Implied Dissent

Tuesday, April 12, 2011

Paul Ryan

I partially agree with Krugman's assessment of Paul Ryan's budget plan. The growth assumptions look aggressive, and many key parts of it are...unspecified. However, I do have some disagreements as well.
Krugman says that anyone who didn't regard his original blueprint for the proposal as unserious has no credibility. What were the reasons to regard it as unserious? That the CBO hadn't evaluated the tax part of it. Which it hadn't done because it was swamped with Obamacare. And...that seems to be all of it. Now, that he still hasn't had CBO score it is bad, but complaining about it at that time would be like complaining that I hadn't proven my senior thesis at the time that I was proposing it, or calling a batter out for not touching home plate after a home run, when he was still making his way to first base.
On Medicare, again, the assumptions look aggressive. However, Krugman's key complaint is that the spending cuts won't actually be allowed to go through once they would start to take effect in many years. And he may be right; I too am pessimistic about the likelihood of large spending cuts. But then, Medicare as it is currently plotted will definitely not be allowed happen, it's much too generous. You punch through your target (especially when your growth assumptions are too rosy).
Lastly, many people are complaining that he doesn't touch military spending. This is simply untrue. As you can see here, the part of the budget that includes defense spending in his plan is currently at 12% of GDP, and his plan cuts that to 3.5%. Defense spending right now is about 6%. No way to do that without cuts to the military, or very high growth in the economy.
All in all, I'd call his plan about 75% serious. Which makes it about 75% more serious than anything I see coming from the other side of the aisle.
UPDATE: I've looked more closely at the economic growth projections, and they actually look a lot more reasonable than I thought. The unemployment rate is ridiculous, but the GDP growth numbers are not outrageous at all. Not saying I trust Heritage, but how these numbers feed into deficit projections aren't a big strike against it or the plan.

Labels: , ,


Post a Comment

<< Home