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The Ryan Budget: DOA But Driving Fiscal Debate

House Budget Committee Chairman Paul Ryan listens as members of the Republican leadership speak to reporters after U.S. President Barack Obama met with the House Republican Conference at the White House in Washington (REUTERS/Kevin Lamarque).

Paul Ryan, the chair of the House Budget Committee, has just released Republicans' version of the Budget Resolution for fiscal year 2014.  It promises to balance the budget by 2023 and to eliminate the entire national debt shortly after 2050.  Between 2014 and 2023, spending would be reduced by $4.6 trillion.  All of the deficit reductions are to be achieved through spending cuts; changes to the tax code will be revenue-neutral.

Let's begin with the basics.  According to CBO's baseline budget projections, spending in 2023 will be $5.94 trillion, while revenues will be only $4.96 trillion.  Reaching balance in 2023 would imply spending cuts totaling nearly $1 trillion in that year alone—a reduction of more than 16 percent, fully 3.8 percent of the GDP. 

Not every category of spending is cut.  Defense spending would be increased by more than $500 billion above the baseline during the next decade, and spending for veterans would also rise.  That means that non-defense cuts would have to total more than $5.1 trillion.

How would this happen?  The details are still murky, but some of the outlines are reasonably clear.  The House Republican budget would repeal President Obama’s health reform act, transform the Medicare program into a system of premium support, and replace Medicaid with a block grant to the states.  Over time, SNAP (the nutrition program once known as food stamps) would also become a block grant.  The maximum award available under the Pell Grant program would be frozen, and student loans would be cut substantially.  In a budget that pulls few punches, there is no plan for Social Security.  Instead, it would require Congress and the president each to offer one.

The House will almost certainly pass this budget resolution, but there is no chance that the Ryan budget will become law.  It will, however, have two useful outcomes.  First, it will generate a debate over the appropriate goal of long-term fiscal policy: Is it to eliminate the deficit and the debt, to ensure that the debt does not rise as a share of GDP, or something in-between?  And second, because the Senate will produce its own resolution, the House version will dramatize the gulf of values and priorities separating the two parties.  The American people will face a clear choice.  If they want compromise, they will have to insist on it, and hold both parties' feet to the fire.

  • William A. Galston holds the Ezra K. Zilkha Chair in the Brookings Institution’s Governance Studies Program, where he serves as a senior fellow. A former policy advisor to President Clinton and presidential candidates, Galston is an expert on domestic policy, political campaigns, and elections. His current research focuses on designing a new social contract and the implications of political polarization.

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