There is nothing more frustrating to progressive commentators than seeing Chairman Paul Ryan’s 2014 Budget Proposal afforded the respect it is due by nonpartisan observers. That’s why New York Times columnist Paul Krugman has worked feverishly for the past several years to discredit Chairman Ryan and his budget. Rather than focus their attacks on policy choices, Krugman and other progressives have resorted to ad hominem attacks, calling Chairman Ryan a “flimflam man” and a “con artist.” The level of invective reflects the threat Ryan’s proposal poses to progressives; if treated seriously, the balanced budget would inevitably require President Obama to produce one of his own.
President Obama’s fiscal policy amounts to exponential growth in federal outlays with periodic calls for higher taxes on “the most fortunate among us” whenever pressed on how the numbers are supposed to add up. The President’s mantra of a “balanced approach” is a useful deceit in that it suggests that the scale and timing of deficit reduction is the same; the only difference is Chairman Ryan’s insistence on cutting vital programs more than necessary to protect the “wealthiest Americans” from tax increases. In reality, the Obama Administration has no plan for addressing escalating debt burdens and the associated drag on economic growth. When forced to document how it would achieve $4 trillion in deficit reduction, the Obama Administration double-counted revenues already included in its baseline, assumed savings from already scheduled military drawdowns, and doubled-down on cuts to reimbursement rates that will hasten the exodus of medical professionals willing to serve Medicare beneficiaries.
It is also worth noting that even if the President proposed genuine savings, the static $4 trillion figure is inadequate for the scale of the problem. The number comes from the 10-year savings achieved by Bowles-Simpson in 2010. It is now 2013. As the federal government and debt grow each year, so too do the savings required to stabilize and eventually reduce the debt-to-GDP ratio. Between 2010 and 2013, the gross federal debt actually increased by a larger amount – $4.019 trillion [Table 7.1] – than the 10-year savings the President touts as being sufficient to solve our fiscal problems.
The Senate hasn’t passed a budget since 2009 and only agreed to vote on one this year as a result of mandate imposed by the debt ceiling extension. The budget that resulted from this legislative imperative has been labeled “timid” by reliably liberal voices and that’s probably the nicest thing one could say about it. The Senate budget aims at increasing taxes just enough each year to make the deficits over the 10-year horizon seem manageable. Of course, with entitlement spending rising nonlinearly, the proposed $1 trillion in tax increases would have to be tripled over the next decade to achieve similar results. As shown in Figure 1, slightly increasing the revenue line closes the gap with spending in the near term, but the dramatic upturn in spending at the end of the budget window would leave the country in virtually the same position qualitatively as it is today even after the $1 trillion in new taxes, which come on top of the $620 billion already enacted into law in January. It is remarkable to consider that the alternative to Ryan’s proposal in the House is actually more responsible than the Senate plan in that it purports to balance the budget by 2040. Better late than never.
The threat posed by the Ryan plan becomes obvious in the context of these dreadfully unserious proposals. The Ryan Budget is the simple answer to a straightforward question: How much would we need to slow the rate of growth of federal expenditures to balance the budget in 10 years? And rather than assume that the world ends in 2023 and reverse engineer a budget to make near-term deficits tolerable while ignoring long-run problems, the Ryan Budget addresses them with real entitlement reforms. No one has to like the Ryan Budget, embrace its policy choices, or agree on the reliance on spending restraint rather than tax increases; but it is a real proposal that achieves debt reduction on the requisite scale. Hence the attacks.
Paul Krugman’s main beef is that the Ryan Budget is, well, a budget resolution – i.e. it specifies revenue and spending aggregates without detailing the precise policies used to achieve them. Those echoing the claim that Ryan’s budget is full of “holes” are either intentionally misleading or simply don’t understand budget resolutions. The Ryan Budget leaves the tax revenue baseline unchanged, but suggests – rather uncontroversially – that the revenue could be raised more efficiently through lower rates and less generous deductions. The Senate plan would generate $1 trillion in additional revenue, but is similarly light on details. The spending restraint in the Ryan budget is either explicitly detailed to a greater extent than required (as with Medicare or Medicaid) or would simply take the form of budget caps similar to those enacted as part of the Budget Control Act.
Others criticize the Ryan Budget for proposing to repeal the subsidies ObamaCare but retaining the tax increases and spending cuts. While some view this as devastating evidence of hypocrisy, it is actually nothing more than an affirmation of the most basic conservative critique of ObamaCare: spending cuts and revenue used to extend the solvency of the Medicare Trust Fund cannot simultaneously be used to fund a new entitlement. The Ryan Budget simply ends the double counting that makes ObamaCare a fiscal disaster.
Perhaps the most oft-made criticism is that the Ryan Budget ignores political reality. Some chide Ryan for proposing something that couldn’t pass the Senate or ridicule him for proposing a budget similar in substance to the one proposed in the Presidential campaign. These critics essentially demand that Chairman Ryan negotiate with himself until he produces a budget more to their liking. This critique dovetails with the “balanced approach” rhetoric, as critics can simply pan the Ryan budget for its lack of balance and be relieved of any obligation to propose a serious alternative.
The President is not willing to propose increases in tax revenue on a scale necessary to fund his preferred level of federal spending. The Ryan Budget provides an alternative fiscal framework where aggressive spending restraint substitutes for the President’s scheduled debt accumulation. While no one should suggest these cuts would be painless or popular, progressives’ efforts to hide these basic facts under a blizzard of calumnies is strong evidence that they might not be as poisonous as many suppose.
