It’s Worse Than That, Paul

February 29th, 2012 at 9:32 pm

Paul K’s got a fine post up showing the debt implications of different budget plans as scored by the CRFB.  But he made his graphic before any of the budget crunchers could incorporate new numbers from the Tax Policy Center on the impact of Gov Romney’s plan to further cut personal tax rates by 20% and repeal the AMT, all of which adds about $3 trillion to the cumulative deficit by 2021.  And all of this, of course, is on top of the permanent extension of all the Bush tax cuts (that’s already reflected in Paul K’s graph).

Anyway, Paul cites the CFRB number to show that Gov Romney’s debt-to-GDP ratio would be 86% in 2021, compared to the President’s budget which has that ratio at 77% that year.  But if you add in the TPC’s impact of these new cuts, Romney goes up to 99%.

Unless you want to invoke the magic of “dynamic scoring” (as in: “my tax cuts will unleash scads of growth that’s just waiting to happen!”) or the vagaries of “unspecified spending cuts and the closing of tax breaks to be named later,” there’s just no other way to shuffle this deck.  We cannot both massively cut tax revenues and achieve a sustainable budget outlook.

Sources: OMB, CFRB, TPC, my calculations

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4 comments in reply to "It’s Worse Than That, Paul"

  1. Jill SH says:

    Getting ready to listen to a rebroadcast of you and some other guy talking about John Maynard Keynes on my local public radio station. NHPR. (Available streaming on the web for those out of earshot.)

    This time I’ll listen to the whole hour. The half that I heard last time was great.

    But, with your musical background, can’t you come up with some response to his musical contribution? In the interest of equal time.

    • Jared Bernstein says:

      He put some real resources into those videos…a lot cheaper to link to YouTube…

  2. DBryant says:

    Will you be commenting on Kevin Brady’s proposal for the Federal
    Reserve? How do you think a monetarist like Friedman would have reacted? What would be the long term implications of his proposal?
    I believe I have read where this is not too far from a type of gold
    standard. Thanks!

  3. Tyler says:

    I’m all for deficit growth if it’s due to tax cuts for the lower and middle classes. Of course, those tax cuts pay for themselves. Unlike the Bush tax cuts that went overwhelmingly to the wealthy, reducing the payroll tax is a superb means of rapidly expanding effective private sector demand. The payroll tax is highly regressive (the working and middle classes pay a much higher percentage of their income than do the wealthy) so the payroll tax reduction gets money overwhelmingly to the working and middle classes and it does so immediately. This is why many progressive economists supported the payroll tax reduction as an immediate response to the Great Recession.