Wednesday, March 10, 2010

Ryan's Road Map Crashes. Drives Economy Off the Road.

Oops! Looks like Paul Ryan's numbers and "Road Map" are playing their own "deceptive" game. The Washington Post's Ezra Klein has the story:

Paul Ryan's budget proposal does not balance the budget

When Rep. Paul Ryan sent his alternative budget proposal to the Congressional Budget Office to be scored, there was a bit of a caveat: The CBO doesn't estimate revenues. That's the job of the Joint Committee on Taxation. So the CBO and Ryan's staff agreed to assume that under Ryan's plan, tax revenues remained at about 19 percent of GDP. That's within the historical range for the American tax system, so it seemed a harmless assumption. The problem is that it wasn't accurate. The Tax Policy Center ran their own analysis and, well, I'll let them explain:

In his provocative Roadmap for America’s Future, Representative Paul Ryan figures that his broad tax code overhaul would eventually generate about 19 percent of Gross Domestic Product in revenues. But the Ryan plan would produce hundreds of billions of dollars-a-year less than that—about 16.8 percent of GDP—a decade from now, according to new Tax Policy Center estimates. Moreover, the plan would give a huge tax cut to the wealthy, while cutting taxes by little or nothing (and in some cases even raising taxes) for low- and middle-income people.

As a result, Ryan would likely fall far short of meeting his goal of balancing the budget and paying off the national debt by 2080, even if government spending were slashed to 1951 levels as he proposes.
But it's a reminder that even draconian, unthinkable limits on spending won't be enough to balance the budget. Revenues -- likely at much higher than 19 percent of GDP -- will have to be part of the picture, too.

Update The Ryan camp responds, though it's not clear to me whether they disagree. "If needed," they say, "adjustments can be easily made to the specified rates to hit the revenue targets." And it seems like those adjustments will be needed. Citizens for Tax Justice e-mails to say they also ran the numbers on Ryan's tax changes, and came up with similar results to the Tax Policy Center's analysis.

The Joint Committee on Taxation took a look at Obama's plan, and I'll follow-up on that story soon (still looking for it). Interestingly, Fox News interviewed Paul Ryan, but never mentioned his faulty plan, instead stressing the possible tax increases under Obama's Plan.

No comments:

Post a Comment