Government Spending

Rep. Paul Ryan's Plan vs. Barack Obama's Budget

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Here's a quick chart, via Reason columnist and Mercatus Center economist Veronique de Rugy, of the difference between projected spending and revenue in Rep. Paul Ryan's budget plan vs. President Obama's.

We'll be posting longer analyses of this later today and tomorrow, but the most cursory glance shows a couple of things. First, while President Obama's budget plan is a total piece of junk that doesn't even pretend to restrain any spending, Ryan's ain't all that great either.

To put it another way: If you can't even pretend to balance the federal budget over a decade, it means you're not really trying to restrain spending or even bring it into a passing acquaintanceship with revenue reality. One of Ryan's main talking points on his plan is that he will bring spending down to about 20 percent of GDP, "the historical post-war average." That compares favorably to Obama's scenario, in which spending stays around 23 percent of GDP. (The president commission on fiscal responsiblity and rapping about the enema man and churlish grandkids pegs the spending closer to 21 percent of GDP).

But the simple fact of the matter is that postwar average for federal revenue is around 18 percent of GDP, a figure that CBO projects will hit 19 percent of GDP by 2021. Any spending plan that shells out more than 19 percent of GDP on average is doomed to deficit spending.

Politics is the realm of the possible, blah blah. Only in a government situation where we're facing a shutdown on Friday and a debt limit squeeze around the same time—after a decade of completely bipartisan raids on fiscal sanity—can Ryan's plan be considered the realistic plan.

In the March 2011 issue of Reason, de Rugy and I proposed what we called The 19 Percent Solution, which would balance the budget over the next decade without raising taxes.

At the heart of the proposal is a series of cuts in proposed spending increases in each of the next 10 years that would leave still leave us spending more in 2020 as a percentage of GDP than Bill Clinton did in his last year in office:

Can the country get by on $3.8 trillion in 2020 (in current dollars)? It would be hundreds of billions less in spending than Ryan's plan. And you wouldn't miss a thing.

Read The 19 Percent Solution here.

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65 responses to “Rep. Paul Ryan's Plan vs. Barack Obama's Budget

  1. If you can’t even pretend to balance the federal budget over a decade, it means you’re not really trying to restrain spending or even bring it into a passing acquaintanceship with revenue reality.

    This. But *why* are we not even pretending?

  2. Look, like every libertarian, I want a budget that is more 19 percent solution-y and less crazy socialist Obama budget-y. Knowing the reality of politics, I will gladly take Ryan’s proposal. As every libertarian should. The 19 percent solution would be DOA, even if the Republicans took the Presidency and the Senate in 2012.

    1. “The 19 percent solution would be DOA, even if Republicans took the Presidency and the Senate in 2012.”

      Then let’s make sure that libertarians win as many elected positions as we can.

      And libertarians don’t settle. Settling is best left to conservatives, liberals, and anyone else who has no principles.

      1. I tend to agree with you, but you’ll have a fight on your hands with a lot of posters here. There seems to be a pretty big divide between the “compromise” libertarians and the “stick to your guns no matter what” libertarians.

        I got into a fight with SIV about this less than a week ago; he was basically saying we should throw in our lot with Team Red when appropriate, in order to “nudge” said team in the correct direction. I believe that we’ve been trying that for decades, with no success; indeed the last big republican surge before 6 months ago was of the neocons, so not only were we not successful, we actually got the opposite of what we were pushing for.

        1. I certainly understand what you’re saying, and I do appreciate any elected official actually mentioning their intentions to cut spending. But we’re far beyond the point where getting a “good start” is acceptable. We’ve been electing “good start” candidates for decades yet we keep moving further away from fiscal sanity and personal liberty.

          1. Oh I agree with you, I was just saying there’s quite a few on here who wouldn’t, and it seems to be some sort of ideological divide amongst libertarians (it may fall along the minarchist v. ancap lines, though I don’t know the personal beliefs of everyone here).

          2. Maybe because we’ve been electing even more “not even think about starting” candidates? What do you think?

            1. @Jim – True enough.

              @Josh – Totally agree!

        2. At no other point in the history of American politics since the founding fathers controlled shit have we had more actors even approaching libertarian in government than the Pauls.

          We ARE making inroads, however slowly they may be.

      2. There is a difference between settling and taking calculated steps towards a particular goal.

        One of the main reasons that libertarian politics has a very difficult time getting any mainstream popularity is because most libertarians refuse to see that distinction.

        We can’t simply go in and start cutting every useless government “worker” and agency. We have to set up the framework in order to make those cuts.

        It’s not about lacking principles or badly compromising, but about setting up an atmosphere where REAL libertarian policies can flourish.

        1. The framework should get to 19 or 18 percent over 10 years or it isnt the right framework.

          I would prefer 5% or less, but I have said that I will shut up about federal government spending if its below 15% of GDP.

          ANY plan that Im going to accept needs to have that as an end point.

          Hell, Im compromising 10+%, why cant the GOP come down 6%?

        2. Yep. Everyone wants Libertopia, no one has a map.

    2. Learn to crawl before you walk

    3. The 19 percent solution would be DOA, even if the Republicans took the Presidency and the Senate in 2012.

      Perhaps. But how about about this:

      The 19 percent solution would be DOA, especially if the Republicans take the Presidency and the Senate in 2012.

      Last time Repubs had everything to themselves… well, I expect we all remember what happened. After their fall from power, they rediscovered smaller government as a value in response to their repudiation in elections at the end of W’s reign.

      Are there good reasons to suppose that if Repubs had a sweeping victory in 2012 they would control spending better than a mixed federal government would? Am I wrong in seeing a pattern that budget restraint tends to become a bigger issue under divided government?

  3. While Ryan’s may not be the perfect solution, its well on the road to that no? And it also addresses the need to redefine how the entitlement programs operate, not simply the cash going out the door.

    1. Yes, he intends to transform them from social insurance into charity with a cut for the corporate middle man.

      1. You must have images of mustache twirling just running through your head all the time, huh?

      2. God, you are an idiot, Tony. Just a booger-eating idiot.

        1. He’s surely been getting spoofed the past few days.

      3. Re: Tony,

        Yes, he intends to transform them from social insurance into charity with a cut for the corporate middle man.

        Really? Could you point out your source?

      4. What’s wrong with charity*? It’s far better to have charity for those in need than a huge blanket of “social insurance” that covers everyone whether they need it or not and breeds huge inefficiencies and dependencies.

        *BTW, charity this is not. Charity is something freely given and freely accepted. It generally increases virtue on both sides. The giver at least appears virtuous by voluntarily giving of himself to help his fellow man. The receiver gains virtue by having gratitude and seeing goodness in others.

        When the government does “charity” this is all destroyed. The use of force destroys virtue.

      5. Isn’t social insurance already charity?

      6. Entitlements are not “social insurance.” Insurance is meant to protect against an unforseen event of low probability, but very high cost. Everyone will get old if they live long enough and everyone will need more medical care the older they get. This is not insurance–it is foreseeable and predictable costs. And we can’t keep spending more money that we have coming in. What is so hard to understand about all that?

        1. I think you’re overplaying “unforeseen.” Nothing people buy insurance for is unforeseen. It’s just a matter of risk. The relevant distinction between private and social insurance is that the latter emphasizes adequacy of benefits. Ryan wants to turn a program meant to provide a wide risk pool and safety net into one that is handing out checks to people so they can attempt to purchase decent coverage in the private market. The only reason it could possibly be cheaper is because the range of services is decreased.

  4. I agree with the poster’s above. While Ryan’s plan does not solve the deficit problem, this does more to bring us toward a solution than about anything else I’ve heard of floating around Congress right now that has even a slim chance of passing. If deeper cuts to defense spending were added to the Ryan plan, I wonder if that might get the U.S. to a balanced budget.

    1. That’s a big question I have as well; I’m all for gutting social wealth-transfer programs, and that’s great, but you can’t leave the sacred cow unslaughtered. The plan needs much deeper cuts to the warmachine.

      1. As noted, the plans all call for reductions of $100B/year to the foreign wars. We just need to get the reality to get there.

      2. Have you read the plan?

        The sacred cow isn’t left unslaughtered.

        1. Josh: I only know what’s been reported in the media thus far, but the cuts being talked about aren’t enough. I’m talking about scaling things back to where they were under Clinton, once we can become disengaged from the wars. Then scaling it back even more, to defend our shores, our citizens, and our shipping lanes. That’s it.

    2. You should read Rand Pauls’s bill that will cut $500 billion from government.

      1. Its only a good start, it only gets 1/3 of the way to balanced.

  5. What this country really needs is more middle class welfare!

    1. Let me be clear.

      Please wait just a few months more.

  6. I dunno. I think we should hold out for a better plan and threaten to vote Democrat in the 2012 elections, y’know, to teach the Republicans a lesson. This one totally fails the Libertarian Purity Test.

  7. If this has a shot, I’m for it: unfortunately, 19% GDP budgets are an intellectual exercise, not a politically feasible plan (at least, not yet). Ryan’s entitlement reforms are quite good, and I’d rather not let the perfect be the enemy of the good.

    1. Here’s the problem though…that makes sense logically, but we’ve been saying it since Reagan, and gotten exactly nowhere. At some point, we have to admit that the evidence simply is not supporting our hypothesis.

