The alternative budget introduced today by Rep. Paul Ryan somewhat suspiciously presents numbers as a fraction of GDP without specifying exactly what the GOP projection for GDP is under their budget and how it is calculated. However, one can extrapolate the calculated GDP from the figures for net receipts in terms of dollars and fraction of GDP. The result is surprising.
Under their favored budget, House Republicans project a GDP that precisely mirrors the intentionally conservative CBO estimate for the next decade. One would presume that given that the Republican budget posits that its large corporate income tax cuts, capital gains cuts, and income tax cuts (almost all for the rich - 84% to the richest 20% of Americans) will stimulate economic growth, that they would project some improvement.
Furthermore, the Heritage Foundation simulation that underlies the GOP budget shows that even by their accounting, the Republican plan increases the deficit relative to the current law baseline.
By the logic used to sell the GOP budget (comparing deficit as a % of GDP to Obama’s budget), this budget is worse than doing nothing. The GOP budget increases the deficit at the expense of cutting a huge chunk of government spending with no benefit to the broader economy over the projected time period. The only benefit would be fewer taxes for most, although the savings for the majority would be smaller than their cut in the stimulus bill and many would see a tax increase.
Cross-posted at AlchemyToday.