Paul Ryan's Budget Proposal

Mr. Paul Ryan is a Republican Representative from Wisconsin and Chair of the House Budget Committee. On April 5, 2011, he released The Path to Prosperity, a document that introduces and defends his proposed budget resolution for the US Federal government. Path selectively ignores the EBS “Extended-Baseline Scenario” of the CBO Congressional Budget Office. EBS, which allows the Bush tax cuts to expire, and which avoids drastic spending cuts, produces no significant future deficits.

With Path, Mr. Ryan plays a complex rhetorical shell game. Path assumes from the start that the Bush tax cuts for the wealthy will continue. That is, Path assumes that Path passes the Congress. If Path doesn’t pass,
then EBS will occur without deficits. The CBO projects that allowing the Bush tax cuts to continue under Path will produce massive debt at current levels of spending. Path proposes to prevent massive debt by cutting spending. Path shows a set of spending cuts that will produce budget surplus while maintaining low tax rates on wealthy taxpayers.

On page 8, Path shows two charts. One chart compares spending projections, as a percent of GDP, of the “Current Path”, which is the CBO projection of spending, and of the “Path to Prosperity”, which is what Ryan proposes. 

The other chart on page 8 compares projections of the level of federal debt, as a percent of “The Economy”. (Path uses the expressions “GDP” and “The Economy” interchangeably.) One projection shows the “Current Path”, which is the AFS “Alternative Fiscal Scenario” of the CBO. The second projection shows the “Path to Prosperity”.

The assumptions underlying the AFS include maintenance of tax revenues at low levels by legislation not specified. The other CBO projection, which Path ignores, is the EBS. The EBS assumes continuations of current law, including expiry of the Bush tax cuts, including application of the AMT Alternative Minimum Tax to increasing numbers of households, and including implementation of the health care reform legislation of 2010, the ACA Affordable Care Act.

Resources:

1.  Paul Ryan, The Path to Prosperity, proposed Budget Resolution
for Fiscal Year 2012 (April 5, 2011, retrieved April 29, 2011),
http://paulryan.house.gov/UploadedFiles/PathToProsperityFY2012.pdf

2. Congressional Budget Office, Long-Term Budget Outlook (revised August 2010, retrieved April 29, 2011), http://www.cbo.gov/ftpdocs/115xx/doc11579/06-30-LTBO.pdf

3. Social Security Administration,The 2010 Annual Report of the Board of
Trustees (August 9, 2010, retrieved April 29, 2010), http://www.ssa.gov/oact/TR/2010/tr2010.pdf

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