The Ryan budget plan, Part III: More trickle-down

In “The Path to Prosperity,” House Budget Chairman Paul Ryan makes it clear that tax increases will not be part of the solution to the nation’s fiscal problems. He intends to address the problem solely through budget cuts, most of them focused on programs affecting the elderly, the sick and the poor. After all, that’s where the money is in the federal budget, especially when you exempt the Pentagon from spending cuts, as Ryan proposes to do.

“The U.S. government is not running sustained deficits because Americans are taxed too little,” the plan states. “The government is running deficits because it spends too much.”

However, that sentiment doesn’t mean that Ryan intends to leave the tax code untouched. Among other things, he proposes to reduce the number of tax brackets from the current six, which would make the income tax flatter and less progressive. He also intends to lower the top tax bracket on individuals and corporations from the current 35 percent to 25 percent.

Inevitably, such changes would have the effect of lowering taxes on corporations and the wealthy, while shifting more of the burden to working and middle-class Americans. When combined with the payroll tax, which Ryan concedes is a surtax on earned income below $106,000, a large number of working class and middle-class Americans would probably end up paying a significantly higher percentage of their income in federal taxes than their wealthier counterparts.

I say “probably” because as far as I can tell, Ryan hasn’t released specifics of his tax reform proposal to the public. He did, however, provide considerable detail to the Heritage Foundation’s Center for Data Analysis to allow it to project the economic impact of the proposed changes. So let’s see what they have to say.

Overall, Heritage projects, the Ryan budget proposal would produce an outcome that frankly would be nothing short of miraculous, including an increase in economic output of $1.5 trillion over the next ten years. That in turn would help drive down the federal deficit considerably.

But how real is it? Unlike projections by the nonpartisan Congressional Budget Office, the Heritage analysis relies on what is called “dynamic scoring.” In other words, it programs its computer models to assume that tax cuts on the wealthy and corporations produce enormous economic growth.

For example, let’s take a look at what dynamic scoring does to the projected unemployment rate. The CBO projects that the unemployment rate next year will average 8.4 percent. The Heritage Foundation, using dynamic scoring, projects that if the Ryan plan passes, unemployment would plummet next year to 6.4 percent.

By 2015, the CBO projects, unemployment will be down to 5.9 percent. Under the Ryan plan, Heritage projects it will fall to a remarkable 4.0 percent, declining still further to 2.8 percent in 2021.

2.8 percent?

Who believes that? Nobody believes that. In fact, those projections are so embarrassingly absurd that Heritage itself has gone back into its study and removed them. They were there in the version I downloaded yesterday; they are gone from the version available today.

In this case, Heritage can make ridiculous claims for the economic benefits of Ryan’s plan — claims that help account for the supposed deficit reduction — without fear of those claims being tested against reality. Nobody believes that the plan will ever be adopted.

Ten years ago, however, the Heritage Foundation’s Center for Data Analysis ran similar projections for President Bush’s plan to cut taxes, using the same computer model it used to analyze Ryan’s plan.

Heritage claimed that if the Bush tax cuts were approved, the economy would grow so quickly that by 2010, the entire federal debt would effectively be eliminated.

Not only that, “The plan would save the entire Social Security surplus and increase personal savings while the federal government accumulated $1.8 trillion in uncommitted funds from FY 2008 to FY 2011, revenue that could be used to reform the Social Security and Medicare systems and reduce the payroll tax,” Heritage claimed.

Well ….

– Jay Bookman

970 comments Add your comment

WOW

April 7th, 2011
9:24 am

Finn, just for you

Looking at the annual average unemployment rates for each of the eight years of Bush’s presidency, the average of all eight figures, and thus of his entire presidency, is 5.26%, with a low of 4.6% for the years of 2006 and 2007, and a high of 6.0% for 2003.

According to the Bureau of Labor Statistics, the number of unemployed was nearly 6.0 million in January 2001 and 6.9 million in September 2006. The unemployment rate was 4.2% in January 2001, 4.6% in September 2006, and 7.2% in December 2008.

Source: Wiki

TaxPayer

April 7th, 2011
9:24 am

WOW. Mountain Dew. Nah! Republicans are more into the Mellow Yellow stuff. I think they call it trickle down also.

WOW

April 7th, 2011
9:24 am

“What was yours, WOW.”

In other words, Taxpayer won’t answer the question.

WOW

April 7th, 2011
9:24 am

“WOW. Mountain Dew. Nah! Republicans are more into the Mellow Yellow stuff. I think they call it trickle down also.”

I don’t drink soda pop, Tax.

