Paul Ryan's Budget Deficit Reduction Plan

[Madison Redskin]

Thanks for pointing that out.So possibly eliminating this tax deduction then. Didn't Ryan go off the recomendations from the Debit commisson for this purposed tax code?

I know the Commission considered eliminating the deduction, but I don't know what they ultimately decided. Obama's budget proposed to cap the deduction for households making more than $250K a year and on taxes paid for second homes.

If they go ahead with eliminating that deduction, I wonder how it will affect the already **** housing market.

[maxiumone]

This plan is the same **** just packaged a different way. There needs to be across the board cuts and I for the life of me do not understand why this is so hard. All parts of the fed (including defense) should start by cutting 10% right now today (I also know this would be tough for Social Security). Then everyone of the departments need to have a 3rd party audit of its books, every dollar accounted for and what that dollar was spent on. Then it should be encouraged that departments find ways to save money. I have heard horror stories (on the state level) of departments spending on useless things to justify their budget. Dont punish a department for bring fiscally sound with a reduction in their budget. All federal budgets need to be tied to inflation (true war time would change but it must be a war congress declared). And final after the audits are compete any duplication need to be cut and closed and if the audit shows that more can be cut it happens.

If you want to raise my taxes that is fine but it better also be followed by a $2 cut in federal spending for every $1 tax increase.

You want to cut taxes fine it better be followed by a $2 cut in spending for every $1 tax cut.

Just spend what you have I dont think it could be any simpler.

[Destino]

So, you advocate doing nothing? At present time, that seems to be the Dem plan regarding debt reduction. Status Quo and let's spend some more!

Where's all the "wouldn't $5/gallon gas be wonderful" crowd at?

Y'all ain't losin faith are ya?

Nothing? lol I'm the exact opposite of this. I'm for dramatic increases in the tax rate to income taxes at the top. I'd like to see the US return to 50% tax rates that we had from 1932-1986 (feel free to argue that tax rates destroyed america in that time period). The line would be set extremely high as well, over 1.5 million in income a year taxed at the highest rate. The reason is simple, I want to depress salaries at the top and convert them to other ways of earning income such as methods tied to success of the businesses they are running, which I would have taxed at an entirely different rate (capital gains). The reasoning is simple, earn your ridiculous income with sustainable success as opposed to being a giant chunk of overhead. Otherwise the G-men take half or more of your cash, choice is yours.

[maxiumone]

I know the Commission considered eliminating the deduction, but I don't know what they ultimately decided. Obama's budget proposed to cap the deduction for households making more than $250K a year and on taxes paid for second homes.

If they go ahead with eliminating that deduction, I wonder how it will affect the already **** housing market.

Could be the time to do it now with it being so crappy

[Gibbsisgod2006]

To me, that would make sense. I mean, as I posted earlier, if the goal is to eliminate loop holes and get everybody to pay taxes, then it would make sense to do this. I am not certain what everybody gets back on mortgage interest but lets just assume you make 100K a year. Moving from .35 to 25 would be a 10K reduction in taxes paid. Would that be more then what you get now for mortgage interest returns?

---------- Post added April-6th-2011 at 11:09 AM ----------

The Debt Commission actually borrowed a lot of this from Ryan but it doesn't really matte who came up with it first. I think that the salient point here is that both the debt commission and Ryan's plan have come to the same conclusion.

I dont know but I thought Ryan was on the debit commison.

[ABQCOWBOY]

Nothing? lol I'm the exact opposite of this. I'm for dramatic increases in the tax rate to income taxes at the top. I'd like to see the US return to 50% tax rates that we had from 1932-1986 (feel free to argue that tax rates destroyed america in that time period). The line would be set extremely high as well, over 1.5 million in income a year taxed at the highest rate. The reason is simple, I want to depress salaries at the top and convert them to other ways of earning income such as methods tied to success of the businesses they are running, which I would have taxed at an entirely different rate (capital gains). The reasoning is simple, earn your ridiculous income with sustainable success as opposed to being a giant chunk of overhead. Otherwise the G-men take half or more of your cash, choice is yours.

