I will have more to say on Rep. Paul Ryan’s budget in my Thursday column. But in the course of reporting it, I ran into dueling numbers that are probably confusing other people as much as they confused me. Ryan says his budget cuts $6.2 trillion, but other accounts note that the actual cuts amount to $4.3 trillion.
Both numbers are right in their way, but the correct number to use for actual program cuts is the $4.3 trillion. The intrepid Jim Horney, vice president for federal fiscal policy at the Center on Budget and Policy Priorities, explained this as clearly as anyone in an e-mail to me this morning:
Relative to the Congressional Budget Office’s March baseline, the Ryan plan reduces spending by $5.812 trillion (this is the number in his documents).
But $1.044 trillion of that is accounted for by the reduction in spending for the wars in Afghanistan and Iraq that Ryan assumes relative to what the CBO baseline includes. This does not really represent a change in policy. (The CBO’s baseline for discretionary spending simply assumes current funding levels, adjusted for inflation, will be provided for all discretionary programs in every year through 2021. So, CBO’s baseline assumes that the current funding for the wars will be provided each year through 2021. Ryan assumes that the funding will be reduced as troop levels are reduced, which is current policy, and puts in the same level of funding that the president proposed in his budget to fund that policy. That means big savings relative to CBO’s baseline projections, but it does not really reflect a reduction in program funding.)
And $0.446 trillion is from reductions in interest payments, which is simply the result of the effect of policy changes on the deficit and debt.
So, the real reduction in program funding is $4.322 trillion.
My thanks to Jim for letting me share this crystal-clear explanation.