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.