The problem I see with this is that we have never demonstrated the ability, at least in recent history, to limit spending regardless of how much money we have to spend. IMO, the problem is not that we need more money. Our problem is that we need to learn to live within our means.

[Stadium-Armory]

Granted this is an opinion piece in the post, but worth the read non-the-less:

http://www.washingtonpost.com/opinions/ryan-vs-obama--is-that-all-there-is/2011/04/06/AFdH19oC_story.html?hpid=z3

Ryan vs. Obama — Is that all there is?

By Matt Miller, Wednesday, April 6, 11:12 AM

Paul Ryan’s new fiscal blueprint doesn’t balance the budget until sometime between 2030 and 2040, and racks up more than $14 trillion in new debt by then. By Ryan’s own reckoning, his plan adds $5.7 trillion to the debt in the next decade alone, while more than tripling interest payments, from $212 billion this year to nearly $700 billion in 2021. The only way such a profligate plan can be called “fiscally conservative” is by comparison to Barack Obama’s budget, which never comes close to balance and loads on more debt even faster. Meanwhile, both the House budget chairman and the president shortchange needed investments in America’s future. The question sane citizens should ask in the face of these dueling disappointments is: Why are these the only choices?

There will be plenty of overheated reactions to Ryan’s budget, declaring him to be either a savior or the devil incarnate. Since neither is the case I want to give folks who are amenable to reason a few facts and perspectives to make sense of it all:

Paul Ryan proposes that the federal government spend $40 trillion over the next 10 years, as opposed to Barack Obama’s $46 trillion. The first thing to note is that there is thus about a 15 percent difference in the size of government envisioned by our two major parties. This difference matters greatly, of course, but shouting aside, this is a fight taking place between the 40-yard lines on either side.

If, in addition, you assume, as I do, based on private- and public-sector experience, that there’s rarely been a budget that couldn’t stand an aggregate 10 percent cut, then the real gap between the parties may be smaller still. Ryan’s choices within these totals are unwise and deeply unfair for reasons I’ll explain. But this overall magnitude of change can’t be called “radical.” Doing so is just a way of underscoring how timid and incremental the debate usually is.

Ryan wants the federal government to spend about 20 percent of gross domestic product. Obama wants it to spend 23 to 24 percent. (One percent of GDP is worth about $150 billion today.) For context, recall that Ronald Reagan ran the federal government at 22 percent of GDP, when America’s population was much younger, when we weren’t about to double the number of seniors on Social Security and Medicare, and when per capita health costs for all age groups were much lower.

To run government at smaller levels than Reagan did with an older population in an era of higher per capita health costs, Ryan’s plan would thus substantially shrink the portion of federal spending devoted to things besides senior citizens. For example, while Ryan’s budget increases spending on Social Security and Medicare by $929 billion a year by 2021 (an increase of 72 percent over today’s levels), it would cut nonsecurity discretionary spending (from which funding for such things as research and development, infrastructure, and recruiting and retaining better teaching talent would come) by $143 billion, or 25 percent, in that year. Ryan would thus exacerbate the already dramatic tilt in federal spending toward current consumption for seniors and away from investment in the future. If you’re under 40, and especially if you’re under 25, these (bipartisan) priorities should be a call to arms.

State and local governments spend around 12 percent of GDP today, so in Paul Ryan’s America government at all levels would represent 32 percent of GDP, and in Barack Obama’s it would represent 35 or 36 percent. Interestingly, this means Ryan’s and Obama’s visions resemble each other more closely than they resemble what other rich nations do. For context, according to the Organization for Economic Cooperation and Development, the 14 countries in the Eurozone spent 50.7 percent of GDP in 2010; Finland, Sweden and Denmark are in the mid to high 50s; Britain, 51 percent; Germany, 47 percent. Canada spent 43.5 percent; Japan 40.6 percent; Switzerland, 34 percent; South Korea, 28 percent.

