A Nice Word About The Ryan Plan

by Jonathan Chait | April 29, 2011

Jonathan Bernstein says the fiscal seriousness of Paul Ryan's budget is worse than we think:

CBPP's estimate simply accepts Ryan's numbers at face value. Fair enough, but -- second step -- we know that Ryan's numbers are based on completely discredited Heritage economic projections -- you remember, the ones that predicted an implausible unemployment percentage for the future, and then "revised" that number while claiming it was independent of employment and unemployment numbers, or something like that.

That's not quite right. Ryan's plan featured some hilariously rosy, and quickly withdrawn, estimates from the Heritage Foundation. But it wasn't "based on" them. There's not enough of a plan to base it on.

What Bernstein's describing is something Republicans have frequently done in the past. They release a proposal to cut taxes by, say, a trillion dollars over the next decade. Then they assume the tax cuts will increase economic growth -- like what happened under George W. Bush, right? -- and that the higher growth will create a "feedback" effect that reduces the revenue loss. Some even claim the feedback effect will completely offset the revenue loss.

Ryan did have Heritage 'score" his budget to project massive economic gains. But, as I confirmed with the Center on Budget and Policy Priorities the day Ryan's budget came out, he did not use those assumptions to conjure up new revenue out of Lafferite magic. Instead, Ryan just conjures up new revenue out of a magic asterisk. Ryan basically declares that he's going to keep current tax cuts in place, and then lower rates farther still -- to 25% -- and replace all the additional lost revenue by closing unspecified tax deductions. He didn't have Heritage score the tax plan because there really isn't a tax plan at all. It's just a set of goals that he almost certainly cannot meet.

What Bernstein's describing is a reliance on unrealistic economic assumptions. Ryan instead relies on unrealistic political assumptions.

Source URL: http://www.newrepublic.com//blog/jonathan-chait/87686/nice-word-about-the-ryan-plan