Tax Analysts Blog

Paul Ryan Borrows a Page From Obama’s Playbook

Posted on Mar 19, 2013

Paul Ryan may have been on the ticket opposing President Obama in the last election, but that hasn’t stopped the House Budget Committee chair from copying the president in at least one important respect. Much like Obama, Ryan keeps releasing the same budget every year, knowing full well that it has no chance of becoming law. The latest Ryan budget is very similar to last year’s version, and the Tax Policy Center has reached a familiar conclusion: Ryan’s plan would cost the federal government about $6 trillion over the next 10 years.

Obama released essentially the same budget three years in a row. It called for a deductions cap, increased taxes on the wealthy, repeal of the section 199 credit for oil and gas companies, and various international revenue raisers (only one of which, a limit on foreign tax credits, ever became law). The last Obama budget was perhaps the most comical repeat. The administration released it and then immediately began to contradict it by pushing a corporate tax reform plan that clashed with proposals in the Treasury blue book. After 2009, Obama’s budgets were seldom taken seriously even by his own party. The 2012 version failed on a symbolic 99-0 vote in the Senate.

Ryan can at least claim that his budgets pass one chamber. The House has approved a Ryan budget two years in a row. The original Roadmap for America’s Future passed 235 to 193 in 2011, and last year’s version passed 228 to 191. Ryan’s budgets are famous for their Ayn Rand flair, calling for sharp reductions in government assistance programs, cuts to Medicare and Medicaid, lower taxes, and vague promises of corporate and individual tax reform. Like the 2011 and 2012 versions, Ryan’s latest proposal would limit the federal tax system to two rates (10 and 25 percent), repeal the AMT and Obamacare, and lower the corporate tax rate to 25 percent. The Wisconsin Republican claims it will all be paid for and that the country will even have balanced budgets in 10 years.

The TPC is skeptical. In its analysis of Ryan’s plan, the TPC claims that Ryan will need to create $5.7 trillion in revenue over the next 10 years simply to reach revenue neutrality. The Budget Committee chair claims that his plan will actually raise $4.6 trillion, but he includes some dubious math. The budget takes credit for $715 billion in Medicare cuts and $1 trillion in insurance savings from the passage of Obamacare – despite claiming that Obamacare is assumed to be repealed. Ways and Means member Chris Van Hollen, D-Md., called the Ryan budget “a total hoax.”

The spending cuts in Ryan’s budget are both severe and vague. Ryan has yet to talk about tax expenditures that would be pared down. And he hasn't committed to a specific amount of revenue that needs to be raised. But the tax cuts in the Ryan budget are easy to find. The TPC says that taxes would fall by an average of $3,000 per tax unit, which would raise after-tax incomes by 5 percent. Those in the top 1 percent of earners would see their after-tax incomes rise by 17 percent, while the bottom quintile would see a tax savings of only 0.3 percent. Once again, Republicans have opened themselves up to some pretty easy attacks about fairness.

In the end, Ryan’s budget is a lot like Obama’s last three proposals -- mostly for show. Ryan deserves some credit for actually backing his budget rather than releasing it and then immediately repudiating or ignoring it. (Obama usually pretends his budget proposals don’t exist.) And Ryan deservedly was praised in 2011 for producing one of the more detailed fiscal proposals. But that was years ago, and he has yet to fully develop his plan. He still won’t specify exactly how he wants to pay for his tax decreases. He still hasn’t confronted just how hard it would be to wring more discretionary spending cuts out of the budget. And he seems no closer to securing any bipartisan support, which would be necessary to implement the broad reforms he is calling for. In 2011 his plan might have seemed innovative and bold. In 2013 it just seems like leftovers from the failed Romney campaign.

What should Ryan do? He should drop his emulation of Obama and start tailoring his plan to the political situation in Washington. It does no good to draft and pass something that can’t get a single Democratic vote in either the House or Senate. He should start to provide some details. It might be the job of Ways and Means to supply the tax components of a budget, but Ryan shouldn’t just pass the buck to Dave Camp. He needs to tell us how he envisions raising $600 billion a year to pay for his tax reforms. In short, Ryan should get back to treating the roadmap like a serious plan or no one else will.

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