My own view is that unless we can find a politically viable way to shrink our radically inefficient health sector’s claim on American output, we won’t be able to retire the boomers, provide decent coverage to the uninsured, shift health costs from corporate payrolls to government budgets (which would be good for business and for workers), and invest in the nonelderly priorities I’ve cited for less than 40 percent or so of GDP as the boomers age. This would still leave us with a government much smaller than those in Europe and Scandinavia, conservative cries to the contrary aside.

Instead, Paul Ryan’s “path to prosperity” would leave America with 50 or 60 million uninsured (as he’d repeal Obama’s health-care plan while funding no alternative coverage extension), and with decrepit roads, bridges, sewers and airports, lagging R&D and a middling teacher corps. Apart from 30 million fewer uninsured, Obama’s plans don’t adequately address these nonelderly priorities either.

My verdict on Ryan: By including only token defense cuts in his plans, by excluding higher-income Americans from playing any role in deficit reduction, and by shortchanging investments in the public goods that would promote future growth, the Wisconsin Republican’s plan fails every reasonable definition of shared sacrifice, fiscal conservatism and vision.

By pretending, moreover, that we can retire the baby boomers without raising overall taxes (his original and continuing sin), Ryan disingenuously betrays his assertion that the American people are ready for “honest talk.”

[ABQCOWBOY]

I dont know but I thought Ryan was on the debit commison.

He was. Here are the members of that Commission.

Co-Chairmen:

Sen. Alan Simpson. Former Republican Senator from Wyoming.

Erskine Bowles, Chief of Staff to President Clinton

Executive Director:

Bruce Reed, Chief Domestic Policy Adviser to President Clinton

Commissioners:

Sen. Max Baucus (D-MT)

Rep. Xavier Becerra (D-CA 31)

Rep. Dave Camp (R-MI 4)

Sen. Tom Coburn (R-OK)

Sen. Kent Conrad (D-ND)

David Cote, Chairman and CEO, Honeywell International

Sen. Mike Crapo (R-ID)

Sen. Richard Durbin (D-IL)

Ann Fudge, Former CEO, Young & Rubicam Brands

Sen. Judd Gregg (R-NH)

Rep. Jeb Hensarling (R-TX 5)

Alice Rivlin, Senior Fellow, Brookings Institute and former Director, Office of Management & Budget

Rep. Paul Ryan (R-WI 1)

Rep. Jan Schakowsky (D-IL 9)

Rep. John Spratt (D-SC 5)

Andrew Stern, President, Service Employees International Union

[gbear]

Max, crappy now would smell like roses. You think there are a lot of people underwater now? Get rid of the deduction acting like it can't get any worse, and I predict there will be swaths of uncared for properties as people move away. Keep in mind the bank doesn't just get to take the house tomorrow and resell it. They get it after it's sat empty and uncared for during the months it took for them to get legal posession. Then try selling your house with 4 out of 10 houses on your street in disrepair and about to go to auction.

For all the "at least he put something out there unlike the Dems" people, do you consider this a more reasonable approach then the one put forth by Obama as the reason to say the dems haven't offered one? If I were home, I'd love to see a side by side comparison to see which people thought was a better approach and projected result. It would be even better if individual parts could be left unlabeled and voted on say revise medicare & medicaid to block grants increasing at a rate less than the increase in healthcare spending versus increase the retirement age for social security by 2 years for everyone under the age of 55. Both save money down the road while doing little for spending now. It's those types of trade offs I'd like to see debated.

[Larry]

Is home ownership not a good idea anymore?

Ryan's plan includes eliminating mortgage interest deductions from income tax. Seems that would make it less possible for people to afford home ownership, if they had to pay more out of pocket taxes on their income.

Don't know about Ryan's plan, in particular. But I've seen plans where what they want to do is to replace the current mortgage deduction, with a tax credit along the lines of (I'm going to invent some numbers) 20% of up to $20K of interest.

I like the plan.

The reason I like it has to do with how a tax deduction works. How much a tax deduction "pays" you, depends on which income tax bracket you're in.

If you're in the 10% marginal bracket, then the government "pays" 10% of your mortgage interest, no matter what size it is.

If you're in the 15% bracket, then the government "pays" 15% of your mortgage (interest).

