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The NYT ran a profile of House Republican Budget Committee Chairman Paul Ryan today. It misrepresented some important features of Representative Ryan's budget plan.
For example, while it told readers that the plan would, "reduce domestic federal spending to its smallest share of the economy since World War II." it failed to point out that it would essentially eliminate all areas of the federal government, except Social Security, Medicare and other health care spending, and the military.
The Congressional Budget Office analysis of the Ryan budget, which was done under his direction, shows all non-health care, non-Security Security spending shrinking to 4.5 percent of GDP by 2040 and to 3.75 percent of GDP by 2050. The military budget is currently over 4.0 percent of GDP and has never been less than 3.0 percent of GDP since the start of the Cold War.
Assuming that Ryan keeps military spending in its historic range (he has indicated that he would), this implies the elimination of almost the whole federal government. His budget would leave no room for federal support of education, roads, bridges and other infrastructure, the federal court system, the Food and Drug Administration, the national park system and everything else associated with the federal government. It would have been useful to point this fact out to readers in a lengthy piece that attempted to give readers a sense of Representative Ryan's vision.
The piece was also misleading when it told readers that:
"he has proposed collapsing today’s six personal income tax rates into two, 10 percent and 25 percent."
The number of tax brackets is trivial. The more important feature of Representative Ryan's tax plan is that it would reduce the tax rate faced by the wealthy from 39.6 percent under current law to 25.0 percent. This implies an enormous tax cut for the wealthiest people in the country.
If this tax cut is offset by eliminating tax breaks, as Representative Ryan claims would be the case, then it would imply large increases on middle class families through the elimination of tax breaks such as the mortgage interest deduction and the deduction for employer provided health insurance.
It would have useful to tell readers that Representative Ryan wants to finance large tax cuts for the wealthy with big tax increases on the middle class. That is presumably an important part of his philosophy.
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The second way Ryan proposes to simplify is by closing loopholes. But because there are hundreds of loopholes to choose from and because Representative Ryan isn't on record for closing a single one of them, the NYT shouldn't give Ryan credit for a proposal without any details. It's like me saying I plan to lose 20 pounds by Summer but also saying I have no specific plans to eat less or exercise more.
2. Ryan will "maintain the same flow of revenue". From the summary of the CBO analysis:
"Those calculations do not represent a cost estimate for legislation or an analysis of the effects of any given policies. In particular, CBO has not considered whether the specified paths are consistent with the policy proposals or budget figures released today by Chairman Ryan as part of his proposed budget resolution.
The amounts of revenues and spending to be used in these calculations for 2012 through 2022 were provided by Chairman Ryan and his staff."
So the CBO specifically did not analyze the policies of the Ryan budget, and further, they simply inserted the numbers provided by Chairman Ryan and the Budget Committee.
In particular, the Ryan budget predicts that revenues as a percentage of GDP will increase from 15.4% in 2011 to 18% in 2014. This miraculous revenue growth is accomplished because the CBO just inserted the figures provided by Ryan. Or in simple terms, because the revenue increase is just made up.
So Representative Ryan says he'll make tax reform revenue neutral and predicts revenue as a percentage of GDP will increase dramatically in the next couple of years. Why didn't the NYT ask how that's possible?
The only logical way to increase revenue as a percentage of GDP as much as Ryan predicts without raising effective tax rates is for a large number of Americans to suddenly have their wages increase enough to put them into higher tax brackets. The chances of that happening under Ryan's budget are slim and none.