Ryan’s House Budget Committee has a new budget blueprint which promises to eliminate the deficit in decade or so through tax cuts, and a new accounting trick. The budget plan contains the first reference to a line item labelled "macroeconomic fiscal impact," and it refers to the economic growth created by cutting the deficit. Simply put, as the federal deficit decreases, economic growth increases, and at a predictable rate. People are calling its use in budget predictions “dynamic scoring.”
Some, like Slate writer Jordan Weissman, describe the line item as a “gimmick.” But it’s far less a gimmick to include a reasonable estimate of economic growth impact in a budget than it is to call inflating the budget less than previously estimate a budget cut, as both spending-happy Republicans and Democrats are fond of doing.
What isn’t a gimmick at all is the reality that cutting the deficit leads to economic growth, and the deficit is now so large that economic growth is our only hope to avoid total economic collapse.According to the CBO, “Federal debt held by the public now exceeds 70 percent of the nation’s annual output (gross domestic product, or GDP) and stands at a higher percentage than in any year since 1950.”
Any plan which can credibly reduce the deficit is a good one. However, this one may not be it. Ryan’s budget plan fails to address the two biggest contributors to the federal deficit: entitlements and military spending.
Stating, “This budget rejects the President’s cuts to national security,” the proposal actually increases military spending, ratcheting it back up to pre-sequestration levels. How unfortunate that after all the fighting over sequestration, the GOP wants to undo all that good work. National Review describes sequestration’s automatic spending cuts, implemented after the 2011 debt-ceiling fight, as one of the GOP’s greatest accomplishments since retaking the House in 2010. And for what?
Simply by getting rid of waste, the Pentagon could easily cut around $70 billion from the budget over 10 years without threatening any Army brigade combat teams, Navy combat ships or Air Force fighter squadrons. One senior defense official estimates the Pentagon could save the $23 billion it wasted in 2013 overusing contractors and underusing oversight.
As for entitlement spending, according to Social Security and Medicare’s board of trustees, “We are looking at over $30 trillion in total obligations that we have to find sources to pay for above and beyond projected payroll tax and premium revenues.”
While it’s great that Ryan wants to reduce the corporate tax rate to 25 percent, repeal all of Obamacare, including the Independent Payment Advisory Board, reduce the size of the federal workforce, wind down Fannie Mae and Freddie Mac, and eliminate corporate welfare, there is simply no way any of that will make the difference we need to see if GOP politicians continue to shirk from their responsibility to cut where it matters: entitlements and military spending. The real gimmick here is that Republican lawmakers keep talking about free markets and fiscal responsibility, then slinking away when it comes time to put their money where their mouths are.