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Ryan-nomics is mostly HYPE…with little Reality!

August 16, 2012

The key word is ‘ASSUMPTIONS’ – Paul Ryan’s assumptions are mostly bogus! Why?

 
 Let’s give some thought to the budget plan of Paul Ryan, Congressman from Wisconsin, and now a running mate with Mitt Romney for the Republican party. Do any of his ASSUMPTIONS make any sense given the State of American finance today? Personally, I have experienced the 10 year model for projecting income and expenses while doing Appraisals for lending institutions in the 1980’s and 1990’s. The model we used was called the Discounted Cash Flow model with 10 year projections. This model, however, makes no sense (in reality) as it assumes that future events will be basically identical to past events. All my projections turned out to be bogus in less than one year’s experience. Why?

What I have discovered is that anyone who projects numbers into the future (especially for 10 years) will discover that the ASSUMPTIONS used will not be valid within future months…let alone years! Projecting numbers into the future and expecting that financial conditions and results will be similar to those on the DATE of projection has not proven to be a VALID model. Changes happen to all kinds of variables that no-one can discern or internalize on the initial date of projection. For example: tax revenues can drop due to unemployment, spending can change due to emergencies, a major international conflict can emerge, and new revenues can be eaten up via inflation or deflation in the overall economy.

What Mr. Ryan and Mr. Romney are doing is ASSUMING that their projections into the future are ‘sane’ and ‘realistic’. For example:  Mr. Ryan assumes that spending will be held to an INCREASE of 3.1% per year rather than the 6.6% assumed by the House Budget Committee. The House Budget Committee has ASSUMED that tax revenues will increase on average at a rate of 6.6% for the 10 year projection period. Growth in our economy is supposed to create this result. In reality this is totally bogus and unrealistic. Our National economy is now in a condition where tax revenue growth is very unlikely going forward. There is no current evidence that our future economy will produce the revenues projected by the House Budget Committee.

NOTICE that budget projections ASSUME that spending can increase at a rate of 3.1% (on average) and still reduce the DEFICIT…as tax revenues will increase by MORE that the 3.1%. All these ASSUMPTIONS continue to be projected into the future (10 years) and AFTER these 10 years the DEFICIT will supposedly become balanced. This type of logic is totally worthless and my experience has shown that this whole budget model is BOGUS.

In REALITY, financial conditions continue to change in ‘unpredictable’ ways and with today’s DEBT laden economy the variables will be totally UNPREDICTABLE. All 10 year projections are mere QUESS-WORK! ASSUMPTIONS usually are worthless if longer than one day…let alone over 10 years! Will the American people catch on to these bogus ‘assumptions’ and ‘projections’ between now and the date of election? Probably not!

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Paul Ryan is certainly a fine young man and he has a great attitude and personality. His economic logic, however, seems weak and lacking in reality. Obama-nomics has also been mostly worthless as his projections and ‘assumptions’ were also not realized. Our economic problems today to not lend themselves to ‘PROJECTIONS’ into the distant future. We have a NOW problem that needs a NOW solution. Our leaders have mis-managed our accounting books for some 40 years and we now have ‘debts’ and ‘deficits’ which can not be resolved via multi-year ‘projections’ and ‘fantasy’ assumptions. Take the time to review this website for evidence on WHY Ryan-nomics or any other …nomics will not work!  www.usdebtclock.org.
 

 

Will Ryan’s, Romney’s, or Obama’s ASSUMPTIONS be recognized as VALID or BOGUS by the voters???
 
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