Paul Ryan presented the House Republican budget Tuesday. The ambitious strategy balances the budget over 10 years — if you're willing to go along with more than one questionable assumption.
On the whole, the document wouldn't surprise (or disappoint) any long-time Ryan fan. It offers the now familiar balance of subtle cuts to programs benefitting the elderly — although not Social Security, somewhat suprisingly — and rollbacks of core safety net programs like food stamps. Defense sees a slight increase. Here are Ryan's proposed cuts, by year, through 2023.
Food policy serves as case-in-point, demonstrating the schism between party rhetoric and economic decision-making is perhaps the most stark. Ryan notes a handful of incidents of food stamp fraud — two cases of Michigan lottery winners getting food stamps, House Oversight Committee chair Darrell Issa uncovering "dozens of other examples" of people trading food stamps for alcohol and cigarettes. The biggest instance is New York city employees making 1,500 fake food stamp cards to steal $8 million. It's true, $8 million is a lot. But the agriculture industry — which Ryan celebrates as "a strong economic-success story" — got a $16 billion bailout this year. He vaguely suggests the Agriculture Committee look at those payments, but once framed as a success story, it's hard to see much urgency around the issue.
And that's the point. Ryan's 91-page budget is not a budget document; it is a political baseline. It is a starting point to which the president and Democrats are meant to react. From that standpoint, it's already a success.
Here are the specific programs he would cut:
Item:Taxes Ryan's proposed change: No new taxes ever. Ryan would create just two tax brackets for individuals — 10 percent and 25 percent. (The top tax rate is currently 39.6 percent.) The top corporate tax rate would be 25 percent, instead of the current 35 percent. Money saved: $0 over 10 years—- unless you believe that lower taxes eventually bring in more income for the federal government by spurring growth and investment. Complicating factor: It will be very difficult for Ryan to implement this tax cut without raising taxes on middle-class people, as Slate’s Matthew Yglesias points out. Ryan and Mitt Romney proposed this tax plan in the 2012 election, and the Brookings Institution found that it would raise taxes on most people making less than $100,000 a year.
Item: Economic growth Ryan’s proposed change: One of the key ways in which the Clinton administration was able to close the budget deficit was incidental to political maneuvering. Rapid economic growth meant more tax revenue, which meant that it was easier for the government to meet its spending needs. Ryan’s budget suggests that economic growth will similarly help close the deficit gap. Money saved: In the report’s second appendix, he outlines the expected “feedback effects” from broader deficit reduction — reducing spending by $75 billion and increasing revenue by $112 billion. The effect is heavier later in the process; the graph below shows Ryan’s projected average from 2014-2022 at left and the 2023 effect at right, both in billions. Complicating factor: This is necessarily something of a guess. Ryan accepts the Congressional Budget Office projections that deficit reduction will spur long-term growth, but makes a much more questionable case that it will help over the short term, too. As we noted earlier, there are recent examples that show constricted spending over the short-term will do harm than good — which is also the argument the CBO makes. Ryan cites two Stanford economists to disagree. Given that the feedback effects comprise 10 percent of the 2023 deficit reduction, it’s not a trivial point of contention.
Program: Pell Grants. (Grants given to students who can demonstrate financial need and who have not yet earned a bachelor’s degree.) Ryan's proposed change: Ryan would stop increasing the size of Pell Grants to adjust for inflation. Instead, they would stay at the current level, $5,645, for 10 years. Ryan would also change the way the government calculates how much a student’s family is expected to pay to make it less generous. Money saved: According to the Department of Education, 796,255 students applied for Pell grants for the 2011-2012 educational year. The maximum award is generally tied to the consumer price index, but has grown about $1,500 since 2003. If the same number of people applied in 2023 and Pell Grants otherwise continued to increase award levels by that amount, Ryan’s plan would save $1.1 billion. Complicating factor: Ryan’s proposal doesn’t spend much time on a key reason Pell Grant awards have increased: rising education costs. Average costs for a four-year institution have risen 250% since 1980 and nearly doubled in the last 20 years. Pell Grant allocations have increased rapidly over the last decade — but that increase isn’t tied to the change for education costs.
Program: Defense Ryan's proposed change: Ryan would increase defense spending by $500 billion over 10 years, canceling the sequester. Defense would get a budget of $579.2 billion for next year. Money saved: $0 over 10 years. Complicating factor: There are plenty of Republicans who think defense spending could use a trim.
Program: Obamacare Ryan's proposed change: Ryan repeals it — except for the Medicare cuts and the tax increases. Money saved: $1.84 trillion over 10 years. Complicating factor: It will be essentially impossible to repeal Obamacare with a Democratically-controlled Senate and the law’s namesake in the White House.
Program: Medicare Ryan's proposed change: Ryan would implement his voucher plan in 2024. Money saved: $129 billion over 10 years. Complicating factor: As the American Enterprise Institute’s James Pethokoukis points out, if the change to Medicare is so important, why does Ryan wait so long to implement it?
Program: Medicaid Ryan's proposed change: Ryan would give block grants to the states to pay for Medicaid in order to give them an incentive to get people off the roles. He would end the expansion of Medicaid in Obamacare that gives benefits to people making 139 percent of the poverty level. Money saved: $756 billion over 10 years. Complicating factor: This is a very dramatic drop in Medicaid spending. The Washington Post’s Ezra Klein notes that 59 percent of Ryan’s savings come from cuts to health care programs. When the Romney-Ryan team proposed this, the Kaiser Family Foundation estimated that 17 million Americans would lose health care coverage with the elimination of the Medicaid expansion. Combined with Ryan’s other Medicaid cuts, the non-profit said about 20.5 million people would lose coverage.
Program: Supplemental Nutrition Assistance Program (SNAP), better known as food stamps Ryan’s proposed change: Worried about rapid growth of the program’s cost (much of which is due to the recession, as he notes) and SNAP’s lack of “incentive to root out waste, fraud, and abuse,” Ryan proposes allowing states to customize their own requirements. This could include adding timeframes and work requirements. Money saved: It’s not entirely clear how much this will save, though the budget projects a 2014-2023 drop of $249 billion in discretionary spending. Complicating factor: People need to eat food. While one can clearly save money by limiting the extent to which the government provides food assistance, it’s risky to consider the effects of time-limited access to nutritional support, particularly when jobs are hard to come by.
Program: Social Security Ryan's proposed change: No changes. Money saved: $0 over 10 years. Complicating factor: In 2011, Ryan said he thinks Social Security “is going bankrupt.” If he still believes that, he’s doing nothing to change it.
Program: Welfare Ryan's proposed change: Ryan says he would reinstate the work requirements for people to get welfare. Money saved: Again, it’s not clear. This goes into the $249 billion saved from “discretionary” spending. Complicating factor: The charge that Obama got rid of welfare’s work requirements is recycled from the 2012 election. It wasn’t true then, it’s not more true now. Health and Human Services provided waivers for the work requirements to states if they can show some other program is better at getting people jobs.