Budget enforcement: This budget recognizes that it is not enough to change how much government spends. We must also change how government spends. It proposes budget-process reforms—including real, enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.
Tax reform: This budget would focus on growth by reforming the nation’s outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all.
Obama’s budget plan would take spending as a percentage of gross domestic product (GDP), the total economic output of the American economy, from 25.3 percent this year to the 22 percent range for much of the next decade. But by the end of the 10 year horizon, his plan has spending back at 23 percent. Revenues, meanwhile, which are currently at an anemic 14.4 percent, would creep up to 19 percent by 2015 and then hit 20 percent in 2021.
Obama’s budget does not show what happens beyond the 10-year window. So, compared to George W. Bush’s spending, he seems to be about on par. However, projections from the Congressional Budget Office (CBO) show spending growing at its current pace will grow to more than 26 percent of GDP in 2022, over 32 percent of GDP in 2030, 38 percent of GDP in 2040, and 45 percent of GDP by 2050, with the bulk of that spending driven by ever-rising health care costs.
Ryan’s plan would move spending back to historic levels, keeping it at 20 percent of GDP through 2030, and actually reducing it to under 19 percent by 2040. Ryan’s plan predicts revenues growing to 19 percent of GDP by 2040, allowing the national debt to be reduced over time.
A draft proposal from Ryan’s House Budget Committee says that under his plan, the national debt would be $1.1 trillion less than it would be over the next five years under Obama’s budget, and would add $3 trillion less to the debt than Obama’s budget proposal over the next decade. Ryan’s budget proposal would bring the debt held by the public to $13.9 trillion by 2016 and $16 trillion by 2021, compared to $15 trillion in 2016 and $19 trillion in 2021 under the president’s proposal
Ryan’s plan has $40 trillion in spending over the next 10 years compared to $34.9 trillion in revenues. Obama would spend $46 trillion in the coming decade while bringing in $38.8 trillion in revenues. So Ryan’s plan would still result in the government spending $5.1 trillion more over the next decade than it brings in, but that’s less than the $7.2 trillion in deficit spending that Obama has proposed.
Some Think that Paul Ryan budget could revive interest in the Fiscal commission budget
Fiscal Commission budget proposal 2015 Savings
Domestic: $100.2 Billion
Defense: $100.1 Billion
Total: $200.3 Billion
Ryan caps his Medicare vouchers at GDP+1%. The Fiscal Commission directs Congress to “contain growth in total federal health spending to GDP+1% after 2020 by establishing a process to regularly evaluate cost growth, and take additional steps as needed if projected savings do not materialize.” The savings are similar to Ryan’s budget, but the proposal offers more flexibility in how they should be achieved, and it doesn’t insist on privatization — which would raise costs — as a precondition to cost control.
Ryan freezes non-defense discretionary spending at 2008 levels, but he largely leaves defense alone. The Fiscal Commission’s plan “rolls discretionary spending back to FY2010 levels for FY2012, requires [a] 1% cut in discretionary budget authority every year from FY2013 though 2015” — but, notably, that includes both defense and non-defense discretionary spending and requires equal cuts from both, meaning it saves a lot more money.
One of the better parts of Ryan’s plan is his proposal to clean out and simplify the tax code. The Fiscal Commission does much the same thing, but it assumes the expiration of the Bush tax cuts for income over $250,000 and it increases revenue a bit beyond that, too, so where Ryan’s plan sneaks a big tax cut into his deficit-reduction proposal, the Fiscal Commission makes revenue a larger part of the solution.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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