One of the more outrageous things ever said re fiscal policy…and that’s a high bar.

March 17th, 2015 at 4:41 pm

House Republicans released their budget today, and I found it to be…um…how can I put this nicely?…orthogonal to reality. As I wrote earlier:

The policies put forth in this document suggest that America’s main problem is that the poor have too much and the wealthy, too little. The budget plan “corrects” this perceived imbalance by deeply cutting programs that help low- and middle-income people, and cutting taxes on those with high incomes, capital gains, multinational corporations and “pass through” business income.

Programs that provide affordable health coverage for the middle class (Obamacare, which they repeal) and the poor (Medicaid, which is “block granted”) face large spending cuts. Future elderly persons do not escape unscathed, either, as Medicare is “voucherized” beginning in 2024. The budget includes more than $1 trillion in unspecified cuts that would appear to fall on nutritional support for the poor and tax credits for low-income, working families.

While the budget’s authors claim it balances out revenues and spending within the ten year budget window, to get there it uses the same massive magic asterisk as did the Ryan budgets upon which this one is based. They write down revenue targets and, in Ryan’s case, profess to have ways to get there. In this case, however, they simply invoke “faith.”

When a reporter asked Budget Committee chair Tom Price how his budget makes up the lost revenue from all the tax cut implicit in their  budget, he replied, “We believe in the American people and we believe in growth.”

He goes on to invoke supply-side fairy dust on how tax cuts would create more growth and thus more revenues, but they’ve got an interesting problem here. They got the CBO to score their budget, and the budget office did, in fact, say it would raise GDP per person (really GNP, but no matter…this is all just fun with numbers) by 1.5% by 2025.

But you’ve got to appreciate the pretzel logic here. You only get the boost in growth because CBO must do what you tell them. If you say, as Price and co. did, that you’ll cut taxes by trillions and yet somehow (I guess because of your belief in the American people and growth) balance the budget, then and only then do you get CBO to credit you with lower deficits, lower debt, lower interest rates, more growth and thus higher per capita income.

But if your plan fails because no matter how much you believe in the American people and growth, tax cuts of the magnitude you’re contemplating sharply increase deficits and debt, even with all your spending cuts, then you don’t get the lower interest rates, growth, etc.

I too believe in the American people and growth but I don’t believe in magic asterisks or tax cuts that pay for themselves. It’s great to have faith, but math is good too.

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5 comments in reply to "One of the more outrageous things ever said re fiscal policy…and that’s a high bar."

  1. Nick Batzdorf says:

    They’re just trying to put The Onion out of business.

  2. Chris G says:

    > “We believe in the American people and we believe in growth.”

    “My mother, drunk or sober!”

  3. Resolved says:

    As my children learn piano, I look for good piano players to give them motivation:

    How fun would it be to be this good at piano? Ragtime is one of my favorites, and it was the precursor to Jazz.

    I simply cannot stop listening to Root Beer Rag. Billy, you are an American Icon. Love you, man.

    • Resolved says:

      Well, algorithms are calling us with prerecorded, tested initial key words, and they call it ‘live town hall meetings’, and they just pretty much comfort us with the Paul Ryan budget within 20 seconds of the presentation, somethings up… Right? Somethings not right here, you’re playing a gag on us, right?

      Why doesn’t anyone ask that question. Is this a gag? Yes, it is a gag. It is made up for people that follow others.

      So is somebody hacking that gag? Yes, of course. Sooner or later, the gag will advocate the exact opposite of its intent. In the mean time, we need to attack!

      We on it…

      And I’m not even one of them. Just say it, just give the cause and the reason and they do it. These people are wonderful.

  4. Jill SH says:

    Ah, how they use the language. I just listened to your stint on the Diane Rehm show from yesterday and came away shaking my head.

    Romina talked about “patient-centered, market-based” healthcare. I’m not sure those words mean what she thinks they mean, or we are seriously in YOYO land. My context for “patient-centered” has more to do with how health care treatment is diagnosed and delivered to a patient, possibly with multiple co-occuring conditions that an integrate team of practitioners would address, expectedly at one facility. I wonder if she actually means that the patient is the center of the financial morass that is our health care system (are we buying actual care, or are we buying the insurance to get to that care?), and that patient must do all the seeking, requesting, and paying for the care/insurance, while they are ill? Note that I said patient, not consumer. (And btw, that insurance may actually limit your health care choices.)

    And then Congressman Yahoo (sp?) goes on about how SocSec/Medicare/Medicaid will be bankrupt — Bankrupt I tell you! — in a mere decade or two. How come we never talk about the Defense budget — oh, excuse me, that’s off-budget — being bankrupt? Last I heard the tax structure supporting Soc Sec was doing fine, in surplus, and was actually being used to finance other govt stuff like, ya know, off-budget wars.

    And then jumping ahead to the block grant question. Having been in state govt., where budgets must be balanced, block grants are a good way for the federal govt to save money, but not such a good way for states. Often, when the fed source is finite, states do not respond to growing need — often they can’t respond — by expanding payments, coverage, or support. And believe me, at the state level, Medicaid has always been contentious budget issue.