      We can always claim that “this time it’s different”, and it may well be; that claim, by it’s very nature, can’t be disproven. But that phrase does not have a very good history of panning out.

      1. OBAMA 2012: This time it’s different.

      2. What? This is a concrete plan and I support it.

        What the heck are you talking about actually? It’s different from what?

        1. Josh: Try to follow. “This time it’s different” is used as a joke because it’s often the rallying cry for people endorsing actions which have been repeatedly tried before, with no appreciable success.

          In this case, it refers to our going full partisan and endorsing TEAM RED. Many libertarians have done that before, and always gotten burned in the end. The plan will be mutilated in committee, back door deals will be made, rent-seekers will all have their input, and, based on past experience, in 10 years the budget will not look anything like what the present plan is projecting. Meaning the whole thing is an exercise in political theater. Elections cannot, and do not, allow bigtime fixes to longterm problems. Read up on your Hoppe and Rothbard.

          1. – It’s amazing how many “libertarians” these days are firm believers in the immanentize the eschaton

            – The first paragraph is a fallacy.I’m not endorsing some abstract actions, I’m endorsing this very concrete plan.

            – The second one: you are the one being full partisan here. I’d venture the main reason why you don’t endorse this plan is because it’s being proposed by a republican – in fact, you admitted you didn’t even read it! You were against it before knowing it! Why? Because you hate “Team Red”. That’s why you decide your position and jump to conclusions (later proven false) even before knowing what you’re talking about. Also the reason your position never changes. You also believe it makes you look good.

            – Of course the budget is not going to look like this plan. For that to happen, you’d probably need to elect a majority of Paul Ryan clones. But that’s exactly why one should endorse it. Personally I couldn’t care less if Ryan is a republican, a democrat or a Martian. I support his plan because it’s a huge improvement as a frame to the debate about government overspending over what we have now.

            – It seems you have an over-emotional perspective on this. You’re too affected by partisan politics. You see everything from a red vs blue vs good guys perspective. You hate republicans and that’s more important than anything. Look, the US are going to be a democratic republic for the foreseeable future. I have two children. Two real children, they have names, I left them at the kindergarten this morning, I’m going to cook dinner for them in awhile. I’m not digressing about some abstract “children” and “future” here when I think about these issues. Something that I suspect it’s your case, it’s your analytical grid. Something that may indeed be a solid step in moving the debate in the right direction and that may make their future less bleak, I’ll fully support it.

            – In the concrete world, this concrete plan is an excellent step that should deserve the full support of any responsible citizen and taxpayer.
            .
            – Read up your Burke.

            1. What have I said that was “proven false”? I read about the military cuts, and don’t believe they’re enough.

              The difference between us, is that you’re stuck in a statist mindset. You simply cannot imagine a world without the state, so you participate in it’s puppet shows, it’s bread and circuses, thinking all the while that you’re doing something good for your kids. You aren’t. Anything you do which legitimatizes the existence of the state in it’s current form does nothing except help maintain it’s oppression onto your children into the future. You’re willing to take a tiny crumb now in exchange for acknowledging the legitimacy of a monstrosity which has only shown itself capable of getting bigger and more aggressive as time goes on. So what if this budget gets passed now? How does that prevent socialism from creeping back? As long as your solution includes leaving the state in existence as-is, it’s no solution at all. Your kids may live in a time of outright socialism, or they may not. But either way, that outcome will have nothing to do with this budget being passed or not. It will have to do with the continued existence of an entity which holds a monopoly of force upon the 49%, because the 51% decreed it thus.

              I see the choice as between David Duke (remember him?) and Hitler. Sure, Hitler is a lot worse. That doesn’t mean I’m going to vote for David Duke. I reject that choice. Tear down gov’t. All of it. Any monopoly of force is inherently corrupt, and any tiny victory you win now is doing nothing but trying to drain the ocean with a bucket.

              Cutting back spending while giving people vouchers is still statism. Until / unless someone comes out with a budget which eliminates many programs and departments (energy, education, etc), ends transfer payments collected through taxes period (including vouchers), and pars the military down to a purely defensive force, I won’t support it. Since I know that no such budget will ever be proposed, I wash my hands of the gov’t at all.

              I’m sure you see me as being a completely unreasonable idealogue. My views don’t work in the real world, etc. I see you as being someone willing to take scraps from the masters table, and act grateful for the opportunity. I didn’t use to believe this, but the gulf between minarchists and anarchists really may be too large to really fill.

              1. You really wouldn’t vote for David Duke in an election over Hitler? I would, both with my vote and with my feet: change in increments is how change comes in the real world, and I would rather have blacks spat on than fried in an oven. In that hypothetical matchup, it’s not even a choice.

