Rep. Paul Ryan, the chair of the House Budget Committee, released the fiscal-year 2015 House Budget proposal on Tuesday, a largely political document that will help shape the partisan debate ahead of the 2014 midterm elections.
As with some of his past budget proposals, Ryan will have trouble explaining the details and the means that get to the end — a balanced budget. This year, the consensus on the most implausible parts of his plan comes on two fronts.
The first are the levels at which non-defense discretionary spending is set in the budget. Discretionary spending is comprised of spending on programs that have to be reauthorized by Congress every year, not including entitlement programs like Social Security, Medicare, and Medicaid.
The second is an accounting trick that is likely to be controversial, and that some call a gimmick.
The last year of the budget window, 2024, gives a good example of what Ryan does to balance the budget:
- He ups non-defense discretionary cuts by $50 billion in 2024.
- He assumes lower war spending by about $25 billion that same year.
- He still needs a trick to get the budget to complete balance. Ryan uses a “dynamic” scoring method that helps balance his budget — one that could generate controversy. The “macroeconomic feedback effect” assumes the macroeconomic effects of cutting deficits will lead to about $74 billion in savings in 2024.
The non-defense discretionary spending levels, especially in the last year, seem to be the most implausible part of the budget. In 2024, per the budget, the non-defense discretionary spending levels would be $467 billion — a 22 percent cut from post-sequester levels. In raw dollars, that’s lower than it was in 2005. It’s also much lower than the 2013 level of $576 billion.
Loren Adler, a research director at the at Committee for a Responsible Federal Budget, told Business Insider it would “c ertainly be one of the toughest pieces to feasibly achieve.”
In inflation-adjusted terms, it amounts to about a 29 percent cut from current levels. According to a Senate Democratic aide, it’s also 28 percent below the average amount of the non-defense discretionary spending levels during the Bush administration.
By 2024, the Ryan budget adds $483 billion to defense spending beyond sequester-set spending caps. But to get overall savings, the budget cuts $791 billion from non-defense discretionary spending.
“NDD levels by end of budget window totally implausible — damage to safety net as well,” Jared Bernstein, a former Obama administration economist and now a senior fellow at the left-leaning Center on Budget and Policy Priorities, said in an email.
Ryan also uses the accounting trick to achieve balance. It’s a method he hasn’t employed in past budgets, and one that usually isn’t used by the Congressional Budget Office when scoring legislation. Ryan says the “macroeconomic feedback effect” of the deficit-cutting provisions in his budget will amount to $175 billion in savings over the 10-year budget window. And about $74 billion of that will come in the last year — coincidentally providing the U.S. with a $5 billion surplus.
Here’s Ryan’s reasoning for doing so:
The Congressional Budget Office has estimated several times over nearly 20 years that congressional action to reduce deficits will ultimately result in lower interest rates and faster economic growth by freeing up savings for use in productive investment. In addition, CBO has estimated that the positive economic effects of deficit reduction will feed back into the budget and further reduce deficits and debt over the medium and longer term.
Ryan notes the CBO used such dynamic scoring, for example, in 1998, when analyzing the 1998 bipartisan budget resolution that planned to balance the budget. But in general, the CBO says it does not usually analyze the macroeconomic effects due to several reasons (emphasis added):
Doing macroeconomic analysis of all proposed legislation would not be feasible; nearly all legislation analyzed by CBO would have negligible macroeconomic effects anyway (and thus negligible feedback to the federal budget); and estimates of macroeconomic effects are highly uncertain.
In his budget last year, Ryan included guidance about the macroeconomic effects to argue how his budget would be even better for deficits than the numbers showed. However, he did not employ the scoring method to achieve a balanced budget.
Republican budget proposes deep cuts in domestic programs
4/1/14 2 hours ago By David Lawder – Reuters
WASHINGTON (Reuters) – Representative Paul Ryan, the leading Republican voice on budget policy, rolled out a new fiscal blueprint on Tuesday that calls for deep cuts in domestic programs, increased defense spending and a goal of erasing annual deficits in 10 years.