If you're in the 35% bracket, then the government "pays" 35% of your mortgage interest. No matter how big your mortgage is.

Frankly, I don't see why the government should be paying 10% of Joe the Plumber's mortgage, but 35% of Dan Snyder's.

The (to make up numbers) "20% credit, up to $20K", both means that the government "pays" the same percentage of everybody's mortgage, but it also puts a cap on how much the government will subsidize.

---------- Post added April-6th-2011 at 02:24 PM ----------

So, you advocate doing nothing? At present time, that seems to be the Dem plan regarding debt reduction.

Worked for Clinton.

What's the track record for massive tax cuts on the rich and corporations leading to reduced deficits?

[DieselPwr44]

Worked for Clinton.

What's the track record for massive tax cuts on the rich and corporations leading to reduced deficits?

So, when your kid won't quit spending, do you give him more money or up his allowance?

I guess next you'll tell me there's no spending problem in DC..........

[Larry]

So, when your kid won't quit spending, do you give him more money or up his allowance?

So, when you ave a problem, do you do the only thing which has ever worked, in all of history? Or do the thing which has been done multiple times, just recently, and has always made the problem worse?

[ABQCOWBOY]

So, when you ave a problem, do you do the only thing which has ever worked, in all of history? Or do the thing which has been done multiple times, just recently, and has always made the problem worse?

An excellent case can be made that the thing we do most recently that has made the problem worse is to spend beyond our means.

[Destino]

The problem I see with this is that we have never demonstrated the ability, at least in recent history, to limit spending regardless of how much money we have to spend. IMO, the problem is not that we need more money. Our problem is that we need to learn to live within our means.

Completely agree with you. I've been saying there is a need in this country for a political party that support regulation and progressive tax policy but NOT run away spending. Spending ourselves into oblivion is ridiculous and has to stop. It's not just entitlements either, the entire system has gotten addicted to budget growth.

[sacase]

Not true the Contractoring company pays for most of the cost to have a clearance processed. One of the reasons a company won't hire a person without a clearance is because they don't want to pay $ 15,000 to $20,000 to have it processed and adjudicated. Yes the process is done that way but the company still has to pay.

If they have been telling you that they are wrong. The only cost to the contractor is how much they pay their security person to process the cleance in equip, that's it, so what 10 or 20 dollars max. They pay the government NOTHING. Trust me, I work for the agency that handles all the security clearences. That 15 to 20k number....vastly inflated.

[Predicto]

There is a lot of truly horrible stuff in this plan (and some good stuff), but I have to give Ryan huge props for actually putting SOMETHING on the table for discussion. The GOP hasn't done that before.

[JMS]

I haven't even cracked it, but I can tell you what's in it... We get rid of all the social programs, leave defense spending as is, and cut taxes for the wealthy again.... Grandma and Grandpa loose their medicaid, social security, and half their federal pension... Ryan doesn't give up jack, and the entire economy is still trillion pluss deficites for as long as the eye can see...

When Rand Paul told the republicans they could cut every social program in the federal budget and still not balance the budget if they didn't get the defense spending under control. I bet he didn't think the republicans would actually try that.

Nailed it..!!

[Wrong Direction]

Actually, I was thinking that you're better than that. Hopefully, if you believe that garbage, you can go to the store with Rush Limbaugh so you can each buy can openers for your grandmothers.

Here's a thoughtful piece by Douglas Holtz-Eakin, former head of the CBO. It's a little wonky, but thoughtful.

http://www.nationalreview.com/corner/264040/economics-ryan-budget-douglas-holtz-eakin

---------- Post added April-6th-2011 at 04:31 PM ----------

Another good article which lays out many things.

http://www.nationalreview.com/corner/263941/republican-budget-yuval-levin

On Medicare:

The plan would not touch the Medicare benefits of people who are 55 and older today—so attempts by Democrats to get seniors riled up about losing the benefits they have, attempts that have already begun, are simply based on a lie. For anyone younger than 55, the existing structure of Medicare would be transformed into a so-called “premium support” system which, rather than directly paying for services in an open-ended way (encouraging cost inflation) would subsidize the purchase of private health insurance chosen from a broad range of options. This would introduce competition into the provision of Medicare coverage, to induce efficiency among providers and consumer pressure for better options at lower costs. That’s essentially how the federal employee health insurance system works today, and it’s how the Medicare prescription drug benefit works and how it has managed to come in under CBO’s cost projections—a feat almost unheard of in Washington. The subsidy would be greater for people who are poorer and for people who are sicker, thus also introducing an element of means testing into Medicare.

