Rep. Ryan Misleads Fox News Viewers On His Budget Proposal

April 07, 2011 10:08 am ET

Fox & Friends interview is the political equivalent of home field advantage for Republicans, and Rep. Paul Ryan's (R-WI) appearance yesterday morning demonstrated just how nurturing the Fox News environment is for right-wing misinformation. Ryan insisted his plan doesn't give tax breaks to the rich at the expense of middle-class working families (even though it does) and asserted — falsely — that his budget proposal will "repair the social safety net," protect Medicare and Medicaid, and pay down the debt. While the GOP's cable network of choice didn't challenge any of these assertions, Political Correction is happy to round up the evidence that Ryan is lying. It's presented below.

CLAIM: Rep. Ryan Claimed His Budget Will "Repair The Social Safety Net"

REP. PAUL RYAN: Well first of all, we've actually saved the safety net. We make it— we repair the social safety net.

FACT: Ryan's 'Repairs' Involve Cutting Nearly $3 TRILLION From Programs That Aid Low-Income Americans

Debt Commission Chairmen: Ryan's Budget Cuts To "Safety Net Programs" Would "Disproportionately" Affect "Disadvantaged Populations." In a statement calling Rep. Ryan's budget proposal "a positive step," the leaders of the president's National Commission on Fiscal Responsibility and Reform — former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles — wrote: "The plan largely exempts defense spending from reductions and would not apply any of the savings from eliminating or reducing tax expenditures as part of tax reform to deficit reduction. As a result, the Chairman's plan relies on much larger reductions in domestic discretionary spending than does the Commission proposal, while also calling for savings in some safety net programs - cuts which would place a disproportionately adverse effect on certain disadvantaged populations." [Simpson-Bowles Statement, 4/5/11 via The Hill]

CBPP: Two-Thirds Of Ryan's Spending Cuts Would Come From Programs Targeted At Low-Income Americans. According to the Center on Budget and Policy Priorities: "House Budget Committee Chairman Paul Ryan's budget plan would get about two-thirds of its more than $4 trillion in budget cuts over 10 years from programs that serve people of limited means, which violates basic principles of fairness and stands a core principle of President Obama's fiscal commission on its head. The plan of Erskine Bowles and Alan Simpson, who co-chaired President Obama's National Commission on Fiscal Responsibility and Reform, established, as a basic principle, that deficit reduction should not increase poverty or inequality or hurt the disadvantaged. The Ryan plan, which the chairman unveiled in a news conference, speech, and Wall Street Journal op-ed today, charts a different course, turning its biggest cannons on these people." [, 4/5/11, emphasis added]

CBPP prepared a graphic showing the types of spending Rep. Ryan's proposal would cut:

[, 4/5/11]

Ryan Budget Cuts $2.9 Trillion From Medicaid, Low-Income Housing Support, Food Stamps, And Pell Grants For Low-Income Students. According to the Center on Budget and Policy Priorities:

Cuts in low-income programs appear likely to account for at least $2.9 trillion - or about two-thirds - of this amount. The $2.9 trillion includes the following three categories of cuts:

  • $2.17 trillion in reductions from Medicaid and related health care. The plan shows Medicaid cuts of $771 billion, plus savings of $1.4 trillion from repealing the health reform law's Medicaid expansion and its subsidies to help low- and moderate-income people purchase health insurance.
  • $350 billion in cuts in mandatory programs serving low-income Americans (other than Medicaid). The budget documents that Chairman Ryan issued today show that he is proposing $715 billion in cuts in mandatory programs other than Medicare, Medicaid, and Social Security, but do not specify how much will be cut from various programs (although they imply that cuts in the food stamp program will be large). In this analysis, we make the conservative assumption that savings from low-income mandatory programs (other than Medicaid) would be proportionate to their share of spending in this category. Thus, we derive the $350 billion figure from the fact that about half of mandatory spending other than for Medicare, Medicaid, and Social Security goes for programs for low- and moderate-income individuals and families. This likely substantially understates the cuts that the plan would make in low-income programs. The Ryan documents show that $380 billion in cuts would come from programs in the income security portion of the budget (function 600), and the overwhelming bulk of the mandatory spending in that category goes for low-income programs. The documents also show $126 billion in mandatory cuts in the education, training, employment, and social services portion of the budget (function 500), which, based on the discussion in those documents, would likely come mainly from cuts in the mandatory portion of the Pell Grant program for low-income students.
  • $400 billion in cuts in low-income discretionary programs. The Ryan budget documents show that he is proposing $1.6 trillion in cuts in non-security discretionary programs, but again do not provide details about the size of cuts to specific programs. (The documents do identify some major low-income program areas, including Pell Grants and low-income housing, as prime targets for cuts.) Here, too, we make the conservative assumption that low-income programs in this category would bear a proportionate share of the cuts. Thus, we derive the $400 billion figure from the fact that about a quarter of non-security discretionary spending goes for programs for low- and moderate-income individuals and families. [, 4/5/11, emphasis original]

CBPP: Ryan Budget's Food Stamps Block Grant Proposal Would "Eliminate" Program's "Ability To Respond To Rising Need ... During Recessions." According to the Center on Budget and Policy Priorities: "Chairman Ryan's proposal to convert SNAP [Supplemental Nutrition Assistance Program, formerly called food stamps] into a block grant beginning in 2015 would seriously damage the program and cause harm to the millions of low-income Americans who rely on it. Although the chairman's proposal does not include details on how deeply the block grant would cut the program, a capped funding structure of the kind he proposes would largely eliminate SNAP's ability to respond to rising need, such as during recessions. In such times, states would be forced to cut benefits to some households or create waiting lists for needy families." [, 4/5/11]

  • Block Grants Would Allow States To Deplete Food Aid Funds When Faced With Budget Shortfalls. According to the Center on Budget and Policy Priorities: "States would likely be able to shift funds away from food assistance to other purposes, which they would be tempted to do when they face large budget shortfalls (as they do today)." [, 4/5/11]

FACT: Rather Than 'Repairing' Medicare, Ryan Budget Would Leave Many Seniors With Over $20,000 In Annual Insurance Costs After 2022

CBO: Ryan's Budget Would Provide "A Typical 65-Year-Old ... $8,000 In 2022" To Buy Health Insurance. According to the Congressional Budget Office's analysis of Rep. Ryan's budget: "After assessing the total costs that would be incurred for a typical 65-year-old, CBO estimated the government's share and the beneficiary's share of those costs under the proposal and under CBO's long-term scenarios. The proposal would set the premium support payment for a typical 65-year-old at $8,000 in 2022, approximately equal to government spending on the average 65-year-old beneficiary in Medicare under the extended-baseline scenario in that year." [, 4/5/11]

CBO: By 2030, Medicare Beneficiaries Would Be Paying 68 Percent Of Their Health Care Costs Under Ryan's Plan — Or A Much Lower Share If Medicare Remains Intact. According to the Congressional Budget Office's analysis of Rep. Ryan's budget: "When expressed as a percentage of the benchmark, the beneficiary's share in 2030 would be 68 percent under the [Ryan] proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario. To summarize, a typical beneficiary would spend more for health care under the proposal than under CBO's long-term scenarios for several reasons. First, private plans would cost more than traditional Medicare because of the net effect of differences in payment rates for providers, administrative costs, and utilization of health care services, as described above. Second, the government's contribution would grow more slowly than health care costs, leaving more for beneficiaries to pay. Paying more for health care would be particularly challenging for elderly people with less savings and lower income." [, 4/5/11, emphasis added]

CEPR: Ryan's Budget Would Force Seniors To Spend Much Of Their Income On Health Insurance. According to Center for Economic Policy Research co-director Dean Baker:

Representative Ryan would replace the current Medicare program with a voucher for people who turn age 65 in 2022 and later. This voucher would be worth $8,000 in for someone turning age 65 in that year. It would rise in step with with the consumer price index and also as people age. (Health care expenses are higher for people age 75 than age 65.)

According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit. This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)

According to the Social Security trustees, the benefit for a medium wage earner who first starts collecting benefits at age 65 in 2030 would be $32,200. (This adjusts the benefit projected by the Social Security trustees [$19,652 in 2010 dollars] for the 2.5 percent annual inflation rate assumed by CBO.) For close to 70 percent of seniors, Social Security is more than half of their retirement income. Most seniors will get a benefit that is less than the medium earners benefit described here since their average earnings are less than that of a medium earner and they start collecting Social Security benefits before age 65. [, 4/6/11, emphasis added, all parentheses original, internal citations removed for clarity]

CLAIM: Rep. Ryan Suggested The Tax Cuts In His Budget Would Not Actually Favor The Wealthy

REP. PAUL RYAN: And when it comes to taxes, we get rid of all these loopholes and deductions which are what mostly wealthy people use, and we're lowering tax rates as a consequence to get economic growth in this country.

FACT: Rep. Ryan's Proposal Would Make Bush Tax Cuts Permanent, Then Cut Taxes For The Wealthy Even Further

Rep. Ryan's Proposal Would Make The Bush Tax Cuts Permanent. In his preliminary analysis, Ezra Klein of the Washington Post wrote that Rep. Ryan's plan "[p]revents the Bush tax cuts from expiring in 2013. So the revenue-neutral tax reform locks in today's rates, which is to say it makes the Bush cuts permanent." [Washington Post, 4/5/11]

Rep. Ryan's Proposal Reduces Top Income Tax Rate From 35 Percent To 25 Percent. According to page six of Rep. Ryan's budget proposal, the plan "[s]implifies the broken tax code, lowering rates and clearing out the burdensome tangle of loopholes that distort economic activity; brings the top rate from 35 to 25 percent to promote growth and job creation." [Rep. Ryan Budget Proposal, 4/5/11, emphasis added]

For more on why cutting taxes for the wealthy will not speed the economic recovery, click here.

FACT: Rep. Ryan's Proposal Would Necessitate Middle-Class Tax Hike

Rep. Ryan's Proposal Relies On "Shifting More Of The [Tax] Burden To Working And Middle-Class Americans." According to Jay Bookman of the Atlanta Journal-Constitution: "Among other things, [Ryan] proposes to reduce the number of tax brackets from the current six, which would make the income tax flatter and less progressive. He also intends to lower the top tax bracket on individuals and corporations from the current 35 percent to 25 percent. Inevitably, such changes would have the effect of lowering taxes on corporations and the wealthy, while shifting more of the burden to working and middle-class Americans. When combined with the payroll tax, which Ryan concedes is a surtax on earned income below $106,000, a large number of working class and middle-class Americans would probably end up paying a significantly higher percentage of their income in federal taxes than their wealthier counterparts." [Atlanta Journal-Constitution, 4/6/11, emphasis added]

Rep. Ryan's Plan "Makes A Middle-Class Tax Hike Unavoidable." From the Center for American Progress:

Rep. Ryan's budget simply doesn't describe exactly how his tax plan would work, instead resorting to broad bullet points that conveniently skip over important details. [...] Which brackets are going to be consolidated? What will the new rate structure be? Which tax expenditures will be eliminated? Which will be limited and how? Rep. Ryan doesn't tell us. There is no plan here.

That's probably on purpose since any detailed description of his ideas for tax "reform" would reveal a massive tax hike for the middle class. For Rep. Ryan to cut the top rate by nearly one-third and still keep tax revenue the same as it would have been under President's Bush [sic] tax-cut regime means he's going to have to raise taxes somewhere else. And though he pointedly refuses to tell us where those tax hikes will come from, we can make an educated guess.

For one thing, the basic math makes a middle-class tax hike unavoidable. The rate cut at the top, of course, benefits only those in the top brackets (the richest 2 percent of Americans), but to pay for this, Rep. Ryan says he will "broaden the tax base." Broadening the tax base means removing some tax expenditures that currently benefit both the middle class and the rich-though remember that the rich are getting a huge rate cut. [Center for American Progress, 4/5/11]

FACT: Rather Than "Get[ting] Rid Of All Those Loopholes," Rep. Ryan's Budget Protects Big Oil Tax Loopholes While Lowering Corporate Tax Rate

Rep. Ryan's Proposal Locks In $40 Billion In Tax Giveaways To Big Oil Companies. From the Center for American Progress:

House Budget Committee Chair Paul Ryan's (R-WI) proposed FY 2012 budget resolution is a backward-looking plan that would benefit big oil companies at the expense of middle-class Americans. It retains $40 billion in Big Oil tax loopholes while completely eliminating investments in the clean energy technologies of the future that are essential for long-term economic growth. [...]

Ryan's plan would continue "welfare" for big oil companies. Ryan was asked several times in a recent interview whether his plan would "eliminate tax breaks for Big Oil," but he refused to answer. Evading an uncomfortable question was his acknowledgment that his budget hatchet leaves Big Oil tax breaks untouched. This is consistent with his recent vote to keep Big Oil tax loopholes as part of the FY 2011 spending bill, while cutting education, medical research, and clean-tech investments.

In addition to receiving $40 billion of unnecessary tax breaks, Big Oil does not pay its fair share of royalties for oil and gas produced from publicly owned waters. The Government Accountability Office estimates that a loophole in a 1990s oil-and-gas law could deprive the treasury of $53 billion in lost royalties. In February, the House Republicans overwhelmingly voted against recovering these royalties. Although Ryan's budget claims that it "stops spending money the government doesn't have," it does nothing to recoup these forgone funds. This is another gift for Big Oil, paid for by middle-class taxpayers who must suffer the consequences of other steep spending cuts. [Center for American Progress, 4/6/11, emphasis added]

Rep. Ryan's Budget Reduces Corporate Tax Rate To 25 Percent. As reported by the Huffington Post: "Ryan believes tough choices have to be made now rather than under duress in the midst of a crisis. But he was roundly criticized from the left Tuesday for not raising taxes; he would lower the top income and corporate rates from 35 to 25 percent." [Huffington Post, 4/6/11]

  • General Electric Paid $0 In U.S. Taxes On $5.1 BILLION In U.S. Profits. From the New York Times: "General Electric, the nation's largest corporation, had a very good year in 2010. The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion." [New York Times, 3/24/11, emphasis added]

For more on the taxes U.S. corporations do and don't pay, click here.

CLAIM: Rep. Ryan Claimed Medicaid Block Grants Will Improve, Not Harm, Health Coverage For Medicaid Recipients

REP. PAUL RYAN: OK, so, if you're on Medicare nothing changes. If you're 55 and above, nothing changes. Medicare stays exactly as it is today. If you're in Medicaid in a nursing home, the states already run that program, the federal government just gives it some financing. But the problem is the federal government for the non-nursing home program has so many strings and makes it so hard for the states to properly administer Medicaid. And as a consequence, most doctors don't even take Medicaid patients, because every time a Medicaid patient walks in a doctor office they lose money. So we don't wanna give people second-class healthcare in Medicaid. So we wanna give governors, who've written us lots of letters asking for freedom, so they can customize Medicaid to meet the needs of their particular populations, and that's what we do.

FACT: Block Grants Would Mean Cuts In Eligibility, Benefits And Provider Payments

Block Grant Financing Would Mean Restricting Medicaid Enrollment, Eligibility And Benefits. From CBPP:

As a state's block-grant amount became increasingly inadequate over time, states would likely make up for the shortfall, at least in part, by exercising the greater flexibility they would be given to restrict enrollment, eligibility, and benefits. These cuts would likely become deepest at times when individuals and families most need Medicaid, such as during a recession.

Such cuts could be devastating for tens of millions of low-income Medicaid beneficiaries. For example, states might be given flexibility to cap Medicaid enrollment, leaving uninsured a substantial number of people whose low incomes would otherwise qualify them for Medicaid. Many current beneficiaries could also be made ineligible and end up uninsured, as states narrow coverage. [Center on Budget and Policy Priorities, 1/6/11, emphasis added]

Block Grant Financing Would Also Lead To Reducing Provider Rates. From CBPP:

States facing inadequate block grant funding would also likely have to further scale back provider rates.  These rate reductions likely would apply not only to hospitals, nursing homes, physicians, and pharmacies in Medicaid fee-for-service but also to managed care plans that currently serve low-income children and their parents.  That, in turn, could cause some providers and plans to withdraw from Medicaid, threatening beneficiaries' access to needed care, particularly in communities - such as rural areas - that already are underserved.  It also would place greater pressure on providers such as community health care centers and safety-net hospitals, which rely on Medicaid funding but which would face increased patient needs because of increases in the numbers of uninsured individuals if Medicaid enrollment were capped and eligibility restricted under a block grant. [Center on Budget and Policy Priorities, 2/23/11]