Ryan’s budget, called the “Path to Prosperity,” has almost no chance of passing the Democratic-controlled Senate but is expected to serve as a campaign manifesto for Republicans in November’s congressional elections.
It proposes to kill President Barack Obama’s 2010 healthcare reforms and revives cuts in social programs such as the popular Medicare entitlement for the elderly that Ryan, who chairs the House Budget Committee, has proposed in other recent budgets.
The plan calls for savings of $5.1 trillion over a decade, with the goal of reaching a balanced budget by 2024 with no new tax revenues but increased defense spending.
Nearly $2.1 trillion would be saved over a decade by the proposal to kill Obamacare, according to the plan.
A sweeping overhaul of Medicare has been slightly revised, with phased-in changes applying to workers 55 years old and younger, compared to last year’s proposal which affected workers who were 54 and younger.
The document aims to bolster Republicans’ credentials as the party of fiscal prudence, but could open them up to fresh attacks from Democrats, who are calling for steps to reduce the gap between the rich and poor.
Pelosi Statement on Ryan Republican Budget
April 1, 2014
Washington, D.C. – Democratic Leader Nancy Pelosi released the following statement today after Budget Committee Chairman Paul Ryan released this year’s version of the House Republican budget:
“Today, Republicans have laid out their vision for a less prosperous America, demonstrating, yet again, the weakness of their arithmetic and the strength of their indifference to the concerns of struggling middle class families across the country. They are proving the lengths they will go to protect the special interests at the expense of the public interest. They are undermining seniors, students, and the middle class, crippling our economic competitiveness, and gutting our nation’s investments in the future – all to protect loopholes for the wealthy few and corporations that ship jobs overseas.
“Under this Republican budget, the wealthy and well-connected wouldn’t be asked to pay even a little more. But seniors would be asked to pay more for preventive services and prescription drugs and see the end of the Medicare guarantee. Families would witness devastating cuts to research, innovation, education, clean energy, and manufacturing, ceding economic leadership to other nations. All Americans would see a budget that rejects comprehensive immigration reform, with its promise of job creation, stronger small businesses, a growing economy, and a shrinking deficit.
“Democrats have a better approach: creating jobs, strengthening the middle class, investing in our infrastructure and our children’s education, closing the opportunity gap, and responsibly reducing the deficit. Together, we can reignite the American Dream and build an economy that works for everyone.”
Hoyer Statement on Republican Budget for Fiscal Year 2015
April 1, 2014
WASHINGTON, DC – House Democratic Whip Steny H. Hoyer (MD) released the following statement today in response to the House Republican budget for Fiscal Year 2015:
“No one ought to be surprised at the budget unveiled by Chairman Paul Ryan and House Republicans today, which once again asks those with less to give more and those with more to give less. This year’s Republican budget builds on the disastrous approach Republicans have followed over the past three years, embracing the painful and irrational sequestration cuts and slashing funding that supports investments in opportunity, growth, and security.
“While anyone who looks at the FY2015 Republican budget can readily see that it would do serious damage to our economy and society, Republicans do their best to hide the extent of the damage. As in previous years, Chairman Ryan relies on gimmicks, magic asterisks, and spurious accounting assumptions to presume that his budget will achieve its anticipated deficit savings. Additionally, his budget ends the Medicare guarantee as we know it, turns Medicaid into a block grant, repeals the Affordable Care Act [aka ObamaCare], fails to invest in job creation, and does not include any new revenue. His budget simply doesn’t work – and would lead to significant harm for our country.
“Last week, I delivered a speech in which I called on both parties in Congress to maximize every opportunity to move us closer toward the long-term fiscal sustainability that our country needs. Our budget process is just such an opportunity; unfortunately, House Republicans chose to make it a partisan messaging exercise rather than a real effort to achieve balanced deficit savings and invest in the programs that strengthen our economy, grow our middle class, and help more of our businesses and families Make It In America.”