On Social Security/Health Reform

What is most plainly missing from the budget is a broader health-care reform—a real substitute for Obamacare, which this budget would repeal. Evidently, Ryan could not get agreement among House Republicans for his preferred approach—converting the tax exclusion for employer-provided coverage to a credit for all, which would be a natural companion to the Medicare reform in this budget, and an immensely useful reform. Something like it (or perhaps something like the more gradual approach proposed by Ramesh in the latest NR) will surely need to be part of the 2012 Republican agenda. The budget also does not take up Social Security reform—it only requires the president to submit a plan for reform rather than laying out its own detailed agenda. This is no doubt done to avoid the political risks of Social Security reform, which after all involves far less of a fiscal payoff than Medicare reform and yet is more politically sensitive.

On overall importance:

Of course, that doesn’t mean the politics of what is in the budget will be easy by any stretch. A budget like this stands no chance in a Democratic Senate, and the reforms it proposes will not be an easy sell with many voters. But by adopting this budget, House Republicans will be decisively asserting their commitment to take our daunting fiscal problems seriously and to change course. And by so doing, I think they will also compel the Democrats to move. There is no way that President Obama can take his party to the next election with the non-agenda he offers in the 2012 budget he proposed in February—no way that he can allow the graphs above to be the choice put before voters next year. He will be forced to make some kind of counteroffer.

In the process, very slowly and very painfully, he and his party will be forced to begin to confront the reality of the coming decades: the fact that the social-democratic dream that has driven the Left for a century is dead, and something else must now replace it; the fact that the American welfare state will need to look very different a generation from now. There is no avoiding that reality, and in the long run the most significant consequence of the House Republicans’ very consequential budget may well be that it finally starts that conversation that everyone has long only pretended to want.

[Bliz]

Another good article which lays out many things.

http://www.nationalreview.com/corner/263941/republican-budget-yuval-levin

On Medicare:

The plan would not touch the Medicare benefits of people who are 55 and older today—so attempts by Democrats to get seniors riled up about losing the benefits they have, attempts that have already begun, are simply based on a lie. For anyone younger than 55, the existing structure of Medicare would be transformed into a so-called “premium support” system which, rather than directly paying for services in an open-ended way (encouraging cost inflation) would subsidize the purchase of private health insurance chosen from a broad range of options. This would introduce competition into the provision of Medicare coverage, to induce efficiency among providers and consumer pressure for better options at lower costs. That’s essentially how the federal employee health insurance system works today, and it’s how the Medicare prescription drug benefit works and how it has managed to come in under CBO’s cost projections—a feat almost unheard of in Washington. The subsidy would be greater for people who are poorer and for people who are sicker, thus also introducing an element of means testing into Medicare.

Thoughtful, but from an unapologetically partisan source. The bolded part, in particular, seems to be entirely false, if you believe the CBO. I haven't seen what they have to say about social security/health reform yet.

http://www.miamiherald.com/2011/04/06/2154026/cbo-seniors-would-pay-much-more.html

Seniors and people with disabilities would pay much more for Medicare under a new plan by Republicans in the House of Representatives that's aimed at curbing the nation's growing budget deficit, a Congressional Budget Office analysis shows. For example, by 2030, typical 65-year-olds would be required to pay 68 percent of the cost of their coverage, which includes premiums, deductibles and other out-of-pocket costs, according to the CBO. They'd pay 25 percent under current law, the CBO said.

...