                1. Of course I agree with you about the desirability of being spat upon v. being murdered, but the point I was trying to illustrate is that I reject false choices, of which the two-party system is the greatest example. It’s bullshit for me to walk up to you and graciously allow you to choose whether you want me to stomp on your toes, or kick you in the groin. You may have a preference, but that doesn’t make the scenerio acceptable.

          2. But there *are* examples of government making itself smaller, or at least stopping its growth and privatizing: it happened in New Zealand, in the UK (only stuck for a little while in the latter case), and some other Western democracies. If libertarians just up and gave up, we would still have the draft, People’s Republics, and plenty of other wholly un-libertarian things in our society.

            I guess it goes back to the incrementalist v purist debate, and that you won’t be persuaded, but can we at least be somewhat enthused about the possibility of the government reforming itself and averting a revolution or stagnation (neither of which tends to result in libertarian preferences being realized).

  8. The enemy of the good is the perfect. Not here though.

    1. Common sense and human nature have no place at Reason. Burn the witch!

    2. Dont let the mediocre be the enemy of the perfect.

  9. I think Ryan and the rest understand that there is no way this, or anything like it, gets through a Dem Senate and signed by a Dem President.

    I think they’re doing three things with this proposal:

    (1) Laying down a marker for the 2012 budget negotiations (of course).

    (2) Prepping the battlespace for the 2012 elections, assuming that it will come down to a brutal war of attrition between the pubsec (somewhat broadly defined to include dependents) and the Tea Party. They need this to get the Tea Party troops in the field.

    (3) Beginning to build a consensus on what a federal budget should look like, for future budget negotiations.

  10. The simple fact that Ryan had the courage to propose this plan makes him deserving of my support.

    I have no idea how it’s still possible for a libertarian do discard this as “more of the same”. At the very least it opens a serious conversation about the federal government overspending. At the very least it lets us know who can be an ally and who needs to be removed from the Overton window (those who oppose this plan because it’s too radical).

    That must be politics; some guys who just can’t bring them to support anything proposed by a republican (or a democrat). Only explanation I can find.

    1. That must be politics; some guys who just can’t bring them to support anything proposed by a republican (or a democrat). Only explanation I can find.

      It is the explanation. A republican could put out a budget completely eliminating the DoD, and rest assured some of these cosmotarians would still find something to whine about. Or they would pull some bullcrap like bringing up an irrelevant newsletter from thirty years ago.

    2. Its more of the same because he has a ten year plan that has the spending curve parallel to the revenue curve instead of intersecting.

      Its not that fucking hard to balance the budget in 10 years. Even Clinton (almost) pulled it off in 8 years.

      1. Don’t give Clinton credit for having his wishes thwarted by a Republican congress.

        -jcr

        1. I’ve never gotten this. It’s like blaming Reagan for the AMT. Just completely blind to history.

  11. Doesn’t Ryan’s plan sit on the assumption that it will bring unemployment down to 4% by 2015? That seems a bit farcical, don’t you think?

    http://www.economist.com/blogs…..et_deficit

  12. I’ll End Gitmo, the wars, lower the dubget, fix healthcare and the economy.

    Obama 2012: leading on lefties

    1. I’ll even fix the budget and learn to spell.

      1. Raise the dubget instead and I think you’ve got a winner. People like dub.

  13. Ryan’s plan is certainly better than the alternative, but unfortunately we will need many years of surplusses to pay off past binges. Keeping revenues below spending is not feasible. Would be preferable to keep the president’s revenue and Ryan’s spending. It sucks that that includes raising taxes, but c’est la vie. Republicans shouldn’t have spent so many decades taking political advantage of giving tax cuts while refusing to cut spending.

    1. What alternative?

      The Paul plan is better than the Ryan plan. THAT is the alternative.

      1. The alternative being the President’s projected plan listed on the chart above. And yes, Paul’s plan certainly is superior.

  14. Or we can just wait for the bond market to stop buying US Treasuries.

    If Reid and Obama think the current Republican plan is “draconian”, wait till they see their options when auctions start failing.

    1. This, +1, and all that.

      Both plans are spitting at a forest fire; Ryan’s just pissing on it too. Rand Paul’s is about the only one that might signal the bond markets that we’re serious about addressing spending, and his doesn’t even go far enough.

      Eventually, the bankers are going to turn off the music, turn on the lights and kick everyone out into the cold. Life will be interesting when that happens.

    2. I am convinced that Japan will cash in a huge chunk of their US debt to finance their recovery and the dollar will not be the reserve currency within 5 years. Hello, stagflation.

  15. Who the hell cares about Ryan’s plan? Rand Paul has a plan on the table that gets out of this mess. Let’s talk about serious proposals.

    -jcr

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