Heritage also predicted a Bush economic boom
(Ryan credit: Jason Reed/Reuters. Bush credit: WH)
This will give you a sense of the
magnitude of Paul Ryan's
budget credibility problem: The Heritage Foundation, which provided the economic forecasts Ryan used to sell the plan yesterday, has
scrubbed its
implausible forecast of 2.8% unemployment from its analysis of Ryan's plan without offering any explanation, suggesting Heritage itself doesn't believe its own numbers.
Of course, that isn't Ryan's only credibility problem. There's also the fact that he claimed Clinton budget director Alice Rivlin supported his plan to repeal Medicare and replace it with subsidized private insurance, but she actually doesn't. And there's the fact that the firm whose model Heritage employed in its forecast is skeptical of Heritage's numbers, saying the firm would have used different assumptions than did Heritage.
The list goes on: Ryan's plan calls for shrinking all spending other than health care and Social Security from 12% of GDP to 3.5%, but he doesn't explain how he will accomplish that feat. And Heritage is the same exact outfit that predicted an economic boom from the Bush tax cuts, a boom that never happened.
When you look at the CBO's analysis of the Ryan plan, it's easy to understand why he chose to tout the Heritage numbers, flimsy though they may be. Heritage decided to use a modified version of what the CBO calls its "alternative fiscal scenario" as a baseline against which to compare Ryan's plan. According to CBO's analysis, in 2022, public debt would be 95% of GDP under the alternative fiscal scenario, but 70% under Ryan's plan, a gap of 25%. According to Heritage, however, public debt would be 112% of GDP in 2021 under it's modified CBO baseline and 65% under Ryan's plan, a gap of 47%. So you have two different forecasts, both based on the same scenario, and both supposedly using the same baseline, but one is twice as rosy as the other—and of course the rosier scenario is the Heritage one.
But if you look at the actual CBO forecasts, and you compare what would happen under current law to what would happen under Ryan's proposal, you find something extraordinary: under current law, public debt would be lower as a percentage of GDP in 2021 than under the Ryan plan. The reason? Under current law, the Bush tax cuts are going to expire in two years. Ryan wants to extend them, and when you cut taxes, you grow the deficit.
Ryan and the GOP like to pretend their the only serious ones in the room, but when they are proposing a plan that would create more public debt than would current law, serious is the last thing that they are.