Steven Hayward is partially correct in one of Professor Eismeier’s earlier posts when he says “Ryan’s budget architecture is about much more than just fiscal balances.” Ryan’s budget is clearly about articulating his radical agenda for the nation. In fact, Ryan’s budget clearly seems to have very little to do with fiscal balancing. After all, Ryan actually gets very little new or serious deficit reduction from CBO’s baseline in the first decade. The reported nearly $1.65 trillion in deficit reduction he gets from the CBO baseline over the first 10 years depends heavily on over $1 trillion dollars in savings from assuming the same war costs that President Obama does in his budget and the resulting lowered interest payment costs. Aka, a raw-down of troops in Iraq and Afghanistan. Ryan’s lack of significant deficit reduction is due to his massive tax cuts almost entirely offsetting his massive spending cuts, which helps to explain why his budget still allows the debt-to-gdp ratio to be even higher in ten years from now. After that, Ryan's budget only achieves significant deficit reduction by slashing Medicare in a way that requires overlooking key political and health economics issues.
Ryan’s proposal really includes over $4 trillion in program cuts, but this is largely offset by the $4 trillion-plus in tax cuts he also supports. The revenue losses largely result from extending all of the Bush tax cuts that overwhelmingly benefited the richest Americans. Note that his revenue estimates have so far neither been confirmed or evaluated by any outside entity. For now everyone just has to accept Ryan’s tax policy claims (which lack essential details) about what revenue levels he is going to achieve while extending the Bush tax cuts AND lowering the corporate and individual top tax rates to 25%. He says he’s going to offset those revenue losses with unspecified changes in tax expenditures. Just remember that he said this before, after his Roadmap's assumption of raising 19% of GDP in revenues was shattered by the Tax Policy Center's analysis which showed that it would actually collect less than 17% of GDP. Combined with this cycle's failed Heritage analysis (see http://krugman.blogs.nytimes.com/2011/04/06/memory-hole-alert/), and a pattern emerges of Ryan being forced to rely on gross exaggerations in order to sell his agenda.
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