Medicare enrollees would get a set amount from the government to purchase private plans. Those plans would cost considerably more than traditional Medicare, the CBO said, partly because private plans pay hospitals, doctors and other providers more and have higher administrative costs. At the same time, enrollees would pay a higher percentage of the overall cost of their coverage.

"What CBO is saying is beneficiaries would pay much less under traditional Medicare for two reasons: The overall cost of the plan would be much cheaper, and they would pay a lesser share of that less-costly plan," said Edwin Park of the Center on Budget and Policy Priorities, a liberal research center.

...

Chip Kahn, the president and chief executive officer of the Federation of American Hospitals, which represents for-profit hospital and health care systems, said Ryan's plan to repeal the law's coverage expansions but keep the provider cuts "will severely impact access to essential medical care for seniors, as well as the lowest-income Americans."

[Wrong Direction]

Thoughtful, but from an unapologetically partisan source. The bolded part, in particular, seems to be entirely false, if you believe the CBO. I haven't seen what they have to say about social security/health reform yet.

No, what the budget does is - starting in 2022 0 risk adjust and add greater subsidies for people who are poor or sick as compared to the subsidies for relatively wealthier/healthier people joining the same plans.

Also, I don't have time to go into it, but by going the insurance route and the out of pocket cost route, you make people consider their health choices before going to the Dr., and they care about the services provided by the Dr. because they have to contribute more. In other words, you add a marketplace to the largest sector of the economy, a place where the marketplace has basically been entirely crowded out by the government in today's system. That is why Dr.'s have code creep and charge for more services than they provide. It's why health outcomes for seniors are not correlated to the number of times they see a Dr. Medicare is fighting a huge quality problem right now precisely because there's no market actually paying attention to necessary services and costs.

On the numbers, I highly doubt they go from 25 to 68%. On hospitals, that's a relic of the deal with Obamacare and would likely need to either be changed or replaced by other health reform.

Finally, the Democrat alternative to balance the budget is what again?

That's the next step to an honest debate. Then reasonable people could decide or, maybe even Congress could meet in the middle.

[AzSkinsFan63]

This plan would be a great starting point for a real debate for sure...

[Bliz]

No, what the budget does is - starting in 2022 0 risk adjust and add greater subsidies for people who are poor or sick as compared to the subsidies for relatively wealthier/healthier people joining the same plans.

Also, I don't have time to go into it, but by going the insurance route and the out of pocket cost route, you make people consider their health choices before going to the Dr., and they care about the services provided by the Dr. because they have to contribute more. In other words, you add a marketplace to the largest sector of the economy, a place where the marketplace has basically been entirely crowded out by the government in today's system. That is why Dr.'s have code creep and charge for more services than they provide. It's why health outcomes for seniors are not correlated to the number of times they see a Dr. Medicare is fighting a huge quality problem right now precisely because there's no market actually paying attention to necessary services and costs.

On the numbers, I highly doubt they go from 25 to 68%. On hospitals, that's a relic of the deal with Obamacare and would likely need to either be changed or replaced by other health reform.

Finally, the Democrat alternative to balance the budget is what again?

That's the next step to an honest debate. Then reasonable people could decide or, maybe even Congress could meet in the middle.

They're the CBOs numbers, not mine. I understand why you're skeptical, and who knows how they got them, but Heritage's numbers (on the unemployment at least) sure don't look trustworthy either.

The ranking member on the House Budget Committee says that they will have a Democratic alternative when the Ryan plan comes to the House floor next week. It will be very interesting to see what's in that.

An honest and reasonable debate would be refreshing, but seems entirely unlikely. Some kind of meet in the middle is what Congress should be doing, since compromise is the foundation of government. It remains to be seen if the Tea Party wing will allow Boehner to talk compromise.

[Dan T.]

My prediction on the looming government shutdown. It will happen. It will last two workdays. I heard a rumor.

[DRSmith]

My prediction on the looming government shutdown. It will happen. It will last two workdays. I heard a rumor.

I bet you Republicans will deem their staffs as essential and not care what happens to others.

[The Evil Genius]

Wait 'til the public hears that military, including those actually on the frontlines, don't get paid.

Or only get 1/2 of their first paycheck.