Paul Ryan and the Republicans really owe everyone an answer to one major question about their plan: does it include a massive new middle-class tax increase, or does it explode the deficit?
CAP’s Michael Linden makes an important point about Ryan’s budget : It calls for revenues to stay the same despite a good deal of (specified) upper-income tax cuts. He concludes from this that the vague allusions to ending some tax expenditures really means a very large middle-class tax increase will be necessary to achieve those revenues. He could be right! On the other hand, I’ve focused more on the clearly bogus economic assumptions underlying the revenue forecasts, and I’ve conclude that what’s really going on here is phony numbers.
In other words, if actually enacted, Ryan’s budget would just produce huge deficits — just as Ronald Reagan’s budgets and George W. Bush’s budgets did when they used similar forecasts.
As far as I can tell, none of the information Ryan has provided gives enough information to prove either the “huge tax increase” or the “huge deficit” theory correct (see a lot more about the math from Ezra Klein).
Bruce Bartlett tries to at least figure out how large the revenue gap might be, noting that the difference between Ryan’s promised revenues in his budget and the revenues realized from his Roadmap version of the proposal would be some 2.2% of GDP. That’s probably the best estimate one can make at this point of the size of the middle-class tax increase, or additional deficit, built into the Ryan budget.
So which is it: Is it a tax increase, or more deficits? It sure would be nice for Ryan to let everyone know the answer before the House is asked to vote on his budget.
CAP’s Michael Linden makes an important point about Ryan’s budget : It calls for revenues to stay the same despite a good deal of (specified) upper-income tax cuts. He concludes from this that the vague allusions to ending some tax expenditures really means a very large middle-class tax increase will be necessary to achieve those revenues. He could be right! On the other hand, I’ve focused more on the clearly bogus economic assumptions underlying the revenue forecasts, and I’ve conclude that what’s really going on here is phony numbers.
In other words, if actually enacted, Ryan’s budget would just produce huge deficits — just as Ronald Reagan’s budgets and George W. Bush’s budgets did when they used similar forecasts.
As far as I can tell, none of the information Ryan has provided gives enough information to prove either the “huge tax increase” or the “huge deficit” theory correct (see a lot more about the math from Ezra Klein).
Bruce Bartlett tries to at least figure out how large the revenue gap might be, noting that the difference between Ryan’s promised revenues in his budget and the revenues realized from his Roadmap version of the proposal would be some 2.2% of GDP. That’s probably the best estimate one can make at this point of the size of the middle-class tax increase, or additional deficit, built into the Ryan budget.
So which is it: Is it a tax increase, or more deficits? It sure would be nice for Ryan to let everyone know the answer before the House is asked to vote on his budget.
By | 05:17 PM ET, 04/08/2011
10 concluding thoughts on Ryan’s budget
Representative Paul Ryan, a Republican from Wisconsin and chairman of the House Budget Committee, speaks during a news conference at the U.S. Capitol in Washington, D.C., U.S., on Tuesday, April 5, 2011. (Joshua Roberts - Bloomberg News)
As my earlier post on controlling medical costs suggests, I’m in a listmaking mood. I’ve also been wanting to somehow summarize my last two days of blogging on House Budget Committee Chairman Paul Ryan’s budget. So here are 10 concluding thoughts.
1) Ryan’s suggestion that Medicare and Medicaid can or should be held to the rate of inflation is absurd. His budget has no way of making that happen, save for draconian cuts in both (this goes far, far beyond “means-testing”). And you don’t have to take it from me. Alice Rivlin, an eminent budget expert and co-author of Ryan’s original Medicare proposal, will tell you the same thing. But those cuts are how he saves so much money going forward. They’re the assumptions that make the rest of the budget work. And they’re essentially no less ridiculous than predicting that unemployment under Ryan’s budget will drop to 2.8 percent.
2) The idea that conservatives believe the savings in Ryan’s plan are realistic while those in the Affordable Care Act aren’t boggles the mind. For one thing, Ryan includes the supposedly unrealistic savings from the Affordable Care Act; they can’t be realistic in Ryan’s budget but not realistic in the ACA. For another, the ACA’s savings are more modest, and the law has many, many more ways to attain them than simply saying “the government promises not to spend more than inflation, even if spending less means millions of seniors and disabled Americans will have no health care.” I spent a lot of time taking conservative arguments on the ACA’s half-dozen cost control mechanisms seriously — including in a conversation with, yes, Paul Ryan — so watching Ryan propose this budget is both frustrating and disillusioning.
3) I suspect Ryan capped Medicare and Medicaid at the rate of inflation rather than at GDP+1% because when he used GDP+1%, he couldn’t get the numbers to add up without including some tax increases.
4) The budget is much more regressive than I thought it would be. In the first 10 years, it has $4 trillion in program cuts, and most of them are coming from programs that primarily serve low-income or otherwise vulnerable Americans. In our previous conversations, Ryan was always been quick to say that government should help the truly vulnerable. This budget evinces none of that compassion.
5) The implication of the Congressional Budget Office’s analysis isn’t just that seniors would pay more for less under Ryan’s Medicare reform but that the gap between Ryan’s plan and traditional Medicare would grow over time. That suggests Ryan’s plan isn’t just shifting costs without cutting total costs but that it’s shifting costs while increasing total costs. I don’t know that people have grappled with that yet.
6) This is related to No. 5, but there’s a big difference between cutting costs and shifting them. Cutting medical care for the disabled doesn’t cut the cost of their care; it just means someone who isn’t the federal government has to pay it. Solving a problem for the federal government isn’t worth that much if it comes at the cost of creating a problem of equal or greater size for individual households.
7) The difference between Ryan’s treatment of spending that occurs through the tax code and Ryan’s treatment of spending that occurs through programs is both instructive and disappointing. On the one hand, he’s willing to slash Medicaid to reduce the deficit. On the other hand, when he slashes the deduction for employer-provided health-care insurance, he’s only willing to use it to lower tax rates. He could’ve slashed regressive tax expenditures to pay down the deficit and preserved Pell Grants.
8) The Heritage Foundation has done itself some serious damage.
9) People don’t realize that if you drill into any deficit reduction plan, what really cuts the deficit are caps on new spending or promises about future taxes. So the question is always whether the proposal has a credible way to make those caps work. On this measure, the Bipartisan Policy Center’s proposal (otherwise known as Rivlin-Domenici) remains the gold standard.
10) Speaking of Alice Rivlin, Ryan has been suggesting she supports his plan when she doesn’t. He also said they had consequential disagreements about the Medicare exchanges that, as far as Rivlin knows, didn’t exist . That matters because it has implications for whether Ryan has been honest in his assessment of the Affordable Care Act. This is misdirection at best and dishonesty at worst.
Some readers have asked (and, in some cases, challenged) me to interview Paul Ryan about his budget. I’ve put in repeated requests to his office, but I haven’t gotten a reply. As always, however, I’d be happy to let Ryan lay out his case and response in conversation with me and post the transcript. Also, no reconciliation today. I think I’m all listed out.
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