The Calculus Of Paul Ryan’s Budget

Jay Newton-Small summarizes Ryan’s new proposal:

The budget would repeal ObamaCare, including the money-saving Independent Payment Advisory Board, cutting $1.2 trillion in federal outlays. It turns Medicaid into a block grant program for states, which would save $732 billion over 10 years. It essentially aims to privatize Medicare, offering enrollees in 2024 the choice of a private plan, while raising the age of eligibility and means tests for high income seniors. All told, more than half of the $5.1 trillion [in cuts] would come from health care savings. The document, provided on an embargoed basis to reporters, did not provide detailed budgetary outlays, but rather an overview of the budget’s goals.

Surprisingly, Ryan did not renew his recommendation from years past to essentially privatize Social Security. In this budget he simply notes the problem in long-term projected shortfalls and calls on Congress and the President to begin working on solutions.

Danny Vinik pans the proposal:

Ryan could have used his budget to signal, even tentatively, an interest in [Dave] Camp’s ideas—or of a similarly reality-grounded approach to making the budget dollars add up. Instead, he did what Republicans have done over and over again in recent years: He promised fealty to principles that, whatever their individual merits, cannot exist in a fiscally responsible budget plan. In so doing, he’s making the same mistake that his old running mate, Mitt Romney, did in the presidential campaign—making it impossible to build support for a real tax reform proposal that, inevitably, would fall way short of those goals. You can see it in the reaction to Camp’s proposals, which has become so toxic that Camp himself is now running from them. (On Monday, he announced he won’t seek reelection.)

Paul Ryan had a chance to learn from Camp’s failure. He had a chance to do what Camp could not: To set expectations at a realistic level. Instead, Ryan further ensconced the impossible goals Republicans have for tax reform—and made his future job that much more difficult.

Howard Gleckman calls bullshit on the budget:

I won’t blame Ryan for this budget, which seems to be more the work of the House GOP leadership. And I don’t know if it will prove to be useful grist for campaign ads. But as a policy document, the tax section is not serious.

Suzy Khimm zeroes in on an area where Ryan goes further than before:

His new budget would cut spending on domestic discretionary programs by $790 billion through 2024. That’s cutting even more than his budget last year—imposing domestic discretionary reductions that are about 7% deeper by the end of the decade, according to estimates from Joel Friedman of the Center on Budget and Policy Priorities. What would these cuts actually mean? Ryan offers some specifics: He would end loan modifications to low-income, distressed homeowners facing foreclosure; eliminate Pell Grants for students who are less than half time; and reduce block grants for economically underdeveloped communities, among other changes.

Edwin Park warns that Ryan’s plan would devastate healthcare:

The Urban Institute estimated that Chairman Ryan’s similar block grant proposal in 2012 would lead states to drop between 14.3 million and 20.5 million people from Medicaid by the tenth year (outside of the effects of repealing health reform’s Medicaid expansion).  That would result in a reduction in enrollment of between 25 percent and 35 percent.  The Urban Institute also estimated that the block grant likely would have resulted in cuts in reimbursements to health care providers of more than 30 percent by the tenth year.  This year’s proposal likely would result in cuts that are similarly draconian.

Drum calculates that “about 86 percent of [Ryan’s non-interest cuts] are targeted at programs for those with low-incomes”:

Ryan will doubtlessly deny this, as he always does, since his blueprint doesn’t spell out all his cuts in detail. But the numbers are nevertheless clear. Maybe it’s not 86 percent. Maybe it’s 85 percent. Or 80 percent. The exact percentage doesn’t matter. No matter how you slice it, Ryan is balancing the budget almost entirely by slashing spending on the poor.

The Bloomberg editors weigh in:

Ryan’s budget blueprint overstates the threat from long-term debt and understates the stresses of poverty and unemployment. There may soon be a time when cutting taxes for the wealthy and cutting spending for the poor makes good fiscal and political sense. Nothing about the current economy or tax structure suggests that time is now.

Camp’s tax-reform proposal, like Ryan’s budget, was based on conservative principles. Only it didn’t make the poor bear the brunt of them. Camp paid for his reduced tax rates in part by cutting tax deductions, exclusions and credits — including the sacred mortgage interest deduction for homeowners — that mostly benefit the well-off. On the whole, the wealthy would have paid less in taxes but received fewer write-offs.

Jared Bernstein’s take:

I don’t think I’ve ever seen more Orwellian budget language than what the Ryan team has crafted.

Under a section called “Expand Opportunity,” Pell Grants to help students from low-income households pay for college are cut by almost $130 billion. “Strengthening the Safety Net” in Ryan-speak means turning over food stamps (formally known as SNAP) and Medicaid to the states with funding that is sharply reduced and then block-granted, robbing those programs of their essential countercyclical functions, i.e., the ability to expand in recessions. That would, of course, severely weaken the safety net and unquestionably kick tens of millions off the programs’ rolls. In fact, Ryan cuts spending in such mandatory programs by about $1.5 trillion over a decade. Orwell, himself, would blush to call that “strengthening.”

Weigel thinks the budget complicates the Democrats’ midterm strategy:

But Ben Jacobs expects the plan to hurt the GOP in 2016:

[W]ith the near-unanimous support for Ryan’s budget among 2016 contenders (the only qualms had are those of Ted Cruz and Rand Paul, who both think Ryan could go further), Democrats get to target the eventual GOP nominee on favorable playing ground. It certainly doesn’t doom any Republican presidential campaign to failure in advance, but it adds a handicap for any contender—particularly those like Jeb Bush and Christie who would be trying to come across as more centrist and less Tea Party. While lowering taxes is always popular and Obamacare may be prove to be unsuccessful, supporting cuts in Medicare and drastic reductions in domestic discretionary spending doesn’t poll well and makes for great attack ads.

Andrew Flowers explains the Ryan budget’s dynamic scoring:

The mechanics of dynamic scoring in the Ryan budget work like this: His budget has a mix of policies (lower tax rates, increased defense spending, cuts to almost everything else). These policies lower federal spending over the next decade by about $5 trillion relative to baseline projections. Then his proposal assumes that the deficit reduction boosts economic growth, thus raising tax revenue, thus further reducing the deficit.

Specifically, the Ryan proposal has a “macroeconomic fiscal impact” line item (see Page 89) that shows this effect. It reduces the deficit by a cumulative $175 billion over the next decade. At 0.3 percent of gross domestic product in fiscal year 2024, it’s just enough to balance the budget in the 10-year span.

Jordan Weissmann also examines the growth calculations: