UK: Ryan's big lie

The Economist

Paul Ryan's budget
Ryan the fibberoo

CREDIT where credit is due: whatever you think of Paul Ryan’s budget, it is politically gutsy. There are not many people on Capitol Hill who would try to build a career on a determination to gut America’s best loved spending programmes. But given how keen Mr Ryan is to speak the fiscal truth, no matter how unpalatable, why does his budget resort to so many fudges and elisions, and the odd outright falsehood?

My more numerate colleagues have already pointed out some of the sunny economic assumptions and sleights of accounting in Mr Ryan’s plans, as well as gaping omissions that make it hard to assess in detail. But it was a much more blatant, albeit tangential, example of Mr Ryan’s slipperiness that really struck me while poring over the 60-page summary of the budget proposal.

On page 35, Mr Ryan discusses various criticisms of Barack Obama’s energy policy. He has over-regulated, held up permits for drilling and thrown subsidies at renewable energy. I could quibble with the over-regulation part (surely offshore drilling was under-regulated before the Gulf spill, in practice if not in theory), but otherwise, there’s little to disagree with there. It was the next line that threw me: “The results are plain to see: gas prices have more than doubled since the president took office.”

The idea that holding up permits or adding to oil firms’ costs through other forms of regulation somehow led to the doubling of gas prices is just ridiculous. Those two things may have had a minuscule effect on the margins, but the main factors behind the oil price’s rise, as Mr Ryan well knows, are the improved performance of the world economy, which has led to increased demand, and growing instability in the Middle East, which has prompted fears about supply.

America’s oil production has actually grown since Mr Obama took office, although perhaps not as quickly as it might have had his administration slashed regulation and rubber-stamped all drilling permits. Oil firms do not find America a particularly difficult place to do business; they’d much rather develop assets here than in dodgy spots like Nigeria and Russia. And even if the Interior Department had massively streamlined its bureaucracy and opened new areas to drilling the moment Mr Obama took office, we would still be several years away from seeing the benefits, given the slow pace of exploration and production. Above all, with only 2% of the world’s proven oil reserves, as Mr Obama keeps repeating, extra drilling in America will only have a marginal effect on supply.

In other words, Mr Ryan is lying. The recent rise in gas prices is not, in any meaningful sense, the result of the president’s energy policies. The Republicans are no more capable of lowering the oil price by fiat than the president is. That is one truth it would not have done Mr Ryan any harm to admit.

http://www.economist.com/blogs/democracyinamerica/2011/04/paul_ryans_budget