Poor Richard: IBD takes a look at the real causes of the Great Depression and comes to an amazing conclusion — massive government overspending and Draconian restrictions on the free market cause it to last much longer.  So who’s model did The Empty Suit choose?

We face a serious financial problem and it is solvable… but not by the idiots who caused it.

Paul Krugman’s Depression

June 29, 2010 * By Investor’s Business Daily

Economic Policy: Nobel Prize-winning economist Paul Krugman says the U.S. is in the “early stages of a third Great Depression.” If he’s right, it’s only because American policymakers have been following his advice.

Hell knows no wrath like that of an economist scorned – especially one on the left of the political spectrum. Case in point: New York Times columnist and sometime economist Paul Krugman. The world is going to hell in a handbasket, Krugman suggested this week, thanks in large part to its refusal to follow his advice to the letter.

Actually, he has it exactly backward. Krugman was among those who encouraged the new Obama administration and the Democratic Congress to spend massive amounts of money early on in a kind of Keynesian frenzy to shock the moribund economy back to life.
It didn’t work. With a stimulus – a deficit, that is – of nearly 11% of GDP, our economy is barely growing, while unemployment remains shockingly close to 10% of the adult working population…

More…

There’s a Better Way

The Path to American Prosperity — Congressman Paul Ryan (R-WI)

So what do I propose with the Roadmap? I will go over it very briefly.

1.  Tax reform. I would replace the current tax system with a modified flat tax, retaining its progressivity. 10% on the first $100,000 for couples, 25% above that. No other taxes on capital or savings – no dividends, capital gains, or death tax.

2.  Replace the corporate income tax, with a better system. We should have a territorial tax system, not a worldwide system. We should have a system that says to businesses you ought to be able to expense every investment in plant and equipment the year in which it takes place. We also should have a border-adjustable system. Why don’t we do to our competitors what they are doing to us? Take the tax off our exports and put it in on our imports to better level the playing field, to reward businesses for building things in America and exporting them. Let’s acknowledge the fact that 97% of the world’s consumers are outside of this country. Let’s get our businesses in a situation where they are ultra competitive. Let’s make sure that when businesses invest and build and grow here in America, that’s the smart business thing to do.

3.  I also think you need to strengthen job training assistance. We have so many different job training programs in the Federal government – dozens of them, duplicative and overly complicated. Let’s consolidate them…

4.  For Social Security, don’t change anything for people over the age of fifty-five. Make sure that we can guarantee their benefits. But if you are under fifty-five, the money isn’t going to be there for you anyway. So why don’t we reform the system so that it will actually be there for you. If you want to stay in the traditional system, you can remain in the current program as structured – that is your choice. If you want a system where you can take a third of your payroll taxes and put them in a thrift savings account, exactly like I as a member of Congress or any other federal worker can, where it will be managed Social Security with safe indexed funds, my reforms will allow you to do that. You can grow your money. You can harness the power of compound interest. The funds become your property. It goes to your spouse or your heirs when you pass on.

5.  Medicaid. Let’s give the States – the laboratories of democracy – the ability to customize their programs to meet their citizens’ needs. We would give individuals a voucher to get private health insurance, with protections to people with pre-existing conditions. Where I come from, if you’re on Medicaid and you walk into a doctor’s office, you’ve got “poor person” stamped on your forehead. Fifty percent of the doctors won’t even take you because they lose forty cents on the dollar for every person that they see. So why don’t we have a system where we don’t segregate the poor into an inferior health care system? Why don’t we have a system so that we can give them the access the kind of private health insurance that everybody else has. You can do that in the way that we are proposing and save the system from insolvency and bankruptcy.

If you get ahead of this debt problem – if you reform these programs, doing it on our terms, not imposing austerity but advancing prosperity – you can guarantee that we will have higher standards of living for future Americans. The next generation will be better off than our generation. There can be more jobs, better wages, and greater opportunity in this society. That at the end of the day is really what this is all about.