“We need to get rid of all these accounting tricks, all these budget gimmicks, and we’ve got to attack the drivers of our debt.”
— Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, April 5, 2011
With a snazzy video presentation and a plan long on rhetoric and short on details, Ryan unveiled his 2012 “Path to Prosperity” budget blueprint last week. In so doing, he suggested he was going to get rid of “these accounting tricks, all these budget gimmicks.” So how did he do?
First off, Ryan stacks the deck a bit. His budget presentation shows a scary-looking graph depicting an ocean of red stretching long into the future. The graph is titled, “We are in a Spending-Driven Debt Crisis” and says it is based on “CBO’s Alternative Fiscal Scenario.” But then when you look at one of the papers from the Congressional Budget Office, it turns out that the scary scenario is also based on taxes being too low.
In fact, taxes are a big part of the problem. The CBO paper assumes, among other things, that the Bush-era tax cuts are extended forever (as Ryan proposes to do); the alternative minimum tax is indexed for inflation (Ryan says he will deal with this problem) and tax law evolves so that revenue remains at 19 percent of GDP (as Ryan proposes to do.)
Ryan also claims that his proposal has the imprimatur of the CBO. The budget document declares: “According to the Congressional Budget Office, this budget charts a path to complete balance. By 2040, the CBO estimates that this budget will produce annual surpluses and begin paying down the national debt.”
This seriously overstates the case.
Yes, CBO has produced a letter in which it plugged various data, plans and scenarios provided by Ryan’s staff into its budget database. But just as Republicans have repeatedly complained about the cost estimates associated with the Obama health-care law, this document largely reflects the scenarios that Ryan has concocted.
And there’s a major caveat emptor: “CBO’s long-term scenarios and the proposal analyzed here are all subject to pressures over the long term that would make them difficult to sustain.”
It said that although debt would shrink relative to the size of the economy, Medicare beneficiaries “would bear a much larger share of their health-care costs than they would under the current program,” payments to doctors would shrink dramatically, states would have to pay substantially more for Medicaid and spending for programs other than Social Security and health programs “would be reduced far below historical levels relative to GDP.”
Mysteriously, although Ryan relies on the CBO to vouch for his plan, he appears to ignore CBO estimates that a repeal of the health-care law would lead to an increase in the deficit. Instead, a substantial part of his claimed deficit reduction — $1.4 trillion over the next 10 years — comes from repealing the health-care law. Where do those numbers come from? Ryan does not explain, and his spokesman did not respond to a query.
In one of the more dubious assertions, Ryan relies on a report from the conservative Heritage Foundation to claim that his budget would result in a gusher of jobs. Be wary when politicians rely on analyses from outside groups — particularly partisan ones.
The Ryan budget plan relies on dubious assertions, questionable assumptions and fishy figures. The ideas may be bold, but the budget presentation falls short of his claim that he is getting rid of budget gimmicks. Two Pinocchios