The non-partisan Congressional Budget Office has released a preliminary report on Rep. Paul Ryan's (R-WI) 2012 budget proposal, and the conclusions of the report show why Ryan has not been using the CBO for his numbers. Ryan has claimed that his budget would save $6.2 trillion from the federal deficit over the first 10 years. Many have noted that Ryan does not use the CBO for his projections, but instead gets his projections from some other unknown source. The CBO states that in the first ten years Ryan's budget proposal would actually increase, not decrease, the federal budget deficit. If Congress does nothing the CBO projects that the federal deficit will make up 67% of GDP in 2012. The CBO estimates under Ryan's proposal the federal deficit will make up 70% of GDP in 2012. Ryan has been called a "genius" by conservative over the last 24 hours, but progressives will contend that even a simpleton knows that 70% is greater than 67%.
The CBO estimates that Ryan's plan will actually increase the deficit because of various tax cuts he would implement in his plan. Most significantly, Ryan would permanently extend all of the Bush tax cuts, including those for the wealthiest Americans. The price tag for this extension is estimated to be about $5 trillion over the next ten years. Ryan also would decrease government revenues by lowering the corporate tax rate. In his budget Ryan attempts to make up the tax cuts with steep cuts to discretionary spending and Medicaid, but his cuts do not go far enough to make up the difference.
The good news for Ryan is that CBO does project his plan bringing down the deficit over the long term. The bad news is that the CBO states Ryan can only do this by shifting Medicare costs to private citizens. Under the current law the deficit will reach 90% of GDP by 2050. Under Ryan's plan the deficit would only equal 10% of GDP in 2050. Ryan achieves these saving by abolishing Medicare and replacing it with a voucher system. Starting in 2022, not coincidentally when Ryan starts to achieve deficit reductions, seniors would start receiving a voucher to purchase private insurance rather than the guaranteed coverage they currently receive under Medicare. The problem is, the voucher would not cover the costs of many private plans, requiring older adults to either pay more out-of-pocket or go without coverage at all. The CBO states this plainly saying,
"Under the proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary’s spending on premiums and out-of-pocket expenditures as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary’s spending would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario"
In other words, under Ryan's proposal seniors would pay twice as much as they would otherwise for health insurance starting in 2030. The costs for seniors would keep increasing after 2030. Ryan achieves savings in the long-term, but only by shifting the cost of health care from the government on to the backs of the elderly.
The CBO also states that Ryan's plan would reduce deficits in the long term by reducing health care coverage to the poor through cuts to Medicaid,
"Federal payments for Medicaid under the proposal would be substantially smaller than currently projected amounts. States would have additional flexibility to design and manage their Medicaid programs, and they might achieve greater efficiencies in the delivery of care than under current law. Even with additional flexibility, however, the large projected reduction in payments would probably require states to decrease payments to Medicaid providers, reduce eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay
Comments