Thursday, April 11, 2013

Confusing budget baselines is a feature, not a bug

 Image: Paul Ryan and the Path to Prosperity (source)

Dylan Matthews over at Wonkblog has made a heroic effort to compile data from the different budgets.  He details in this post why, exactly, this is so difficult:

All of which is to say is that seemingly simple questions about the budget, like “Does Obama or Ryan cut the Medicare budget more over 10 years?” are rather hard to answer honestly. And that’s leaving out dumb mistakes that get made when you’re trying to get the data out fast. For example, when I was entering numbers for Social Security yesterday, I took care to subtract out the $130 billion in cuts due to chained CPI. Only I cut them from the baseline, not the actual program spending. So what is actually a cut looked like a spending increase. Derek Thompson alerted me to the issue and it got fixed, but the damage was done.

That was a stupid mistake on my part, and I should have done better. But policymakers should do better, too. The reason we have institutions like the CBO is so we can have a common set of assumptions about what policies are going to take effect, what the economy is going to look like and so forth, to enable easier comparisons between policies. So it’s mildly infuriating when institutions like the OMB work at cross-purposes and make it harder for citizens to understand exactly which politicians want to cut what from what.

But Matthews, I think, misses the entire point.  Politicians want people to be confused about their budgets.  How could citizens support budgets if they actually knew what was in them?  I'll use Paul Ryan as an example, because he basically owes his career to being able to obscure his true intentions in confusing budgets.  Here is Paul Krugman calling him out in 2010:

The Washington Post put a glowing profile of Mr. Ryan on its front page, portraying him as the G.O.P.’s fiscal conscience. He’s often described with phrases like "intellectually audacious."


Mr. Ryan’s plan calls for steep cuts in both spending and taxes. He’d have you believe that the combined effect would be much lower budget deficits, and, according to that Washington Post report, he speaks about deficits "in apocalyptic terms." And The Post also tells us that his plan would, indeed, sharply reduce the flow of red ink: "The Congressional Budget Office has estimated that Rep. Paul Ryan’s plan would cut the budget deficit in half by 2020."
But the budget office has done no such thing. At Mr. Ryan’s request, it produced an estimate of the budget effects of his proposed spending cuts — period. It didn’t address the revenue losses from his tax cuts.

So, what was the truth?

The nonpartisan Tax Policy Center has, however, stepped into the breach. Its numbers indicate that the Ryan plan would reduce revenue by almost $4 trillion over the next decade. If you add these revenue losses to the numbers The Post cites, you get a much larger deficit in 2020, roughly $1.3 trillion.

And that’s about the same as the budget office’s estimate of the 2020 deficit under the Obama administration’s plans.

And what was Ryan hiding in his budget?

...the Roadmap wouldn’t reduce the deficit. All it would do is cut benefits for the middle class while slashing taxes on the rich.

And I do mean slash. The Tax Policy Center finds that the Ryan plan would cut taxes on the richest 1 percent of the population in half, giving them 117 percent of the plan’s total tax cuts. That’s not a misprint. Even as it slashed taxes at the top, the plan would raise taxes for 95 percent of the population...After 2020, the main alleged saving would come from sharp cuts in Medicare, achieved by dismantling Medicare as we know it, and instead giving seniors vouchers and telling them to buy their own insurance.

Raising taxes on 95% of the population?  Voucherizing Medicare?  Obviously, Ryan had no reason to want the truth of his budget to come to light, so he did his best to obscure it with the alternative baselines that make Dylan Matthews' job so difficult.

Then, in 2011, Ryan proposed moving to a "premium support" model for Medicare, arguing that this plan could successfully limit health care spending for seniors to inflation--in other words, his plan would keep Medicare costs from rising at all relative to the rest of the economy.  Obviously, this was an absurd assumption.  But, even as Ryan was touting that plan, he was still attacking Obamacare, arguing that it would cost hundreds of billions of dollars more than estimated.

The problem was, Ryan's plan for limiting Medicare spending is exactly the same as Obamacare--both rely on people buying private insurance on an exchange.

Speaking of the Affordable Care Act, you’ve said before that the theory behind the exchanges in Ryan-Rivlin and the theory behind the exchanges in the Affordable Care Act are identical. That would mean Republicans who believe in Ryan’s model should be more optimistic about the Affordable Care Act. But Ryan has said the two of you simply disagree on how to build the exchanges. Can you explain to me the disagreement you have that would make Ryan-Rivlin different from the ACA?

[Alice Rivlin]:  No. I can’t. I think he’s sort of backed himself into an intellectual corner here.

If Ryan believes an exchange marketplace saves so much money when it's called "Ryancare," why would the exact same system not save money when it's called
"Obamacare"?  Ryan is not stupid.  He knows Ryancare, Ryan-Rivlin, and Obamacare are all based on the same principle.  But he doesn't want ordinary citizens to know, so he buries it in a plausible-sounding budget.  Here is Ryan pulling the exact same stunt in 2012.

Indeed, for his 2013 budget, Ryan absolutely relied on people not understanding his budget.  He claimed that his budget fully repealed Obamacare, yet his budget actually preserved Obamacare's $500 billion cut to Medicare.  In so doing, he was able to claim that he was not cutting Medicare at all(!).  Remember, Ryan actually campaigned in 2010 against Obamacare's $500 billion dollar cut to Medicare.  Got it?

I haven't been fair to Ryan, because Obama is also cynical.  I hope to address that in a later post.  Nevertheless, Ryan and Obama both want to cut entitlements.  For Obama, this would occur through chained CPI, which is a cut to Social Security benefits.  However, given that just 35% of Americans want to cut Social Security benefits (a majority favors a tax increase over a benefits cut) and just 34% want to voucherize Medicare, is it really surprising that politicians want citizens to be confused about their budgets?  Can there be any question that politicians who want to cut entitlements benefit from the public not understanding what it is they intend to do?

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