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Ryan's Budget is Widely Known but Ryan the Man is Not

For over a year both parties have been fixated on the budget drawn up by Rep. Paul Ryan (R-WI) and now the Republican vice presidential nominee in spe, but few people know anything about the author of the plan. He was born in Janesville, WI (current pop. 64,000), the son of a wealthy lawyer. He went to the local high school and then studied economics and political science at Miami University in Ohio. After graduating, he got a job as a staffer for a Wisconsin senator, and has been in Washington ever since. He was first elected to the House in 1998 and later rose to the chairmanship of the House Budget Committee.

The above material is a summary of Ryan's curriculum vitae, but there is much about the man that is not well known. Politico has a background piece on him that gives a better feeling for who he is. Some of the main points are as follows.

Ryan Will Release Two Years of Tax Returns

Yesterday, Ryan said he will release 2 years of tax returns. He couldn't do otherwise. His salary as a representative, $174,000 is public information and there is no reason to think that he has money stashed away in the Cayman Islands, Andorra, Liechtenstein, or anywhere else. As far as any one knows, he is not all that interested in minimizing taxes or money in general. His two main interests are (1) not dying (he is a gym rat and fitness freak) and (2) saving America from the deficit and the New Deal. Had he been John McCain's running mate or George Bush's, he would have probably released 20 years of tax returns without blinking an eye. But since Romney is adamant that 2 years is enough, had he released more years, there would have been a great howl from many quarters asking why Romney couldn't do what Ryan just did? The message here is simple: Ryan is a team player and takes orders from Romney.

Ryan Is a Full-Spectrum Conservative

While Ryan's budget plan has gotten most of the attention since he was picked to be on the Republican ticket, his other views are also of note. He is a full-blown conservative on everything, not a libertarian who favors small-government on financial issues and laissez-faire on social issues. He is an observant Catholic with a long history of opposing abortion and same-sex marriage. He co-sponsored a bill declaring that a fertilized egg has all the rights of a person, for example. He opposes Planned Parenthood and Obamacare but supports gun rights. In fact he checks every box for the conservative cause. This is why the Weekly Standard and other conservative media outlets were pushing so hard for him. He is a young, articulate, attractive, experienced congressman who supports them on 100% of everything.

Of course, what makes him so popular with conservatives may be a problem with women, especially reproductive rights. Expect the Democrats to hammer away at this until the election. If suburban women who normally vote Republican desert the party en masse over reproductive issues, Romney has real problem.

Romney's Inner Circle Opposed Ryan as Veep Candidate

Initially when the subject of the running mate came up, much of Romney's inner circle was opposed to the choice of Rep. Paul Ryan (R-WI) because they feared the effects his budget would have on seniors, especially in Florida. His campaign staff wanted Tim Pawlenty since he wouldn't stir up much controversy and wouldn't hurt in any states. However, Romney overruled his staff, in part because he likes Ryan and gets along with him well. But he was surely aware of a large number of national polls and swing state polls in the past weeks showing him behind and not gaining. He also desperately wanted to change the national conversation from his tax returns to something else and a bold pick for running mate might be his only chance. Whether this was a good idea will start to become apparent in the next two weeks as pollsters begin asking about Ryan.

Biggest Corporations Pay Only 9% of Revenue as Federal Tax

While there has been a huge amount of discussion about whether rich individuals should pay more tax or less, there has been surprisingly little discussion about the top corporate rate. Currently it is 35%, but in practice big companies pay only about 9%. Some of the difference is due to credits they get for paying foreign taxes, but much of the reduction is due to clever accounting tricks. For example, a multinational with offices all over the world can sell its patents to its subsidiary in, say, the Cayman Islands. Then when the company needs to use these patents, it pays massive licensing fees to the subsidiary. These fees are a cost of doing business and are deductible for the corporation's U.S. tax, reducing its U.S. profit and thus tax. Of course, the subsidiary in the Cayman Islands will have enormous income and no expenses so it will have a very large taxable income there. But fortunately for the corporation, the Cayman Islands do not levy a corporate income tax. This is perfectly legal and schemes like this are widespread. Clearly one way to reduce the federal deficit is for Congress to change the law so as not to recognize transactions that have no business value, only tax value. But that doesn't seem to be on the agenda.

Today's Presidential Polls

State Obama Romney   Start End Pollster
California 51% 40%   Jul 10 Jul 24 Public Policy Inst. of Calif.