Paul Ryan and unicorns...
inmytree
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Paul Ryan's Absurdly Optimistic Budget Projections Draw Widespread Ridicule
2.8% unemployment? $150 billon a year in new economic growth? Tax revenues that rise with tax cuts?
All this can be yours -- and more! -- even while cutting trillions of dollars from the federal government and lowering taxes on the wealthy and corporations, according to a giddy estimate of the Republican budget by the conservative Heritage Foundation. Even as Rep. Paul Ryan (R-WI) proudly touted his "fact-based budget" and decried Democrats' "budget gimmicks" yesterday, he prominently cited the think tank's absurdly rosy numbers, drawing widespread mockery from economists, budget experts, and health care wonks. Even the developer of the model that Heritage used to crunch the numbers can't figure out how Heritage reached its conclusions.
TPM SLIDESHOW: Shut It Down: The Federal Government Shutdown of 1995
"The Heritage numbers are insane," MIT economist Jonathan Gruber said in an interview with TPM.
As Paul Krugman put it, Heritage's take "depends an awful lot on unicorn sightings -- a belief in the impossible."
The numbers stand in stark contrast to analysis from the independent Congressional Budget Office, the gold standard used by both parties to determine the costs of legislation, which shows an increase in the deficit's share of the economy in the plan's first decade thanks to its massive tax cuts and then much tougher financial burdens for seniors in future decades as their health care benefits dwindle.
"CBO is what they use on the budget side -- as a matter of procedure, any numbers from the Heritage Foundation or anybody else are essentially worthless," Bruce Bartlett, a former Treasury official under President George H.W. Bush, said in an interview. "You can assert whatever you want to assert, but you can always find some half-baked tax think tank that will make up any number you feel like."
"The idea he'd go to Heritage for that kind of support indicates he didn't like what the CBO was going to tell him," Stan Collender, a former budget aide for both the House and Senate, told TPM. "This is the same guy who said his budget has no gimmicks in it turning to the rosiest scenario he could get."
Dean Baker, co-director of the Center for Economic and Policy Research, pointed to the projections in the Ryan plan that unemployment would decline by 2% in 2012 as fishy even on their own terms.
"I think they just misprogrammed it," he told TPM. "Note that the unemployment rate falls by 2.1 percentage points relative to the baseline in 2012 even though they only created an extra 900,000 jobs. That doesn't make any sense."
By 2021, unemployment would hit 2.8% under their projection, well below the 5% - 6% range that the Federal Reserve considers the maximum desirable rate achievable without dangerous inflation.
The Heritage analysis bases its numbers on a "dynamic" model that it says takes into account the explosive growth unleashed by tax cuts. As a number of commentators have noted, it's the same approach that led them to conclude the Bush tax cuts would reduce the deficit and create millions of new jobs -- instead they exploded the deficit and unemployment worsened, eventually skyrocketing.
But the model they use, which they attribute to analyst IHS Global Insight, appears to be out there even according to its creators. Nigel Gault, the chief economist for Global Insight told the National Journal's Tim Fernholz that he has no idea how Heritage came up with their conclusions.
"I'm not quite sure what assumption ... would deliver 2.8 percent unemployment," Gault said. "We might assume different parameters."
TPM reached out to the Heritage Foundation study's authors to ask about some of the criticism's of their analysis, but did not immediately receive a reply.
http://tpmdc.talkingpointsmemo.com/2011 ... hp?ref=fpb
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feel free to present a "fair and balanced" article if you wish...
I guess your buying everything that Ryan is selling...
fuck that!
"Well, you tell him that I don't talk to suckas."
Apparently, the Heritage Foundation isn't comfortable being the butt of economists' jokes after boldly predicting a 2.8% unemployment rate in 2021 if the House GOP Budget is enacted. The think tank has removed the number from its study posted online.
As Paul Krugman pointed out in his blog, web users who downloaded a copy of the Heritage Foundation's analysis yesterday were treated to a table in the appendix detailing the unemployment rate under Paul Ryan's plan versus the CBO's projections for the President's budget. The same file downloaded today, however, omits the table entirely. TPM reached out to Heritage for an explanation and will post an update if they have further information.
Earlier today, the analyst responsible for the Heritage study conceded the numbers appeared a little low. But don't take the change in their report as a sign that Heritage has changed its rosy outlook on Ryan's plan -- the switch is only cosmetic. The overall job numbers remain the same in both versions, it's just the unemployment rate that's gone missing.
Update: William Beach, the Heritage analyst behind their budget study, tells Dave Weigel at Slate that they have updated their unemployment figures, which are now significantly higher. Under the new version, unemployment is 7.89% unemployment in 2012 (versus 6.4% in their first analysis) and 4.27% unemployment (versus 2.9% in the original) in 2020.
"We adjusted the full employment unemployment variable," Beach told Weigel. "Nothing else changes as a result of that, but the employment number changes."
http://tpmdc.talkingpointsmemo.com/2011 ... hp?ref=fpa
"Well, you tell him that I don't talk to suckas."
