The House Republican Budget is a Fraud

The House Republican Budget is a fraud, pure and simple.

Jonathan Cohn at The New Republic has run a great series this week on what the House Republican Budget (also known as the Ryan Budget) would actually do, outside of ending Medicare-as-we-know-it. The final segment is about the deficit, and Cohn is right that the Ryan budget’s bark is far more impressive than its bite. But Cohn understates what’s going on here. The Ryan budget is far more of a shell game than Cohn lets on; indeed, there’s every possibility that it will make deficits much worse far into the future.

Nothing here is original, but I haven’t yet seen all of it put together in one place. If you add it all up, you wind up with a plan that just wouldn’t come close to doing what House Republicans say, and probably think, it would do.

First step: This is what Cohn has. He runs the Center on Budget and Policy Priorities table about what the Republicans would actually do over the first ten years (see the updated CBPP numbers here), which show that once you take into account tax cuts and accounting games, the Ryan plan only projects to cut the deficit by $380B over the next ten years.

Still, a deficit cut is a deficit cut, right? Well, not necessarily. Again, as far as I can tell, CBPP’s estimate simply accepts Ryan’s numbers at face value. Fair enough, but — second step — we know that Ryan’s numbers are based on completely discredited Heritage economic projections— you remember, the ones that predicted an implausible unemployment percentage for the future, and then “revised” that number while claiming it was independent of employment and unemployment numbers, or something like that. Actually, even economists couldn’t do estimates, because Ryan doesn’t tell us enough. Basically, he keeps Bush-era tax rates in place (that’s the $4T budget hit he claims), makes a bunch of other specific tax cuts, and then says he’ll make it up by curtailing tax expenditures. If economic growth is lower than Ryan projects, it’s likely that his estimated revenues will also be lower, and it wouldn’t take much to wipe out that $380B over ten years.

But at least it lowers the deficit over the long run, right? Hard to say! Future spending cuts are tricky things to think about. It’s very possible (as Republicans charged in the debate over scoring ACA) that cuts made today will be restored by future Congresses; indeed, Ryan is only able to show the deficit reduction he has in the first decade by flipping and accepting ACA’s Medicare Advantage cuts.

In my view, the proper way to do this, however, is to give the party making the cuts credit for those cuts they now say they want. Still, it’s worth noting that it’s very difficult to believe that if the plan passes and is fully implemented, there wouldn’t be tremendous pressure on Congress years from now to increase spending on the MediVouchers to keep up with the pace of medical inflation. But I’ll give Republicans the courage of their convictions on this one, and assume that if they were in charge then they’d opt for impoverishing old people (and the younger family members who would step in to help — anyone want to project the economic effects of that?) rather than paying more out of the Federal treasury. I can’t fault those who believe that’s unrealistic (and make this a third step), however.

But one cannot do the same for programs that Republicans themselves have no intention of cutting. Fourth step: the problem with the long term “deficit reductions” in the House Republican plan is that, as CBPP reported, they depend on shuttering virtually the entire government outside of Social Security, health care programs (even as modified), and defense. That is, the entire government outside of Social Security and health care (and interest payments) would, House Republicans claim, be down to 3.5% of GDP by 2050 — but defense alone is usually over 3%, and Republicans have no plans to cut it. That means no National Parks, no FBI, no veterans programs, no FEMA…no anything. It’s not going to happen; Republicans don’t intend for it to happen. I’m sure that if Democrats started running ads claiming Republicans were either going to slash defense or eliminate, say, the FBI and the FDA, that Republicans would object. They would be right — but that means they have no real intention of achieving the cuts they claim (and just voted for).

Oh, and if you want to call it a fifth step: there’s no particular reason to believe that GOP tax policies in the long run would yield the revenues they claim, given that their long-term reliance (not just in this budget, but consistently for the last thirty years) on fairy tales about taxes and revenues. In some ways, this is the biggest problem with the GOP budget, and the main reason I disagree with Ross Douthat about whether there’s a “seriousness” gap between the parties. (To his credit, Douthat wrote perhaps the best short critique, and certainly the best conservative critique, of the Ryan plan’s shortfalls in this extremely hard-hitting and spot-on post.) Suppose that steps three and four are both wrong, here, and that in fact Republicans are dead set on getting their Medicare and Medicaid cuts, and then shuttering all the things they would have to shutter to meet their spending goals. It still won’t produce a surplus if they’re using fraudulent economic projections based on supply-side hokum. Instead, their tax revenues will be systematically lower than they expect, and spending systematically higher.

To sum up: the House GOP budget doesn’t actually cut the deficit much in ten years even if you accept their numbers, properly understood; even that ten year estimate is based on phony projections, so it almost certainly yields larger deficits over that period; in the long run many would argue that the Medicare savings are unrealistic; in the long run the other proposed savings are certainly unrealistic given that Republicans right now would not support the cuts needed to achieve those savings; and regardless of any of this, relying on supply-side hokum yields a process that is systematically biased towards producing deficits, just as it did ten years ago and in 1981.

I don’t understand deficit idealists, so I’m not surprised — but I am puzzled — about why they give any “serious” points at all to something like this.

[Cross-posted at A plain blog about politics]

Jonathan Bernstein

Jonathan Bernstein is a political scientist who writes about American politics, especially the presidency, Congress, parties, and elections.