Paul

April 7th, 2011
9:25 am

Bosch

FIgured as much!

I’m jazzed – just got XM to activate on my other car. Called couple months ago, they said it’d been activated since last Nov. Spent an hour with cust care & tech support, they couldn’t do it, said they’d open a ticket and call back. Never did. This morning I went online and resent the activation signal.

It’s working. Go figure.

TaxPayer

How ya’ doin?

From earlier. (Maybe you saw it and are just into weird humor this morning?)

WOW

Did you get Harry’s permission to co-opt his theme song?

http://www.youtube.com/watch?v=WSklX1Hs324

——————————————————————————
To the rest of the posters:

Try the Amish way:

http://tinyurl.com/3ev52vc

Doggone/GA

April 7th, 2011
9:25 am

“I think WOW’s all hopped up on Mountain Dew this morning”

No, I think he goes straight to the hard stuff and drinks JOLT!

(it’s a myth that MD has more caffeine than any other soda, it has more caffeine than any NON-COLA soda)

WOW

April 7th, 2011
9:25 am

“another guy who can’t seem to comprehend the cumulative effect of job losses, and the number of monthly jobs that need to be added to budge the number back down.”

Not my problem if you can’t handle the truth.

Again, why did Obama extend the Bush tax cuts?

WOW

April 7th, 2011
9:26 am

“No, I think he goes straight to the hard stuff and drinks JOLT!”

Why are you gals so obsessed with what I drink?

jm

April 7th, 2011
9:27 am

I feel like I’m carrying around an “argumentative” sniper rifle. But WOW has a gatlin gun. :)

WOW

April 7th, 2011
9:28 am

jm

Like I wrote weeks ago. I am super super super super fast at typing and can do multiple things at once.

TaxPayer

April 7th, 2011
9:28 am

In other words, Taxpayer won’t answer the question.

What was yours, WOW.

Gator Joe

April 7th, 2011
9:28 am

Jay,
The Republicans, especially the wealthy ones, love trickle down where most of the “trickling down” is from the top 1% to the next 4% in line. The rest of the Right refuse to think for themselves and see how they are being taken advantage of.

WOW

April 7th, 2011
9:29 am

“What was yours, WOW.

I seem to remember asking you that question and you still won’t answer it. If you want to know where I went to school and what I got a degree in, answer my question.

Thanks

1811/1801 - 0311/0317

April 7th, 2011
9:30 am

Jay:

It’s such a shame you are not the President.

All of our problems would be solved.

WOW

April 7th, 2011
9:30 am

“especially the wealthy ones”

WEALTH ENVY!

WOW

April 7th, 2011
9:31 am

1811/1801 – 0311/0317

EXACTLY!!!!!

TaxPayer

April 7th, 2011
9:31 am

Hi Paul. What up? What’s the current projection from Heritage Foundation for when we will hit that 2.8 percent unemployment rate given that Obama has now given those miracle working Bush tax cuts two more years to do their thang.

Southern Comfort (aka The Man)

April 7th, 2011
9:31 am

Dave

If the judge decided that, as part of their sentence, they were banned from the dockyards, he could have effectively ended their employment. It’s like that with us. I don’t have to get fired, but if I lose the right/privilege to carry my firearm, I’m no longer employable. The union can’t do anything about that.

Donovan

April 7th, 2011
9:32 am

It’s kind of funny that the Republicans are offering up something in the form of rectification to the problem, while the Democrats just sit on their hands and offer up nothing to fix the problems that they created. For better or worse, the Republicans seem to represent the majority of the American people who do not want anymore spending. What do the Democrats want? They want a higher debt ceiling put into place. What’s wrong with this picture? Ever since 2006 when the Democrats took over the power reins we have seen this group of liberal day dreamers acting like a kid in a candy store with a credit card. With this country out of money and the Chicoms owning a trillion dollars of our debt the Democrats offer nothing but demonization of the Republican Party and obstruction of any viable method of recovery. Their leader has spent more money than all of the previous presidents PUT TOGETHER. For those who live in a glass house it is lunacy to cast stones at one’s enemies. STOP THE DAMN SPENDING and take responsibility for the harmful agenda that you all have implemented.

TaxPayer

April 7th, 2011
9:32 am

I seem to remember asking you that question and you still won’t answer it. If you want to know where I went to school and what I got a degree in, answer my question.

Conditional responses from you don’t do anything for me. What was yours, WOW.

jm

April 7th, 2011
9:33 am

No more dual mandate for the Fed!

That’s a hell of a rallying cry, isn’t it?

WOW

April 7th, 2011
9:33 am

1811/1801 – 0311/0317

I’ve come to the conclusion that the left is incapable of offering up solutions that actually work.

Alternative energy: Nothing from the left but speeches.

Getting the economy back on track: Obama extends the Bush tax cuts because his policies are terrible.

List goes on and on and on.

The left is afraid that the Paul Ryan plan will work and therefore they have to tear it down by making fun of him.

Southern Comfort (aka The Man)

April 7th, 2011
9:34 am

Finn McCool

April 7th, 2011
9:35 am

Democrats just sit on their hands and offer up nothing to fix the problems that they created.

Ummm, I do believe the Democrats have agreed to $30 billion in cuts. Have trouble seeing the whole picture, do we?

Alan Krueger

April 7th, 2011
9:35 am

Instead of focusing on the unemployment rate, it may be better to look at the employment-to-population ratio, or the share of the population that is employed. This rate isn’t affected by whether someone is counted as in or out of the labor force.

Tellingly, the employment-to-population rate has hardly budged since reaching a low of 58.2% in December 2009. Last month it stood at just 58.4%.

(Source: AJC, Friday, April 1, 2011)

josef nix

April 7th, 2011
9:35 am

Good morning!

Wheee…looks like the Bruin’s shooting for a thousand on this thread, so I’m here well rested to do my part…somebody say something I can react to!

Paul

April 7th, 2011
9:35 am

TaxPayer

“What’s the current projection from Heritage Foundation for when we will hit that 2.8 percent unemployment rate given that Obama has now given those miracle working Bush tax cuts two more years to do their thang.”

The day after the compromise gets enacted. See, if Democrats enact the idea, it’ll never work. But if Republicans enact it, then ‘poof!’ – it’s magic!

Paul Ryan Monster

April 7th, 2011
9:36 am

Part IV… coming up…. munch munch

WOW

April 7th, 2011
9:37 am

“Conditional responses from you don’t do anything for me. What was yours, WOW.’

B.S. in Business.

Yours?

Finn McCool

April 7th, 2011
9:37 am

wealth envy?

Ever wonder why the wealthy keep trying to gain more money all the time?

wealth envy.

Paul Ryan Monster

April 7th, 2011
9:38 am

Paul 9:35 “oh oh oh, it’s magic, you knoooow”

Joe Mama

April 7th, 2011
9:38 am

Donovan — “It’s kind of funny that the Republicans are offering up something in the form of rectification to the problem, while the Democrats just sit on their hands and offer up nothing to fix the problems that they created.”

Huh. A few years ago, during the Bush Administration, the Republicans were crying because the Democrats wouldn’t present any budget proposals — and that was the GOP excuse for dragging their feet on presenting one themselves. Now the shoe’s on the other foot, and the GOP’s still crying. Get over yourselves, kids.

Look, I’m not thrilled with the Ryan proposal, but can we please come to the realization that there are going to *have* to be some painful cuts in some places and that there are going to *have* to be some painful tax/user fee increases in others? Just doing one or the other isn’t going to work, politically or practically.

Keep Up the Good Fight!

April 7th, 2011
9:38 am

josef…2 Beavers are better than 1?

Paul

April 7th, 2011
9:38 am

Morning, josef nix

“looks like the Bruin’s shooting for a thousand on this thread, so I’m here well rested to do my part…”

No need to. Looks like Jay has given free reign to he-who-must-not-be-named to get to the 4-digit record.

Doesn’t seem fair, though. Kinda like a UConn running up the score against, oh, Auburn. It’s really not much of a contest.

josef nix

April 7th, 2011
9:38 am

Normal

Anniversay of Shiloh, eh? Hide the menorah, pack to torah and change you name to Smith,,,the mongrel invading horde of invaders is comin’ :-)

WOW

April 7th, 2011
9:39 am

“Ever wonder why the wealthy keep trying to gain more money all the time?’

Because our Constitution protects that right.

Normal

April 7th, 2011
9:39 am

Taxpayer,
I think WOW’s Major was Creative Writing… ;)
—————

Bosch,
Good morning!
——————–

Josef,
Top of the morning to you too, sir
about this, your thoughts…

http://www.ajc.com/news/gambling-questions-slow-effort-901532.html?cxtype=rss_news

Yippee

April 7th, 2011
9:39 am

Barry really knows how to pick his associates. Bombers; Nutjob Preachers; Socialists; Idiots; and now we can add Whorehoppers. I’ll bet you his butt puckered when he heard this news. I will also bet you that Moochelle raised an eyebrow. Barry’s got some ’splainin to do about that last golf game and the drink cart chick. The guys last name makes for a great setup line for Leno.

