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Here's a video that Ryan made about the issues that he says his budget addresses:
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For all of its focus on the right issues - including a debt crisis that is no longer looming but already upon us - Ryan's budget fails to deliver on spending reductions in a number of ways. For starters, it's not overly useful as a document designed to map out what the government should be spending in the next fiscal year. As noted above, it stipulates that we need a radical overhaul of tax brackets but then fails to deliver specifics on what should happen for individual income taxes. It raises the need for entitlement reform that will mostly take place after the period which it covers ends, thereby starting a debate over Medicare that it doesn't really address (other than by talking about preserving Medicare funds from "raids" on it to pay for ObamaCare). In these problems, it is clearly a condensed version of the longer Road Map rather than a stand-alone document that speaks to the budgeting process rather than a larger conversation.
For all the talk about bringing some basic sanity back to fiscal policy, the budget proposes spending over the next decade that averages out to 20.5 percent of GDP. That's more than 2.5 percentage points higher than the average amount of revenue raised as percentage of GDP since World War II (which has come in slighlty below 18 percent of GDP). Part of the problem is due to defense spending, which Ryan does not put on the table. He proposes spending $801 billion on "security" and the "global war on terror" in 2012 and $838 billion (in nominal dollars) in 2021. Over the same time period, non-defense discretionary spending goes from $482 billion to $422 billion. Along with entitlement spending, defense is the largest category of expenditures. When you're looking to restrain spending, you need to go where the money is, so it's simply wrong to suggest that defense spending - much of which has little to nothing to do with actually protecting American lives and property - be kept inviolate if we are in fact out of money. Defense spending has risen dramatically and not simply because of wars in Iraq and Afghanistan that even supporters acknowledge have been incompetently prosecuted. Combat operations add to the problem, but it is hardly the only driver here.
And, needless to say, defense spending, like all contemporary spending levels, are starting from massively inflated totals. So when Ryan brags about bringing "spending on domestic government agencies to below 2008 levels," it's a mostly empty boast.
Another empty boast in the plan is a report from the Heritage Foundation that says following Ryan's "Road Map" would lead to a massive increase in economic growth, and a 4 percent unemployment rate in 2015 and a 2.8 percent rate in 2021. While it's true that any gesture toward fiscal restraint would be welcomed by investors and actors in the domestic and international economy, such patently specific, ludicrous, and ahistorical rates can't be taken seriously. Unemployment reached 4 percent in 2000, an exceptionally rare year indeed that 2015 is unlikely to repeat. The most recent year that the unemployment rate dipped below 3 percent was 1944. This is the sort of "support" which distracts from meaningful conversation.
The Ryan budget punts completely on the issue of Social Security reform. There's simply nothing of substance in the document, other than vague hand-waving of the historic greatness of the system and the observation that current and near-retirees will get screwed if nothing is changed. There are statements about how it would be a mistake to increase the amount of wages subject to payroll taxes and that people are living longer, but no clear proposal for how to maintain a system that no longer makes demographic sense. Yes, people are living longer and poorer people need more help in old age, so declare what the new eligibility age should be and discuss the obvious role of means-testing in possible reforms. For a bold, visionary statement that supposedly offers a real alternative to an untenable status quo, this is weak beer. Unlike when dealing with Medicaid and Medicare, Ryan doesn't suggest a similar end to entitlement status for Social Security. Why should it be exempt from the same logic? The great libertarian economist Milton Friedman once argued for a minimum guaranteed income as an alternative to all transfer payments. Certainly it makes sense to discuss Social Security in such terms.
Similarly, it is not simply disappointing but mind-boggling that the Ryan budget, something the Republican Party has been touting for a long time as a definitive response to President Obama's dismal and unserious offering, cannot find its way to bring annual revenue and annual outlays into balance. Ryan's longer-horizon Road Map doesn't even pretend to balance the budget until 2063, which is tantamount to giving up. We're not balanced-budget fetishists, though there are many economic benefits of having a government which lives within its means (and very few to one that doesn't). But if the federal government, after a solid decade of completely promiscuous spending, cannot reform its wicked, wicked ways, the country is in far deeper trouble than Ryan understands.
There are alternatives on the limited-government side. Sen. Rand Paul (R-Ky.) has put forth a five-year balanced budget plan that forthrightly calls for the elimination of whole departments, agencies, and functions of government. Despite its boldness, Paul's plan is thoughtful. Hence, it calls for the elimination of the federal Department of Education which, since its creation during the Carter years, has failed to produce any significant increase in overall student outcomes at any level. Yet Paul also calls for continuing Pell Grants, which helps students with college tuition, at 2008 levels; we can debate the wisdom of Pell Grants (and their role in inflating tuition), but the point is that Paul's proposal is not the reckless slashing some take it to be. Similarly, when it comes to Social Security, Paul's plan calls for common-sense reforms that can only be controversial among the most-timid of analysts and politicians: raising the eligibility age, indexing for longevity, tying cost-of-living-increases to wage inflation rather than the Consumer Price Index, and establishing some form of means-testing.
In a March Reason article, we proposed a 10-year balanced budget plan that would systematically reduce outlays so that they equal the 19 percent of GDP that the Congressional Budget Office projects that the federal government will raise as revenue if the current tax system is left unchanged. That is to say, we can balance the budget over the next decade without raising taxes if we ratchet down spending from its current 25 percent of GDP to 19 percent of GDP - a figure that would still place it well above the 18.2 percent of GDP that Bill Clinton spent in his last year in office. Here's a sense of how to get from where we are to a balanced tally that would still leave us fatter than we were in 2000, when no one was complaining about a skin-flint government: