Jon Bernstein is right to warn that the numbers in Paul Ryan’s budget look a little funny. For one thing, he’s assuming repealing the Affordable Care Act will save $1.4 trillion over the next 10 years. The Congressional Budget Office says keeping Affordable Care Act saves more than $200 billion over the same period. When asked to explain the discrepancy, Ryan said he was using CBO’s numbers, which is clearly untrue. So something is wrong there.
Then there’s Ryan’s admission, on page 59, that’s he’s using dynamic scoring, which is a scoring model in which the cost of tax cuts is blunted by assumptions about future growth caused by the tax cuts. Ryan doesn’t say much more about the model than that, so it’s hard to know how it’s changing his estimates. It’s a bit like Democrats asking the Center for American Progress to score their budget based on a model in which health-care reform’s delivery-system savings all pan out and it cuts spending by hundreds of billions of dollars more than CBO predicts. My hunch is Ryan wouldn’t react particularly favorably to that trick.
What we do know is that the model is returning some truly off-the-wall results. It assumes, for instance, that Ryan’s budget will bring unemployment down to 2.8 percent in 2021. That’s just bananas. For one thing, the Federal Reserve wouldn’t allow unemployment to go that low, as that would create enormous inflationary pressure (at least in its opinion). Its assumption is that the long-run level of unemployment is likely to hover between 5 and 6 percent. As the Economist’s Ryan Avent notes, “fundamentally worthy policies shouldn’t need to promise laughably overoptimistic outcomes to win support.”
We should get some better numbers when the Congressional Budget Office releases its preliminary analysis later today. I’d still expect the deficit reduction in Ryan’s plan to be significant — CBO will score his caps on health-care spending, and his caps on health-care spending save a lot of money — but I’d be very skeptical of some of the more outlandish numbers Ryan released alongside his report.