Earlier this month, Rep. Paul Ryan (R-WI), ranking Republican on the House budget committee, published an alternative proposal to the Obama budget in a Wall Street Journal op-ed. The plan: doubling down on Bush-style economics.

Like the Bush tax cuts, Congressman Ryan and his allies in Congress would cut taxes for the wealthiest Americans and reject public investment or a fairer tax code that would ensure broadly shared prosperity.

The Center for American Progress Action Fund finds that Congressman Ryan’s proposals would cut taxes for the average CEO by $1.5 million per year and do nothing at all for a minimum wage worker.

Ryan calls for lowering the 35%, 33% and 28% income tax brackets to 25%, eliminating the capital gains tax, and cutting the top corporate tax rate from 35% to 25%. These hugely regressive tax cuts would extend the Bush economic strategy of massive tax cuts for the wealthy and gutted government revenue.

In 2008, the average CEO of one of America’s largest 800 companies made $3.3 million in salary and bonuses, $6.3 million in stock gains, and $3.2 million in “other compensation” for a total of $12.8 million. Under Ryan’s plan, the average CEO’s $6.5 million in paid income would drop from a marginal tax rate of 35% to 25% and his $6.3 million in stock gains would go from being taxed at 15% to being totally tax free. This tax change would save these CEO’s over $1.5 million every year.

A minimum wage worker, however, making around $15,000/year, would see no benefit at all from these proposed tax changes. They already only pay federal income taxes in the 10% marginal tax bracket, are unlikely to have any capital gains, and would thus see no change under the conservative budget plan.

The Bush tax cuts ushered in almost a decade of tepid economic growth and stagnant wages for American families. Ryan says he and his fellow conservatives are offering to be “part of the solution, not part of the problem.” Why, then, are they only offering more of the same?

Methodology notes after the jump. Read more

Today, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner testified before Congress regarding the AIG bonus debacle. In his opening statement, Bernanke expressed remorse that AIG has not been nationalized:

If a federal agency had had such tools on September 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now.

Indeed, a lot of the AIG mess could have been prevented if it was just nationalized at the beginning. Instead, it’s been kept alive by infusion after infusion of federal funds, without the government ever exercising any of the control that should come from an 80 percent ownership stake. As Kansas City Fed President Thomas Hoenig pointed out, we’ve simply nationalized institutions “piecemeal, with no resolution of the crisis.”

Bernanke’s wider point, though, is that there is no formal process that currently exists for nationalizing huge, complex financial institutions. According to a Washington Post report, the administration is well aware of this, and is considering a plan that would grant Treasury such authority:

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG’s most troubled unit. The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

According to Reuters, the FDIC has also “hinted it could take on that job, with Chairman Sheila Bair saying recently that the agency’s model for failed banks works well.” Either way, the change would have to be passed through Congress.

Nationalizing these giant firms would not be easy or inexpensive. But, there is not much else that can feasibly be done with giants like AIG or Citigroup — they’re too-big-to-fail and in no shape to carry on as they once did. If nationalized, AIG and firms like it could be wound down and broken up, and hopefully a new regulatory framework will be implemented to keep firms from growing so large in the future.

Sen. Chuck Grassley (R-IA) has been on a roll recently. In the last few weeks, he suggested that AIG executives commit suicide, advocated lying about comparative effectiveness research and electronic medical records, and is now pushing an insane, debilitating spending freeze as a response to our economic ills:

“What you get when you have an across-the-board freeze is everybody is seen as contributing something,” Mr. Grassley said…adding that a three-year freeze would produce a more dramatic effect. “Over a period of time, there’s something predictable about a freeze, and over a period of time it makes a big difference…The multiplier effect of freezing something for three years is very dramatic.”

As Paul Krugman wrote regarding a spending freeze, “that’s not a retrogression to Herbert Hoover; even Hoover knew better than that.” David Brooks agreed, calling such a move “insane.”

A freeze would have the “dramatic effect” of providing dangerous anti-stimulus at the precise moment when stimulus is needed most. It’s a shame that this policy prescription is coming from Grassley, who can be so reasonable when not engaging in crazy rhetoric.