Ryan’s budget increases spending by $1.2 trillion

There are certainly some things to like about the budget proposal rolled out yesterday by House Budget Committee Chairman Paul Ryan (R-WI). The “Path to Prosperity” attempts to return Medicare to solvency, for example, and repeal Obamacare.

Ryan claims that the budget “cuts $5.1 trillion in government spending,” a line that has been repeated in media reports on the proposal. But this is a budgetary trick. The House Budget Committee may slash projected federal outlays, but Nicole Kaeding of the Cato Institute explains that the proposal would actually increase spending by $1.2 trillion:

How can spending both be “slashed” and increased by $1.5 trillion? It’s because of the bizarre way that Washington discusses spending, which is known as baseline budgeting.
[…]
In Washington, all spending proposals are compared to the CBO’s baseline projections. The CBO releases these projections a couple times a year, which are based on their estimates of current federal law. Every proposal is then compared to this baseline. Inside-Washington discussions of spending cuts or increases are relative to CBO’s figures.

But this is a very different way of thinking about budgeting than used by families, who don’t assume that their income will go up automatically every year. Families prioritize, and they cut back when they need to make the books balance. Sadly, few proposals in Congress make tough trade-offs and cut actual levels of spending.

Kaeding presents a chart showing the differences between the Congressional Budget Office’s baseline budget projections and spending under Ryan’s budget proposal. As you can see, spending still rise, though at a slower rate:

In addition to entitlement reforms, Ryan’s budget focuses on non-defense discretionary spending to rollback the rate of spending increases. The budget does trim back defense spending, but only marginally. But, at the end of the budget window, Americans are still seeing a net-spending increase, as Kaeding points out:

Chairman Ryan’s budget would spend $42.6 trillion over the next ten years. Opponents will say that Ryan’s budget slashes federal spending, while supporters will say that it includes large budgetary savings. The reality is that Ryan’s budget would increase spending at an annual average rate of 3.5 percent, or from $3.54 trillion in 2014 to $5.0 trillion in 2024. Only in Washington would that be considered substantial restraint, let alone slashing.

Though it doesn’t substantially rollback spending, Ryan’s budget is still better than the one presented by the White House last month. President Obama’s budget proposal would increase taxes by $1 trillion and spend just under $49.1 trillion between FY 2015 and FY 2024. While the White House’s budget increases deficits by $7.1 trillion over this timeframe, Ryan’s brings it into balance.

By comparison, Ryan’s budget is the better choice, but it’s not exactly what media reports indicate. In the end, however, it does provide Republicans with blueprint for the 2014 election, but it’s not necessarily something fiscal conservatives can get behind.


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