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Ryan's budget will have all the value of washing clean dishes
Next Tuesday, House Budget Committee Chairman Paul Ryan will unveil the GOP's latest budget document, a plan that party leaders say will balance the budget within ten years. Jonathan Weisman of The New York Times previews a few key nuggets:
WASHINGTON — House Republicans will preserve Medicare cuts that their presidential nominee loudly denounced last year and accept tax increases they sternly opposed just months ago in a new tax-and-spending blueprint that would bring the federal budget into balance by 2023, senior Republicans said Wednesday.

But the politically charged proposal, which emerged as the House easily passed legislation to keep the government financed through Sept. 30, is not expected to include workers currently 55 and over in major changes recommended for Medicare, after more moderate Republicans objected.

So Republicans will once again endorse the Medicare cost-savings achieved by Obamacare and now for the first time they will embrace Clinton-era tax rates on top earners. Those decisions are good for a few chuckles at their flip-flopping, but they were widely expected.

What is new, however, is the fact that Ryan's budget apparently won't include any additional changes to Medicare over the next ten years, preserving the GOP's pledge to not change the program for people 55 and older. They'll still end Medicare as we know it for everyone else, a decision which almost certainly would lead to exploding costs or service disruptions for the final wave of people to qualify for the current Medicare system, but let's set that aside for the moment and take a look at the implications of taking Medicare changes off the table for achieving a balanced budget within ten years.

Follow below the fold to see how Ryan's plan would mean cutting domestic programs, including Medicaid, by nearly 40 percent—unless he includes a magic asterisk, which he surely will.

According to the Congressional Budget Office's latest forecast, we're projected to run a total of $7 trillion in deficits over the next decade. That represents about 15 percent over overall spending during the time period, which is projected to be $47.2 trillion. So at the top-level, Ryan and the GOP need to propose a budget which would cut an additional 15 percent in spending in order to achieve balance—unless they fake their numbers with magic asterisks that assume faster economic growth (and therefore more revenue) than CBO projects.

That 15 percent cut would come on top of the spending caps and sequester created by the 2011 Budget Control Act. If that sounds severe, take a moment to consider how much more severe it will be for the parts of the budget that the GOP hasn't walled off. Medicare spending is projected to be $8 trillion over the next decade, and according to today's report, the GOP won't be touching that. If they aren't going to touch Medicare, I can't imagine that they'll touch Social Security, which is projected to be $11.2 trillion in spending. That leaves about $28 trillion from which to cut $7 trillion in deficits, a 25 percent cut.

But if you think 25 percent is an enormous cut, just wait until you do the math with spending on defense and veterans benefits factored out, because surely Republicans won't propose cuts to those programs, which are projected to cost $9.3 trillion over the next decade. That leaves them with needing to cut $7 trillion from $18.3 trillion—a whopping 38 percent cut which would hit Medicaid and domestic discretionary spending.

Here's the thing, though: not even Republicans are crazy enough to propose cutting 38 percent of domestic spending. But they've committed themselves to proposing a balanced budget without raising revenues, so how will they accomplish their task? The answer is the same as it always has been: they'll do it with a magic asterisk consisting of unspecified cuts to unspecified programs and massive new revenues unleashed by lowering tax rates and cutting spending. And even though their proposal will basically be a figment of their imagination, far too many beltway pundits will treat it as a serious document, because Paul Ryan has earnest dimples and rock hard abs.

Originally posted to The Jed Report on Thu Mar 07, 2013 at 06:49 AM PST.

Also republished by Daily Kos Economics and Daily Kos.

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