Yesterday, amid great fanfare, Rep. Paul Ryan (R-WI) unveiled the Republicans' alternative budget. The budget would reduce the top tax bracket to 25 percent, giving the wealthy another massive tax cut. The effect of this tax cut would be offset to some extent by a five-year spending freeze on everything except military spending and veterans benefits. The proposal contemplates that Social Security benefits will be capped, and Medicare will be replaced by a voucher. The result, Ryan claims, will be dramatically lower budget deficits than what would prevail under what Ryan calls "Democratic budgets":
There's so much wrong with this that it's hard to know where to begin.
First, the Republican proposal pretends to project out for 70 years, and the sexy divergence doesn't begin to occur for 20 years, well outside the range of credible projection. A footnote claims that the "Out-years" are "based on CBO's Long-Term Alternative Fiscal Scenario", but CBO hasn't done any projections past 2019. As Conor Clarke notes, it looks like "Paul Ryan and his staff just took the CBO projections that ended in 2019 and drew a random line, extending upward at about a 45 degree angle, until 2080."
Second, the proposal assumes that people will voluntarily pay more in taxes than they're required to. The proposal would set a new top rate of 25 percent, beginning at $100,000, and a rate of 10 percent on all income below that. But if they wished to, says the proposal, taxpayers would be free to keep right on paying at the higher rates. No one would conceivably do that, but the proposal's tax revenue calculations assume that everyone would. This farcical sleight-of-hand allows the Republicans to understate the fiscal impact of their massive tax cut for the wealthy by about $300 billion per year.
Third, it's insane to call for a spending freeze when consumer spending, business investment, and exports are all falling in a global recession. Even Herbert Hoover didn't do that.
Fifth, a five-year spending freeze would cripple the federal government's ability to do anything but fight wars. That's among the reasons why this ludicrous proposal has no chance of ever becoming law. The Republicans might as well have proposed to cut costs by having federal employees ride unicorns instead of driving cars. That's equally likely to happen.
Without even addressing the House Republicans' defective proposals for Social Security and Medicare, it's obvious that this is a profoundly unserious proposal. Last week House Republicans were ridiculed for presenting a budget with no numbers. This week they should be ridiculed for proposing an absurd budget with made up numbers. Bob Cesca's off to a pretty good start: