Rep. Paul Ryan’s last budget didn’t balance until 2038. His next budget will balance within 10 years. That would seem to suggest that Ryan’s next budget will have to be far harsher than his last budget — a point I’ve made repeatedly.
But Richard Kogan, a budget expert at the Center on Budget and Policy Priorities, says that’s not true. ”Depending on how quick his spending cuts start,” Kogan says, “he’ll need between $4 trillion or $4.9 trillion. Last year’s budget had $5 trillion in spending cuts — largely unspecified but nonetheless. So if he’s willing to do the same things he did last year, he’s basically there.”
So how can Ryan balance the budget in 10 years without adding major new spending cuts to his budget? Simple. All he needs to do is take advantage of the Congressional Budget Office’s new and much-rosier deficit projections and, ironically, the fiscal cliff deal’s tax increases.
In February, the Congressional Budget Office released their updated budget estimates for the next decade. Compared to their 2012 estimate — which is what Ryan’s last budget used — their new numbers cut more than $800 billion off our projected deficits between 2014 and 2023.
Whether CBO’s new projections are right about our future deficits remains to be seen. But they’re the ones charged with certifying whether Ryan’s budget reaches balance. And so the bottom line is that their newest numbers bring him $800 billion closer to a balanced budget.
He’ll also get a helping hand from the tax increase in the fiscal cliff deal — which, remember, Ryan voted for. That, too, will cut the deficit by more than $800 billion between 2014 and 2023. It turns out that tax increases do help balance the budget!
So all in all, Ryan got a $1.6 trillion assist in the past year. And that should more or less get him to balance. “Remember,” says Kogan, “he wasn’t that far from balance last year. He was getting close near the end of the first 10 years.”
All this, by the way, is assuming Ryan’s budget abandons sequestration. But if it holds to those targets — which are significantly lower than what Ryan’s last budget advocated — then Ryan can easily clear the balanced-budget hurdle.
There are three broad lessons to take from these changes. First is that our budget situation is getting better, at least if the Congressional Budget Office is to be trusted. Second is that, yes, tax increases do help reduce deficits. And the third is that if Kogan’s numbers are right, and they almost always are, Ryan’s next budget won’t need to be particularly different from his last few budgets.
Correction: I say in the post that if Ryan holds to the sequester’s targets, he’ll have an even easier time balancing his budget. Marc Goldwein, policy director at the Center for a Responsible Federal Budget, e-mails a correction. “Last year’s [Ryan] budget maintained the sequester almost in its entirety – the exception being a portion of the sequester for 2013 only. That partial repeal in 2013 would have almost no effect on whether the budget is balanced in 2022 or 2023 (only interest payments). Last year’s budget needed the sequester to hit its aggressive fiscal targets, and this one will as well.”