Five huge things we still don’t know about Paul Ryan’s budget

March 12, 2013

(Joshua Roberts -- Bloomberg)

Paul Ryan's budget is, in many ways, an extremely detailed document, and it certainly stands in stark contrast to the Senate Democrats, who haven't released a full budget in years (but who will release one Wednesday). But Ryan's budget leaves a number of major questions unanswered -- questions that could decide whether his budget, if it ever passed, would come anywhere near fulfilling its goals. Here are the five biggest blank spots:

Tax reform. Ryan says a lot about how he'd cut spending. But he says nothing about how he'd reform the tax code. His excuse is that reforming the tax code is the job of the Ways and Means Committee, so he's leaving it up to them. But that's a thin dodge. The same could be said for Medicare and Medicaid, which are also under the jurisdiction of Ways and Means, but Ryan has released detailed plans on both. Making matters more difficult is that Ryan's tax-reform targets -- which have been downgraded in this budget to mere "goals" -- are deeply implausible, requiring, in the estimation of experts I've spoken to, at least $5 trillion in offsets. If Ways and Means cheats by passing a tax reform that is, in reality, a large tax cut, suddenly Ryan's budget might actually be a huge deficit-buster.

Medicare. Peculiarly, the highest-profile idea in Ryan's budget wouldn't take effect for a full decade. His plan to convert Medicare to a premium-support system is at the heart of his claim to be reforming entitlements in a sustainable, free-market fashion. But no one knows if premium support, which has never worked to save massive amounts of money before, will work in Medicare. And if it doesn't work, Ryan's budget is vague on what happens next. He saves money by simply directing that Medicare spending can't grow any faster than GDP+0.5 percent, but if it exceeds that limit, he's vague about what will happen.

Social Security. The third rail of American politics remains quite electric. "In a shared call for leadership," Ryan says, "this budget calls for action on Social Security by requiring both the President and Congress to put forward specific ideas and legislation to ensure the sustainable solvency of this critical program." In other words, no details.

The Section 920 sinkhole. Ryan gets about $1 trillion in savings from "other mandatory" spending. That includes programs like food stamps, veterans' benefits, portions of the Earned Income Tax Credit, and more. But these cuts aren't spelled out in his budget. Last year, many of his cuts were tucked into "allowances" -- also known as Function 920, and explained well by Tom Edsall here -- and left to committees. The result was a huge number of mystery cuts. Most of the numbers in Ryan's chairman's mark are currently blank, so it's unclear which cuts will be specified and how much will be stuck into the 920 sinkhole.

Financial reform. There's no obvious reason this should be in the budget, but it is, so here we go. On page 52, Ryan writes, that "this budget would end the bailout regime enshrined into law by the Dodd-Frank Act. The federal government must ensure financial markets are fair and transparent. And it must hold accountable those who violate the rules. But federal bureaucrats should not micromanage the system or protect Wall Street bankers from the risks they are taking." So how would it replace Dodd-Frank exactly? It never says.

All of which is to say that much of Ryan's budget boils down to, "trust me," or at least, "trust the House Republican Conference." Without the details on tax reform, there's no way for us to verify that the tax and spending sides of the budget really add up. Without knowing whether he's got a credible plan for controlling Medicare costs if premium-support fails to deliver the savings he hopes to see, the long-term projections are, similarly, unreliable. Without knowing where the Section 920 spending cuts are coming from, it's hard to believe they're real. Ryan often criticizes the Democrats for dodging the "tough choices," but there are plenty of tough choices that he too is dodging.

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