Friday, March 23, 2012
Ryan budget balanced in 2040 too austere?
According to the Congressional Budget Office (CBO), the budget proposed by House Budget Committee Chairman Rep. Paul Ryan, and to be voted on by the House of Representatives, would be balanced by 2040.
By his own numbers, the only time the budget would even be cut is in 2013 and 2014, and then by $94 billion and $54 billion. After that, spending would increase every single year under a new baseline.
A rather modest proposal, considering the current fiscal predicament the nation is in, where the $15.57 trillion national debt is now larger than the entire economy.
That has not prevented critics from blasting the Ryan proposal as being too austere. For example the Washington Post’s Ezra Klein charges that his deficit reduction plan targets the poor.
Klein complains about cuts to so-called “mandatory” programs, which under Ryan’s budget are reduced by $100 billion — less than 3 percent of the total present budget — over the next five years.
That’s really not that much. One could find more cuts than that in those types of programs without looking too hard.
For example, returning to just 26 weeks of unemployment benefits would save $80 billion. Going back to 2008 spending levels on Medicaid and food stamps would save $75 billion and $40 billion respectively. Eliminating the earned income and making work pay tax credits would save another $64 billion.
All together, that’s over $260 billion of cuts that could be enacted in a single year without severely disrupting much of anything. These were, after all, spending levels everyone was comfortable with just 3 years ago.
In fact, one could go even further to address the seemingly insurmountable fiscal situation we face. But to do so, we muster the political will that presently is sorely lacking — and may remain so until we face a severe crisis.
We must not wait for a debt apocalypse to act. Presently, the sustainability of our fiscal trajectory depends almost entirely on the U.S. dollar’s status as the world’s reserve currency, and our central bank’s ability to monetize the debt.
Get full story here.