"Well, you tell him that I don't talk to suckas."
http://www.time.com/time/politics/artic ... 13,00.html
The Ryan Budget: A Test of Character for Obama
It was fateful that Paul Ryan released his budget plan the same week Barack Obama launched his re-election campaign — because we will now see what matters most to Obama.
The President has talked passionately and consistently about the need to tackle the country's problems, act like grownups, do the hard things and win the future. But he has also skipped every opportunity to say how he'd tackle the gigantic problem of entitlements. Ryan's plan is deeply flawed, but it is courageous. It should prompt the President to say, in effect, "You're right about the problem. You're wrong about the solution. And here's how I would accomplish the same goal by more humane and responsible means." That would be the beginning of a great national conversation.
(See TIME's Q&A with Paul Ryan on his ambitious 2012 budget.)
The liberal establishment is in full fury over Ryan's plan. From the New York Times to the influential website TPM (Talking Points Memo), all quickly denounced it. And it is an odd proposal from a man who seems genuinely committed to a comprehensive solution to the U.S.'s fiscal crisis. Ryan makes magical assumptions about growth — and thus tax revenues. He tells us that once his policies are enacted, unemployment will decline to 4%, a rate that the U.S. has not seen for nearly half a century. The plan does not touch Social Security, and it does not specify the actual programs it would cut. So for all its supposed radicalism, it's actually quite weak at outlining reductions in government spending. The bulk of the deficit reduction — which allows for the large tax cuts in Ryan's plan — would come from changing American health care. But there, too, Ryan's plan is highly unrealistic.
Over the past two years, Ryan has used the Congressional Budget Office's analysis of Obama's health care plan to criticize it relentlessly. Now the CBO has scored Ryancare, and it is a devastating critique. The main mechanism by which Ryan would cut costs on health care is to limit payments for Medicare and Medicaid. This would save money for the federal government, but it's not clear at all that it would lower health care prices for seniors or the poor. In fact, last year the CBO studied Ryan's voucher plan and concluded that it would raise costs because "future beneficiaries would probably face higher premiums in the private market for a package of benefits similar to that currently provided by Medicare." In other words, Medicare — the Walmart of American health care — can bargain for lower prices than an individual can.
The theory behind Ryan's health plan is that if individuals have to pay for their health care, they will shop carefully and drive down costs. But health is an unusual economic good and is unlikely to follow the usual market pattern. (Look at higher education: consumers pay for a large share of the total, and costs still rise at three times inflation every year.) In health care, a huge part of the expense relates to a small percentage of sick patients and to the last year of life (and those two categories overlap). Eighty-five percent of Medicare costs are generated by just 25% of patients. Even in the most conservative health care plan, the health savings account, people buy catastrophic insurance. Well, that sick 25% of the patient population would have catastrophic insurance, which would still explode the Medicare budget.
(See the nitty-gritty details of Paul Ryan's medicare plan.)
So why do I applaud the Ryan plan? Because it is a serious effort to tackle entitlement programs, even though any discussion of cuts in these programs — which are inevitable and unavoidable — could be political suicide. If Democrats don't like his budget ideas, they should propose their own — presumably without tax cuts and with stronger protections for Medicare and Medicaid and deeper reductions in defense spending. But they, too, must face up to the fiscal reality. The Government Accountability Office concludes that America faces a "fiscal gap" of $99.4 trillion over the next 75 years, which would mean we would have to increase taxes by 50% or reduce spending by 35% simply to stop accumulating more debt. Medicare, Medicaid and Social Security will together make up 50% of the federal budget by 2021.
For liberals, the long-term fiscal crisis should seem devastating. If entitlement programs continue to grow, they will soon crowd out almost all other government spending. Washington Post blogger Ezra Klein has pointed out that the federal government is now an insurance company with an army. This means that there will be little money left for programs to address income inequality, poverty, education, infrastructure, science and technology, research and all the other purposes of active, energetic government.
Liberals fear an attack on the welfare state, so they have become unthinking defenders of every aspect of that state. Consider Social Security. The left doesn't seem to understand that it has won the war. Conservatives long tried to turn Social Security into a set of individual retirement accounts. That failed, and now they propose means testing and other changes that are highly progressive. This is a deal worth making.
(Is Wisconsin's Paul Ryan too bold for the GOP?)
Perhaps most important, American entitlement programs are actually not that progressive. The number of people eligible for Social Security and Medicare will double by 2030. Sustaining these programs in anything like their current form will mean cutting deeply or eliminating most other government programs. Why has the care and feeding of America's elderly become the only cause of American liberalism?
Obama has an obvious script in front of him. He could turn every item in Ryan's plan into an attack ad, scare the elderly and ride to victory in 2012. But that would probably mean we had pushed off reform of entitlement programs one more time, hoping that
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