Paul Ryan Budget: 2014 'Path To Prosperity' Cuts Obamacare, But Maintains Cost-Saving Measures

on March 12 2013 4:44 PM
  • Ryan 12March2013 budget
    House Budget Committee Chairman U.S. Rep. Paul Ryan (R-Wis.) (L) holds a news conference to unveil the House Republicans' FY2014 budget resolution in Washington March 12, 2013. Reuters
  • Paul Ryan
    Paul Ryan's newest budget aims to balance the federal budget in 10 years. Reuters
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U.S. House Budget Chairman Paul Ryan, R-Wis., has always been, and continues to be, an aggressive opponent of the Affordable Care Act, commonly known as Obamacare. And yet, the conservative congressman’s latest budget actually relies on key components of the health care overhaul law to achieve its professed goal of balancing the federal budget in 10 years.

The 2014 budget, once again titled “The Path to Prosperity," makes several references to the “egregious” and bankrupting policies supported by Obamacare, such as the law’s new health care exchange subsidies and Medicaid expansion for the poor. An enormous $1.8 trillion of the total $4.6 trillion in deficit reduction outlined by the plan comes from repealing the ACA.

But as pointed out by ThinkProgress on Tuesday, while the Ryan budget guts the law’s public benefits, it maintains the cost-saving measures and new revenue created by the legislation.

For instance, Ryan’s budget holds onto the $716 billion in Medicare cuts included in the ACA but, on page 40 of the proposal, simply writes those savings will be used “toward shoring up Medicare, not paying for new entitlements.” However, Obamacare currently does not remove money from Medicare to pay for itself.

That accusation, commonly thrown around by President Barack Obama’s 2012 challenger Mitt Romney, has been shown to be false by multiple sources. In August 2012, the fact-checking website Politifact wrote the ACA does not rely on funding from the Medicare trust fund, but instead “uses a number of measures to try to reduce the rapid growth of future Medicare spending. Those savings are then used to offset costs created by the law -- especially coverage for the uninsured -- so that the overall law doesn't add to the deficit.”

The Ryan budget, while stating it will not raise “more” revenue than the “current policy,” still shows on page 78 that the GOP blueprint maintains the nearly $800 billion in revenue created by the ACA.

Here are some other issues that jump out.

Once Again, Budget Doesn’t Pay For Itself

Like his previous plan, the tax proposals included in Ryan’s newest budget don’t come close to generating the revenue needed to reach his professed goal of pushing government spending down to 19.1 percent of the GDP by 2023.

The proposal includes the following tax cuts: Reduces the top marginal tax rate to 25 percent (down from the recently reinstituted top rate of 39.6 percent) and reducing the next rate to 10 percent; reduces the corporate tax rate by 10 percentage points down to 25 percent; and repeals both the alternative minimum tax and tax provisions included in the ACA.

"Because the Ryan plan would restructure the code but collect the same amount of revenue as today’s system, this budget would have to eliminate trillions of dollars in tax preferences," the Tax Policy Center reports. "Ryan, like President Obama and most members of Congress, prefers to call these loopholes. But in reality, targets would almost certainly include popular preferences such as deductions for mortgage interest, state and local taxes, and charitable gifts as well as the exclusion of employer-sponsored health insurance from taxable income."

According to an analysis by the Center for American Progress, the budget would almost certainly add to the federal deficit.

“Last year the Tax Policy Center estimated that these provisions would generate revenue equaling just 15.8 percent of GDP in 2022. Extrapolating to 2023 suggests that Rep. Ryan is missing about $840 billion of revenue in 2023 alone, and approximately $7 trillion over the entire 10-year period from 2014 through 2023. After accounting for the added interest costs from all of these unpaid-for tax cuts, Ryan’s budget would still be about $1.2 trillion in the red in 2023,” the organization wrote Tuesday.

Cuts To Public Spending, But Not For Defense

As previously mentioned, the GOP budget aims to boost defense spending by $500 billion over a decade, which Ryan wrote is necessary to “keep our safety by rebuilding our military.” The U.S. currently spends as much on its military as the next five-highest-spending nations combined.

But because Americans (according to the Ryan vision) purportedly need to cure themselves of their addiction to government entitlements, the budget contains cuts to a category known as “nondiscretionary spending.” But that category, for which Ryan has called for $900 billion in reductions, includes cuts to programs such as: veterans’ health care; food, drug and consumer product safety; federal law enforcement and several other public services. Nondiscretionary spending has never consumed more than 3.2 percent of the nation’s GDP.

Appears To Champion Government Suspicion, Rather Than Deficit Reduction

As noted by Ezra Klein, the goal of Ryan’s budget does not appears to be deficit reduction. Instead, the former GOP presidential nominee’s plan “is intended to do nothing less than fundamentally transform the relationship between Americans and their government.”

At various points Ryan outlines the “many challenges” facing the U.S. – unemployment, the national debt, the housing crisis, gas prices, student loan debt. But most of the budget doesn’t pose any real answers to those challenges, particularly because it would not spur job creation.

Note the way Ryan explains why deep budget cuts are necessary:

“Unless we change course, we will have a debt crisis. Pressed for cash, the government will take the easy way out: It will crank up the printing presses. The final stage of this intergenerational theft will be the debasement of our currency. Government will cheat us of our just rewards. Our finances will collapse. The economy will stall. The safety net will unravel. And the most vulnerable will suffer.”

The introduction to the document also includes a passage that appears to indicate the federal government is attempting to “displace” communities:

“We are a self-governing people. Yet, if we can’t manage our own affairs, we can hardly govern a nation. It’s in the assembly hall and the boardroom - in the town meeting and the state legislature - that we learn how to govern. And that’s where we forge our common bonds. Yes, government is one of those bonds. But it can’t unite 300 million people - not on its own. It needs our communities to tie us together.

Today, our communities - our families, in particular - face many dangers: rising health-care costs, a stagnant economy, a massive debt, an uncertain world. These dangers require a lean, dynamic government - one that can protect its people and keep its word. They also require government to respect its limits—to understand it plays a role in our lives, but not the leading one.”

CBO Has Not Produced Long-Term Budget Projections Of Plan

 The Congressional Budget Office has not evaluated the long-term budgetary impact of the plan.

“Unfortunately, we cannot conduct such an analysis at this time because we have not produced new long-term budgetary projections under current law since significant changes in law were enacted in early January,” the CBO wrote to Ryan on Monday.

That means the 10-year budget projections included in the legislation comes from Ryan’s baseline himself, and has not been confirmed by the non-partisan agency.

 

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