Obama friend arrested for soliciting prostitute

http://www.ajc.com/news/nation-world/obama-friend-arrested-for-901269.html

Paul

April 7th, 2011
9:40 am

Paul Ryan Monster

I’m partial to these lyrics and this performance

http://www.youtube.com/watch?v=8sXLkKflnis

TaxPayer

April 7th, 2011
9:40 am

B.S. in Business.

Yours?

B.S. in Business Replies

WOW

April 7th, 2011
9:40 am

“Doesn’t seem fair, though. Kinda like a UConn running up the score against, oh, Auburn. It’s really not much of a contest.”

Or Auburn running up the score on say, South Carolina in the SEC Championship. Or maybe Nick Fairley destroying Aaron Murray over and over again.

Or maybe Auburn beating Bama for 6 straight years.

Like that?

USinUK

April 7th, 2011
9:41 am

jm – WHATTAYA WANT?

NO MORE DUAL MANDATE FOR THE FED

WHEN DO YOU WANT IT?

NOW

you’re right … lacks snap

WOW

April 7th, 2011
9:41 am

“B.S. in Business Replies’

Ok, so Tax didn’t go to college.

Thanks for playing, TaxPayer.

1811/1801 - 0311/0317

April 7th, 2011
9:41 am

Hear this yesterday and it is so true:

“The mainstream media is little more than a public relations advertising agency for Democrats.”

TaxPayer

April 7th, 2011
9:41 am

I think WOW’s Major was Creative Writing…

I thought it was in High Speed Railing.

josef nix

April 7th, 2011
9:42 am

good fight

And what beavers would THOSE be?

PAUL
Yeah, kind of interesting…but somebody else is still around, too…but then so am I, so I guess Imam Torquemada’s been hit by a tolerant streak,,,

WOW

April 7th, 2011
9:42 am

“I think WOW’s Major was Creative Writing…”

Isn’t that what Jay Bookman’s daughter is getting her masters in? Not making fun of it, just making an observation.

Jay, not making fun of that at all. Just so you know!

USinUK

April 7th, 2011
9:42 am

Enter your comments here

Normal

April 7th, 2011
9:42 am

josef nix

April 7th, 2011
9:38 am

Josef,
you scallywag! When I read that, that is exactly what I was thinkin’ from your teachin’…get outta my head! :D

Paul

April 7th, 2011
9:43 am

Yippee

“Obama friend arrested for soliciting prostitute”

And your friends are all pure, what, televangelists? Priests? wait… don’t go there……

WOW

April 7th, 2011
9:44 am

“And your friends are all pure, what, televangelists? ”

That’s a bit of a reach there, Paul.

Fred

April 7th, 2011
9:44 am

Fresh Elephant meat upstairs

Harry Callahan

April 7th, 2011
9:44 am

“Jay

April 6th, 2011
5:41 pm

“actually, jm, Obama DID propose a solution that included tax hikes. He wanted to let the tax cuts for the rich expire, and remind me again … how did that one go?”

All he had to do was veto the extension of hte Bush tax cuts, Jay. You, know, the extension passed when Dems controlled both houses.

WOW

April 7th, 2011
9:44 am

UH OH!!!!!

Northwestern says star journalism professor lied

Northwestern University officials blasted a heralded journalism professor Wednesday, accusing him of doctoring records and repeatedly lying to his department’s dean and the school’s lawyers.

Chicago Trib.

TaxPayer

April 7th, 2011
9:45 am

Ok, so Tax didn’t go to college.

Thanks for playing, TaxPayer.

What! You doubt my B.S.! I’m shocked but not awed.

USinUK

April 7th, 2011
9:45 am

“Obama friend arrested for soliciting prostitute”

criminey, and that’s different from the relationship between congress critters and lobbyists HOW, exactly???

Joe Mama

April 7th, 2011
9:47 am

Yippee — “Barry really knows how to pick his associates. Bombers; Nutjob Preachers; Socialists; Idiots; and now we can add Whorehoppers. I’ll bet you his butt puckered when he heard this news.”

It sure did. Now the guy’s qualified to be a Republican US Senator from Louisiana.

