hung to the cliff held up by the lifeline of government money, they for whatever reasons, some sound, some purely manipulative, took their lending dollars and went home.

Done was the American housing market, for perhaps a generation. Done was borrowing to buy a car.  Done was the American automobile industry.  With no one purchasing housing or cars, jobs disappeared at a rate only exceeded by the previous Depression.   Where before the crisis the banks would lend money to anyone, after the crisis they would only lend to people with extraordinary high credit scores, i.e. rich people. With no way to borrow money to buy things, the housing and automobile industry collapsed.

Now Mitt Romney is a pure capitalist.  Unlike anyone else who has ever run for President of the United States, he understood what a “credit default swap” was.  In fact, Bain Capital was heavily invested in credit default swaps.  It also has to be implied that he understood that a “managed bankruptcy” for General Motors would require a huge Federal Government guarantee.  He had to have known when he opposed federal action to save GM, that without it, all that GM would have left to sell was their “brands”.  Without the Federal guarantee, whatever Chevy or Buick that was built in the future, would have been built by the Japanese or German auto makers and not in the Midwest.

Fortunately, in the last few hours of George W. Bush’s presidency, despite Romney’s demand not to give one dime to save GM, the government bailed out GM. Fortunately, Barack was able to put together enough of a stimulus to keep the “great recession” from turning into Armageddon.

The Republican lies are built on this premise, if they keep blaming Barack Obama for the economy, you will start to blame him, even though it was Wall Street’s fault.  They know that the overwhelming percentage of the electorate knows who got us in this trouble, and remember’s how much worse it could have been.  They know that their base, doesn’t care because they so hate Obama.  They know that the Democratic base won’t believe anything they say any way.

The gamble is if they lie loud enough, often enough and do so in enough TV ads, the 1-2% of the electorate who haven’t made up their minds yet, won’t have a good enough grasp on the issues to see the lies for what they are.

Ryan’s mistake was lying about something as concrete as to how fast he ran a marathon.  While lies about what you stand for, who your party represents are harder to see through,  claiming to be an extraordinary runner when you were simply pedestrian, casts a shadow of doubt that pervades all that one says.

Gordon Johnson

About the Author

Attorney Gordon S. Johnson, Jr.
Past Chair Traumatic Brain Injury Litigation Group, American Association of Justice :: 800-992-9447