The budgets produced by House Budget Committee Chairman Paul Ryan, and the votes in the Republican controlled House adopting them, are reframing the 2012 elections. This year's elections are now defined in one corner by the spending, entitlement, and tax reforms in Ryan's budget, and in the other corner by the spending, deficits, and tax increases in President Obama's budgets.
Through those budgets, and the votes taken in the House and the Senate in this Congress, Republicans are establishing a record of cutting spending and taxes, while Democrats are establishing a record of refusing to cut spending, and raising taxes.
Yes, Republicans lost control of spending under President Bush. But President Obama is increasing federal spending as a percent of GDP in four years by one third more than President Bush did in 8 years (see www.omb.gov).
After the greatest runaway spending spree in world history, by far, in the first 3 years under President Obama, Obama's budget released in February proposes to increase federal spending by another $1.5 trillion compared to current policies. And that is just compared to the current baseline. President Obama's budget actually proposes to spend $47 trillion over the next 10 years. Ryan's budget proposes to cut that by $6.8 trillion. By 2022, Ryan's budget would consume nearly a trillion dollars less per year than President Obama's.
Ryan's budget proposes to cut total federal spending in actual nominal dollars for 2013 compared to 2012, and to cut it again in 2014. Total federal spending would not climb above 2012 levels in actual, nominal dollars until 2016.
By 2015, after just 3 years under Ryan's budget, federal spending would be nearly back to its long term, historical average since World War II as a percent of GDP, at 20.1%. Even with Ryan's proposed reductions in individual and corporate tax rates, federal revenues would be restored to their long term postwar average as a percent of GDP as well. That would leave the deficit in 2015 at an easily manageable 1.7% of GDP, compared to roughly 9% on average under President Obama.
By 2017, the federal deficit under Ryan's plan would be reduced to $182 billion, less than 14% of the average deficit under Obama. And that is with CBO static scoring. Under dynamic scoring, with Ryan's rate cuts, the budget would be balanced by then, if not sooner, because the rate cuts would not lose as much revenue as under static scoring.
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