Wednesday, April 06, 2011

Abridged CBO Director's blog on Ryan's budget - "It's an unsavory sandwich, but we're all gonna have to take a bite." One key deficit-cutting provision is halving government spending on health care from 12% of GDP now to 6% of GDP.

Related - WSJ: "Medicare for a New Century."


Extend the tax cuts! said...

Unabridged CBO Director's blog:
"The specifications may differ in some ways from the plan released today by Chairman Ryan in The Path to Prosperity: Restoring America’s Promise.

CBO has not reviewed legislative language for the proposal, so this analysis does not represent a cost estimate for legislation that might implement the proposal. Rather, it is an assessment of the broad, long-term budgetary impacts of the proposal, with results spanning several decades and measured as a share of gross domestic product (GDP).

It is therefore quite different from a cost estimate for legislation, which would require much more detailed analysis, focus on the first 10 years, and be based on more recent baseline projections.

The proposal would also: set all other spending (excluding that for Social Security and interest) on a path that would cause such spending to decline sharply as a share of GDP—from 12 percent in 2010 to 6 percent in 2022 and 3½ percent by 2050; the proposal does not specify the changes to government programs that might be made in order to produce that path.

The proposal would also: set revenues on a path that would cause them to rise from 15 percent of GDP in 2010 to 18½ percent in 2022 and 19 percent in 2030 and beyond. No specifications were provided to CBO of the particular revenue provisions that might generate that path.

Those projections included two scenarios—an extended-baseline scenario based on then-current law and an alternative fiscal scenario that incorporated several changes to then-current law that were widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period. Both of those scenarios deviate significantly from the nation’s past budgetary experience. In the extended-baseline scenario, both spending and revenues are well above historical norms as a share of GDP, and federal debt rises to 90 percent of GDP by 2050; under the alternative fiscal scenario, tax revenues remain within their historical range relative to GDP, but with spending above that range, federal debt skyrockets on an unsustainable path and exceeds its historical peak relative to GDP by the mid-2020s.

CBO’s long-term scenarios and the proposal analyzed here are all subject to pressures over the long term that would make them difficult to sustain.

It is unclear whether and how future lawmakers would address the pressures resulting from the long-term scenarios or the proposal."

Actual witch doctors would get angry, if you insulted their profession by calling Ryan's plan "voodoo economics."

Eric said...

Leapin' Lizards, do you mean there's uncertainty in the economic forecasts?

Have you met Obamacare?

Anonymous said...

But Obamacare was created by partisan can-kicking children. The Path to Prosperity was written by very serious adults!

Eric said...

Um, yeah. One was "ice cream for everyone!" and the other was "no, we spent the money for ice cream - ask the Chinese for more ice cream."