Statement by the White House Press Secretary on the House Republican Budget
April 01, 2014
To build real, lasting economic security for the middle class, the President and Democrats in Congress have a plan to grow our economy from the middle out, not the top down, and create more opportunities for every hardworking American to get ahead. Unfortunately, Republicans in Congress do not have a plan that works for the middle class and the House Republican Budget is the same old top-down approach. Because of a stubborn unwillingness to cut the deficit in a balanced way by closing tax loopholes for the wealthy and well connected, the House Republican Budget would slow the economy, stack the deck against the middle class, and threaten the guaranteed benefits seniors have paid for and earned.
The House Republican Budget would raise taxes on middle class families with children by an average of at least $2,000 in order to cut taxes for households with incomes over $1 million. It would force deep cuts to investments in our roads and bridges, scientific research to cure diseases like Alzheimer’s and at every level of education from early childhood to community college. It would end Medicare as we know it, turning it into a voucher program and risking a death spiral in traditional Medicare. Instead of ensuring that Americans earn a fair wage for a hard day’s work and lifting millions of people out of poverty, the House Republican approach undermines Americans working hard to support their families by slashing food stamps and Medicaid. And rather than expanding health coverage for all Americans and making it more affordable, it would repeal the Affordable Care Act, raising health care costs on families and businesses and eliminating coverage for the 3 million young adults who have gained coverage by staying on their parent’s plan, the millions of people who have signed up for private insurance plans through the Marketplaces, and millions more who can continue to gain coverage through Medicaid.
The House Republican Budget stands in stark contrast to the President’s Budget, which would accelerate economic growth and expand opportunity for all hardworking Americans, while continuing to cut the deficit in a balanced way. The President has put forward a Budget that rewards hard work with fair wages, equips all children with a high-quality education to prepare them for a good job, puts a secure retirement within reach, and ensures health care is affordable and reliable, while at the same time asking the wealthiest to pay their fair share and making tough cuts to programs we can’t afford. And by paying for new investments and tackling our true fiscal challenges, the President’s Budget builds on the progress we’ve already made to cut the deficit by more than half since 2009 and cuts the deficit as a share of the economy to 1.6 percent by 2024. It also stabilizes the debt as a share of the economy by 2015 and puts it on a declining path after that.
Budgets are about choices and values. House Republicans have chosen to protect tax breaks for the wealthiest rather than create opportunities for middle class families to get ahead. The President believes that is the wrong approach and that we should instead be making smart investments necessary to create jobs, grow our economy, and expand opportunity, while still cutting the deficit in a balanced way and securing our nation’s future.
A State-by-State Breakdown of the Damage That Would Be Caused by the House Republican Budget
April 09, 2014 05:13 PM EDT
House Republicans this week are voting on a budget that protects tax breaks for the wealthiest rather than create opportunities for middle-class families to get ahead. It is the same old top-down approach and would raise taxes on middle-class families with children by an average of at least $2,000 in order to cut taxes for households with incomes over $1 million.
As in previous years, the House Republican Budget proposes deep funding reductions that would result in severe cuts to critical areas that are needed to support job creation, economic growth, a strong middle class, and assistance for lower income individuals, especially when compared to the overall level of investment in the President’s budget. Since House Republicans aren’t willing to identify specifically what they actually want to cut, one way to assess the potential damaging impact is to look at what would happen to key programs if the cuts compared to the President’s budget were applied evenly across the board.
The results show the potential extent of the damage across the country. Within a few years:
- In Florida, 290,000 seniors benefited from the closure of the Medicare Part D prescription drug donut hole in 2013 alone and at least that many likely would have to pay more for their needed medications in future years.
- In California, more than 50,000 fewer students would receive Pell Grants to help them pay for college.
- In Ohio, the proposed Medicaid block grant would cut federal Medicaid funding for the state by more than $30 billion over the next decade, likely resulting in more uninsured individuals and less care for those still covered.
- In Texas, 12,000 fewer children would receive Head Start services.
- In Pennsylvania, more than 100,000 people would lose job search assistance.
- In Missouri, 1,700 fewer victims of domestic violence would be served through the STOP Violence Against Women Program.