GOP Rep. Paul Ryan’s budget plan may be music to the ears of Republicans and Tea Partiers, but the National Journal raises some serious questions about whether the budget blueprint was created by conservatives donning rose-colored glasses.
According to NJ, the Ryan plan to substantially reduce the deficit is based on this scenario: an unemployment rate that will quickly plunge by 2.5 percentage points; a still-sinking housing market that will come roaring back; and a U.S. treasury that will collect $100 billion more in annual income tax revenues, despite a sharp cut in tax rates for the wealthiest Americans.
NJ’s Jim Tankersley and Katy O’Donnell found that the House GOP proposal “pushes optimism to the outer limits” by making even more questionable assumptions:
“By 2015, the forecasters say, unemployment will fall to 4 percent. By 2021, it will be a nearly unprecedented 2.8 percent.
“The … forecasted growth is so high that it falls on the outer edge of what most economists say is plausible—or even desirable—for the next decade.”
It turns out that the GOP prognosticators rely upon shaky stats put forward by the right-wing Heritage Foundation which place unquestionable faith in supply-side economics.
Heritage analysts defend their work, including predictions of unemployment below 3 percent and robust growth without any fear of inflation or rising interest rates.
Heritage analysts defend their work, including predictions of unemployment below 3 percent and robust growth without any fear of inflation or rising interest rates.
But NJ adds this: “Heritage modelers have made similar predictions before—and they didn’t pan out.
In 2001, they incorrectly projected that tax cuts pushed by President George W. Bush would create millions of new jobs. In fact, the 2000s were the most anemic decade for U.S. job creation since the Great Depression. Heritage experts say they couldn’t have predicted the 2001 recession or the Bush administration’s government spending increases.”
In 2001, they incorrectly projected that tax cuts pushed by President George W. Bush would create millions of new jobs. In fact, the 2000s were the most anemic decade for U.S. job creation since the Great Depression. Heritage experts say they couldn’t have predicted the 2001 recession or the Bush administration’s government spending increases.”
Liberal economists were quick to attack the Ryan plan’s assumptions.
“They (Heritage) don’t have a strong track record of their projections matching reality when it comes to these kinds of scenarios,” said Heather Boushey, senior economist at the Center for American Progress. In particular, Boushey called the math behind projections of massively increased housing investment “fuzzy” given the realities of the market.
The unfairly maligned Congressional Budget Office, in a preliminary review of Ryan’s work, concluded that the cuts and reforms proposed by the Wisconsin Republican would hurt seniors and the disabled with higher out-of-pocket health care costs.
In addition, the CBO said, “federal payments for Medicaid under the proposal would be substantially smaller than current amounts.”
Over at the liberal Economic Policy Institute, they also question the Republicans’ tax and spending assumptions and they bash Ryan for taking a Reaganesque approach to budgeting.
“This budget is not a serious attempt to govern, but a warming over of long-dead economic proposals,” EPI said in a news release.
“The … plan would not only put the fragile recovery at risk, but it would also undermine economic growth and job creation for years.
“This budget is impressive in its ability to not only inflict maximum harm on the economy, but to concentrate that harm on those most in need. This will not only cost the economy hundreds of thousands (and perhaps millions) of jobs over the next five years, it will also destroy the social safety net and undermine policies that support the middle class.”
In response to the House Republicans grabbing the momentum on budget issues, one liberal group, Americans United For Change, has launched a TV ad that claims Ryan’s bold stroke will “leave future retirees at the mercy of the private insurance companies.”
They charge that the Ryan blueprint is a “job-crippling budget plan.”
They also reply on an analysis by the Center on Budget and Policy Priorities that asserts the GOP measure would cost three million U.S. jobs.
The CBPP concludes this: The Ryan plan would (underlined for emphasis) “produce the largest redistribution of income from the bottom to the top in modern U.S. history, while increasing poverty and inequality more than any measure in recent times and possibly in the nation’s history. “That’s because the Ryan plan would generate at least two-thirds — about $2.9 trillion — of its … budget cuts over 10 years from programs for people of modest means, while making permanent all of President Bush’s tax cuts for high-income Americans as well as a new estate-tax giveaway in the December 2010 tax package.”
What’s more, many analysts predict that Ryan, the House Budget Committee chairman, will put the GOP’s presidential candidates in a vise in 2012, in particular due to the plan to eliminate Medicare as we know it. That obviously won’t play well in the polls, but some Republican pundits believe that the Ryan framework will dominate the presidential campaign and put President Obama on the defensive.
So far, GOP presidential hopefuls are walking a political tightrope, supporting the Ryan agenda in general, but avoiding commentary on the Medicare privatization plan. Certainly, campaign managers and consultants will tell their candidates to steer clear of any embrace of the Medicare meltdown. Especially because skittish seniors were a key component of the GOP’s big turnaround in the 2010 elections.
So maybe the Libertarian Party – a Tea Party favorite — will come to the forefront and praise Ryan’s far-reaching efforts. Right? Wrong.
The party issued a statement that said the budget plan reveals Republicans as hypocrites who are not serious about reforming Washington’s ways. The Libertarians complain that the plan does not make any substantial cuts to the Pentagon and does not immediately withdraw U.S. troops from installations across the globe, including Iraq and Afghanistan.
In an attempt at a stinging rebuke, the Libertarians say that Bill Clinton was more effective at limiting government spending than even Ryan’s ambitious plan. They point out that federal spending dropped to 18.2 percent of GDP by the end of Clinton’s second term in the White House. In contrast, Ryan’s 10-year odyssey would still leave spending at 19.9 percent of GDP.
“Americans hoping to get real about our national debt just got sucker-punched by Republican Paul Ryan,” said party chair Mark Hinkle.
“Republicans want to spend $40 trillion over 10 years. That averages a staggering $4 trillion per year. As recently as 2000, federal spending was only about $1.8 trillion.
“They also want to increase the federal debt from $15 trillion to $23.1 trillion. I hope our children and grandchildren enjoy paying interest on that extra $8.1 trillion.
“Republicans want to spend $40 trillion over 10 years. That averages a staggering $4 trillion per year. As recently as 2000, federal spending was only about $1.8 trillion.
“They also want to increase the federal debt from $15 trillion to $23.1 trillion. I hope our children and grandchildren enjoy paying interest on that extra $8.1 trillion.
