Tuesday, April 5, 2011

Ryan's "Path to Prosperity." Here's the chilling math.

Let's walk through the numbers of GOP hatchetman Paul Ryan's plan to see what happens if we follow what he proposes and subtract $580 billion from U.S. eocnomic output over a 10-year period.

We start off with a currrent GDP of $14,700 bln.

Year 1 14120
Year 2 13540
Year 3 12960
Year 4 12380
Year 5 11800
Year 6 11220
Year 7 10640
Year 8 10060
Year 9 9480
Year 10 8900

You can see that by year 10, economic output has shrunk 40%.

Given that the unemployment rate shot up about 5 percentage points when the economy contracted a mere 5% in 2009, we can guestimate that unemployment would increase by 40%. That means we'd have a 50% unemployment rate. Half the workforce would be unemployed.

This is Ryan's "Path to Prosperity."

It's catastrophic. This is a Great Depression.


Tom Hickey said...

I'm sure the wealthy are thinking of how cheap servants will be.

mike norman said...

I hear it's still like that in many former Banana Republics.

Ryan Harris said...

Cutting future outlays from the medicare program shifts health care expense to the private sector from the government but doesn't decrease the amount spent necessarily? For most seniors, treatment will be required and received and paid for with or without the program.

Tom Hickey said...


Ryan Harris said...

I don't know it was a question. I would use my retirement savings to pay for care if there was less medicare and then pass less to heirs.

Tom Hickey said...

Right. Then what do you do for retirement unless you are in the upper 1% of the population, if you have a serious illness.

Essentially what this would do is make people save a lot more for eventualities like illness and retirement, which would constitute a huge demand leakage. This is the problem that China has not with growing its consumer economy. There are only a few alternatives — net exports (Chinese solutions) or deficits to offset increased saving, or economic underperformance and high unemployment, or increasing private indebtedness, or some combo thereof.