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A Look at the Ryan Budget

The Ryan budget has appeared as a chairman’s mark. It’s a long document written in Congress-ese, but I’ve already gone over some of the main points. Here are a couple other tidbits:

• The coverage of the trigger cuts for 2013, incorporated into this document, are unformed and will be the work of six committees. The budget gives instructions to each committee – Agriculture, Energy and Commerce, Financial Services, Judiciary, Oversight and Government Reform and Ways and Means – to come up with a set level of cuts to counteract the trigger. However, we do know the structure for that particular policy – it’s part of reconciliation instructions.

It’s unusual to have an uncoordinated reconciliation plan. The Senate has not offered one. And parliamentary experts believe that a House-only reconciliation won’t pass muster. The House obviously believes that they can put pressure on the Senate to act, with a bill that would only require 51 votes under reconciliation instructions. But the Senate would have to initiate reconciliation themselves prior to that.

• The budget caps long-term revenues for the government at 19%, out to 2050. But by reducing taxes to two brackets, with rates of only 10% and 25%, it’s nearly impossible to see how you could get to even 19%. And Ryan won’t tell you in this budget. There’s no specificity to even where the dividing line gets drawn between the 10% and the 25% tax bracket. And while Ryan says he will cover the cost of those reductions by “closing loopholes,” he fails to mention one loophole that he would actually close. So the 19% revenue number is little more than a fantasy.

• Meanwhile, the targets for spending are at the impossibly small 20.25% for 2030, 18.75% for 2040 and 16% for 2050. That last number rivals the Gilded Age. But this also means that, for all the shrieking about balanced budget, even Ryan’s budget does not balance the budget 18 years from now, in 2030.

• There’s an odd “reserve fund” created for the repeal of the Affordable Care Act. This seems to be an admission that repealing the law would actually increase the deficit.

• Section 509 is also interesting. The Ryan budget includes a “separate allocation for overseas contingency operations/global war on terrorism.” There’s always been an OCO fund, that’s how Iraq and Afghanistan were funded. But adding a “global war on terrorism” allocation makes that fund even more like a slush fund to be used for the benefit of homeland security and weapons industry lobbyists. By the way, defense spending rises from $560 billion in 2013 to $709 billion in 2022 in this document. And that doesn’t include this terrorism slush fund.

• We’ve heard about the Medicare plan, but on Social Security, there’s this:

(b) POLICY ON SOCIAL SECURITY.—It is the policy of this resolution that Congress should work on a bipartisan basis to make Social Security permanently solvent. This resolution assumes reform of a current law trigger, such that—

(1)(A) if in any year the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund in its annual Trustees’ Report determines that the 75-year actuarial balance of the Social Security Trust Funds is in deficit, and the annual balance of the Social Security Trust Funds in the 75th year is in deficit, the Board of Trustees should, not later than September 30 of the same calendar year, submit to the President recommendations for statutory reforms necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year; and

(B) such recommendations provided to the President should be agreed upon by both Public
Trustees of the Board of Trustees;

(2)(A) not later than December 1 of the same calendar year in which the Board of Trustees submits its recommendations, the President shall promptly submit implementing legislation to both Houses of Congress, including recommendations necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year; and

(B) the Majority Leader of the Senate and the Majority Leader of the House should introduce such legislation upon receipt;

(3) within 60 days of the President submitting legislation, the committees of jurisdiction to which the legislation has been referred should report such legislation, which should be considered by the full House or Senate under expedited procedures; and

(4) legislation submitted by the President should—

(B) preserve the safety net for those who rely on Social Security, including survivors and those with disabilities;
(C) improve fairness for participants; and
(D) reduce the burden on, and provide certainty for, future generations.

There’s a well-placed “should” there for the Board of Trustees, which means none of this is binding. But it amounts to saying that the President should go ahead and come up with a plan that Congress would then try to pass. It totally passes the buck and is designed to hold anyone but Paul Ryan responsible for Social Security.

The statement from White House Communications Director Dan Pfeiffer is appropriate (though note the promotion of their own $4 trillion deficit reduction plan at that end):

The House budget once again fails the test of balance, fairness, and shared responsibility. It would shower the wealthiest few Americans with an average tax cut of at least $150,000, while preserving taxpayer giveaways to oil companies and breaks for Wall Street hedge fund managers. What’s worse is that all of these tax breaks would be paid for by undermining Medicare and the very things we need to grow our economy and the middle class – things like education, basic research, and new sources of energy. And instead of strengthening Medicare, the House budget would end Medicare as we know it, turning the guarantee of retirement security into a voucher that will shift higher and higher costs to seniors over time.

The House economic plan draws on the same wrong-headed theory that led to the worst recession of our lifetimes and contributed to the erosion of middle-class security over the last decade. And the President believes we cannot return to a failed theory that didn’t lead to the growth of jobs, incomes, or the economy. That’s why he put forward a balanced approach that reduces the deficit by over $4 trillion. It’s an approach that asks the wealthiest to pay their fair share, makes tough cuts to programs we can’t afford, and strengthens Medicare with reforms that would reduce overpayments to drug companies, improve the quality of care, and protect Medicare’s commitment to America’s seniors.

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David Dayen

David Dayen