BW

April 7th, 2011
9:48 am

The only problem Jay is that the Democratic party is not doing enough to draw a line in the sand and tell the American people what they are all about. They have allow the opposition to completely frame the economic message and have been for decades. It makes you sick to your stomach that one party out of the two real party choices can’t seem to put together a viable clear message about where they intend to take the country and provide a real opposition. The battle between FDR/Great Society and laissez faire economic policy has never ended but the Republicans have never wavered on their message. I don’t think that you can do well when you can’t project a clear message and stick with it. 2010 was the first sign of that and if they don’t get it together in 2012 I don’t know if you can win on a message of the Republican candidate is far worse than anything I’ve done. Obama and company had better get their heads out of their rears and get their minds right because the other party is not to be taken lightly.

Normal

April 7th, 2011
9:49 am

Good one Paul, but I gotta go there…

Televangelists=Bl*w J*bs in the back seat of a car and Priests=little boys.

not that my friends haven’t tried “whorehopping”. Hell, we were in the Navy and we bragged about it…

Southern Comfort (aka The Man)

April 7th, 2011
9:52 am

Or maybe Auburn beating Bama for 6 straight years.

6 straight wins, yet Auburn is still lagging behind like a #2 school should. Alabama leads the series with an overall record of 40–34–1. Doesn’t seem fair, does it?

Yippee

April 7th, 2011
9:53 am

Well, Paul, while I am clearly more qualified to be president, I am not and therefore your point is???

josef nix

April 7th, 2011
9:54 am

Normal
@ 9;39

Lots of thoughts on that one (and thanks for the link)…you already know a good part of where I (we in this house) are coming from via St. Elsewhere…

Thought number one: Iman Torquemada has already decreed that “Indian things” are not much of an issue in these parts, so we’ll see…

Thought number two: so, does the West Bank settlement rule apply here with the same force as it does there?

Thought three: they’re back!

Thought four: the conflict between the Oklahoma and Georgia Creek has to be overcome, and the former have not always been very nice to the latter when the beads and blanket distribution of the occupiers “largesse” wasn’t quite so “liberal…” There’s some bad blood there going back to the Red Sticks and Brother Andy…it should get interesting

Thought five…I wish them the best of luck in the endeavor…up to and including the casino bit…as my tribe says this time of the year, “next year in Brunswick!” :-)

Yippee

April 7th, 2011
9:57 am

@Joe Mama

April 7th, 2011
9:47 am

Your momma wears army boots. Take that!

Patrick

April 7th, 2011
9:58 am

“…the payroll tax, which Ryan concedes is a surtax on earned income below $106,000…”. Jay – stay with me – it’s currently a ”surtax” on any earned income tax below $106,000. What’s new? Chairman Ryan’s plan lowers income taxes across the board. You’re actually complaining because everyone gets a tax break, but a person who currently pays more taxes gets a larger tax break. You’re party would be taken more seriously if the Dems actually produced their own responsible plan, rather than simply lie, bully and demagogue as usual, while we and our children are crushed under the weight of runaway debt ….

Joe Mama

April 7th, 2011
10:00 am

Yippee — “Your momma wears army boots. Take that!”

My momma’s feet are too small for mah Army boots. Right back atcha!

Cynthia Who?

April 7th, 2011
10:00 am

At least he is proposing something. Dems controlled Washington last year and decided to not pass a budget because of the elections.

Southern Comfort (aka The Man)

April 7th, 2011
10:01 am

<i.There’s some bad blood there going back to the Red Sticks and Brother Andy

Brother, you said a mouthful there. Some seriously bad blood.

Yippee

April 7th, 2011
10:06 am

Which political party does this mental midget (child abuser) call home? Hmmmm? Is that double D, big Dick Durbin looking on?

Alec Baldwin: Financial Crisis Has ‘Crippled’ Obama, Preventing Him From ‘Doing Any New Spending’
Wednesday, April 06, 2011
By Nicholas Ballasy

http://cnsnews.com/news/article/alec-baldwin-financial-crisis-has-crippl

MVM

April 7th, 2011
10:24 pm

The compromise is simple:
1. Determine how much money we’re wasting in lost Afghanistan and wasted Iraq, along with clueless, asinine Libya.
2. Get hell out of all 3 ASAP.
3. Give tax cuts in the amt of step 1.

That should satisfy both the left and right, to degrees, while helping America greatly.

Glenn Beck's Black Mistress

April 7th, 2011
10:33 pm

“beck lived there but was fired.”

He wasn’t fired. The parting was mutual. I said two years ago that I would convince him to move on to other projects; he could only discuss Sorors and hating Obama so much. And so it has come to pass that my efforts were not in vain. He is a closet liberal, I have always known this. It was simply time to move on. He is gone from fixed news, my per diem has increased and all is right with the world. Thank me later.