Rep. Paul Ryan recently unveiled the 2014 edition of the “Path to Prosperity” – the Republican budget proposal. While it is often referred to as the Ryan budget, it is a publication of the House of Representatives Committee on the Budget, of which Rep. Ryan is chair. In other words, this is not off-the-cuff musings of one man, it has some official status and, as one would expect, was backed by significant staff work. Unfortunately, it is a political document that does not supply the information necessary to create a budget.
An authority to distort?
The document begins with a section labeled “Statement of Constitutional and legal authority,” which sounds sober and impressive at the onset, but goes on to claim that President Obama is “shirking his duty” because he has “missed the budget deadline four times in five years” and calls this a “blatant disregard for the law.”
Those are words not suited for official documents, but rather the campaign trail. And even there, they would be misleading. Obama has indeed missed the deadline, but the entire budget process is broken and composed of ad hoc and partial actions. The Senate has not passed a budget since 2009, and there have been endless supplemental budgets, continuing resolutions, stop-gap measures and the like because everyone is missing deadlines.
The non-existent path to fiscal doom
A few pages later the report displays a graph showing total debt held by the public as a fraction of “the economy” (presumably Gross National Product or GNP). It shows the World War II peak when debt reached nearly 100 percent of GNP and its subsequent decline in 2008 when the recession, wars and bailouts produced a massive rise to nearly 75 percent of GNP. It then projects two totally fictitious lines into the future — one labeled “current path” and one labeled “Path to Prosperity.”
The so-called “current path” shows total debt exploding over 30 years to 250 percent of GNP, which would be very serious. This is simply not what is going to happen under any “current path.” The chart claims to be the product of the Office of the Management and Budget, and it is, sort of. But as FactCheck pointed out this “current path” is based on several assumptions that have already been changed to reduce future deficits. It also assumes that there are no options, no choices and no way of changing course in the future, which certainly will happen if things started getting that bad.
The second line is equally illusory. It shows that the total debt held by the public will disappear within 40 years if the Ryan budget is adopted. It does not just allude to a balanced budget in 10 years, as they claim elsewhere, but claims the Ryan budget will create a surplus large enough to wipe out all public debt within 40 years. This isn’t going to happen, and it isn’t even a good idea. To do that would be so fiscally contractionary that it would send the economy plunging into another recession. Debt is how capital purchases are financed by businesses opening new plants, by homeowners buying houses and by governments building infrastructure, or (as in WWII) financing a war for survival.
We already have signs this proposal isn’t serious. But it gets worse.
Those student loans
The bulk of the report is comprised of a series of analyses of various parts of the federal budget, rife with attacks on the administration and presentations of the Ryan budget’s alternative proposals. Near the beginning of the “budget” is a short section on higher education. It attacks the rapid increase of tuition at universities, and claims that student loans and other federal aid programs are “a key driver” in increasing tuition, citing 2005 testimony by Richard Vedder.
So what is their solution? As is often done in this budget, there is a generic call for “efficiency,” “flexibility” and “maximizing innovation.” Nowhere is there any estimate of what the impact would be on the federal budget. There is an interesting point about shifting financial aid to the most needy students and some rumbling about Pell grants and the “accounting gimmicks” that are said to understate their true cost.
Whatever the merits of these ideas, and some of them may be worth considering, there is not one word or statistic indicating the impact on the federal budget of making these changes. There are several dollar amounts tossed around (and they may well be accurate), but even they relate to long-term costs or liabilities and do not tie back to annual expenses or revenues.
This is a generic fault in the report. There is page after page of complaints about various programs, page after page of generic statements of what to do but without showing how any of it could impact the budget. Again, some of their ideas aren’t bad, and they would no doubt have an impact on the budget, but that is very different from saying “make this change and federal expenses will go down by $1.6 billion a year.”
The plan is to have a plan
This lack of connecting proposals to budget impacts is endemic in the budget. On issue after issue from defense to Medicare, the budget does indeed have specific ideas – usually. When it comes to Social Security, the GOP is in favor of making it better, but their plan is to require the president to submit a plan, require Congress to submit another plan and suggest that some of the ideas put forward by the President’s Fiscal Commission (the Simpson–Bowles Commission) were worth considering. They then announce that they are saving and strengthening existing programs through common-sense reforms. The solutions, they claim, are clear.
But not clear enough for them to know what they are, or attach specific dollar amounts to any of the changes they didn’t describe.
Finally, the numbers
At the end of the document is a section of summary tables that lay out what federal government income and expenditures will be under their budget. These are bare summary numbers by major government function. They do indeed show the budget moving to a surplus in 10 years.
But how? Anyone can write down a number. Anyone can write a list of numbers getting bigger and call that revenue and a list of numbers getting smaller and call that an expense, subtract one from the other and note that it is a positive answer and declare they’ve created a surplus.
Didn’t the Congressional Budget Office (CBO) score the budget? Doesn’t that prove the budget is real and based on solid analysis? Well, funny thing about that. The CBO scored his budget from last year, but has apparently not done so this year. The analysis for last year contained an odd line: “Chairman Ryan and his staff specified rules by which revenues and spending would evolve.” This is followed by an enumeration of these rules.
Budgeting of the federal government is very complex, every change of law causes changes in the economy which feeds back into the revenue and expenses of the government. But in the absence of any other information it sure looks like the Ryan budget waves a magic wand and just declares what changes it makes in overall spending – without proving that policy choices equal spending changes.
Perhaps there is a second document or a staff report or one really big spreadsheet someplace – but it isn’t in the report, not referenced on the committees’ home page and a brief search hasn’t found one.
If further evidence is needed that the Ryan budget is a false front hiding a big bunch of assumptions, just read this quote from the start of last year’s CBO analysis: “The calculations presented here represent CBO’s assessment of how the specified paths would alter the trajectories of federal debt, revenues, spending and economic output relative to the trajectories under two scenarios that CBO has analyzed previously. Those calculations do not represent a cost estimate for legislation or an analysis of the effects of any given policies.” In other words, smoke and mirrors. It’s not serious. The middle is missing: You have plans at one end (some specific, some general) and a bottom line budget number at the other end with no idea how you get from one to the other.
Ryan was a bit offended last year when Obama didn’t take him seriously. All of us should be very offended at the lack of seriousness that Ryan takes when preparing a budget and that after several years of this, media and politicians alike still continue to take Ryan seriously.