FACT: Ryan Plan's Medicaid Block Grants Would Lead To 2 Million Lost Jobs

EPI: Ryan's Cuts To Medicaid "Would Result In A Loss Of 2.1 Million Jobs Over The Next Five Years." According to the Economic Policy Institute: "House Budget Committee Chairman Paul Ryan (R.-Wisc.) released a budget resolution this week that would "block grant" Medicaid, meaning that it would give states a fixed amount of money rather than provide a fixed share of the total costs. Because these grants would grow more slowly than the expected inflation rate for health care costs, this proposal would have the federal government shift an increasing amount of the coverage costs onto states, who will be in turn forced to cut health benefits and other services, cut public investments such as education and transportation, or raise taxes. Assuming states responded by cutting Medicaid benefits, this plan would certainly inflict enormous hardship on the most vulnerable populations in society by depriving them of access to basic health care. But it would also have a significant jobs impact. Over the next five years (during which time CBO projects that the economy will still be below potential), Chairman Ryan's Medicaid proposal would cut the program by $207 billion, which includes both eliminating the Medicaid expansion under the Affordable Care Act and even deeper cuts to the Medicaid program. Using a standard macroeconomic model that is consistent with private- and public-sector forecasters, we find that a $207 billion cut would result in a loss of 2.1 million jobs over the next five years, or 2.9 million full-time equivalent jobs." [Economic Policy Institute, 4/6/11, emphasis added]

CLAIM: Rep. Ryan Claimed His Budget Would "Literally Pay Off The National Debt"

REP. PAUL RYAN: This is a plan to literally pay off the national debt. [...] This pays off the debt.

FACT: Ryan's Plan INCREASES Debt As Share Of GDP Over 10-Year Period

CBO Says That Ryan Proposal Would Increase Debt Over 10-Year Window. As reported by Talking Points Memo: "In addition to acknowledging that seniors, disabled and elderly people would be hit with much higher out-of-pocket health care costs, the CBO finds that by the end of the 10-year budget window, public debt will actually be higher than it would be if the GOP just did nothing. Under the so-called 'extended baseline scenario' -- a.k.a. projections based on current law -- debt held by the public will grow to 67 percent of GDP by 2022. Under the GOP plan, public debt would reach 70 percent of GDP in the same window. In other words, the spending cuts Republicans would realize in the first 10 years would be outpaced by deficit increasing tax-cuts, which Ryan also proposes. After that, debt projections under the plan improve decade-by-decade relative to current law. That's because 2022 would mark the beginning of the Medicare privatization plan. That's when, CBO finds, 'most elderly people would pay more for their health care than they would pay under the current Medicare system.'" [Talking Points Memo, 4/5/11, emphasis added]

  • CBO: We Are Not Confident About Long-Term Budgetary Impact Estimates, But Evaluated Rep. Ryan's Proposal Impact Through 2050. From the Congressional Budget Office's analysis of Rep. Ryan's budget proposal: "CBO is providing projections for the proposal through 2050, which is a longer time period than CBO generally includes in its projections of budget proposals. However, because projections of federal health care spending under current law depend on complex interactions among many factors that are particularly difficult to predict, the difference between future spending under the proposal and that under current law is highly uncertain, as is the difference in overall budgetary effects." [, 4/5/11, emphasis added]

FACT: The Longer-Term Debt-Reduction Numbers Are Based On Unexplained Revenue Projections That Rep. Ryan's Staff Instructed CBO To Use

CBO: Rep. Ryan Instructed Us To Use The Revenue Projections Underlying Our Deficit Estimates But Did Not Specify How Those Revenues Would Be Achieved. "The path for revenues as a percentage of GDP was specified by Chairman Ryan's staff. The path rises steadily from about 15 percent of GDP in 2010 to 19 percent in 2028 and remains at that level thereafter. There were no specifications of particular revenue provisions that would generate that path." [, 4/5/11, emphasis added]

FACT: Economists Ridicule Rep. Ryan's Growth Projections As "Insane" And "Essentially Worthless"

National Journal: "Ryan's Projections Seem To Rely On Overly Optimistic Economic Projections." From the National Journal: "Ryan's projections seem to rely on overly optimistic economic projections culled from a conservative think-tank that's made similar projection mistakes before. He's also 'snuck in' an extension of the 2001/2003 tax cuts that will, as Slate's Jacob Weisberg put it, leave '$400 billion in annual deficits as far as the eye can see.'" [National Journal, 4/6/11]

  • The Heritage Foundation Supplied Rep. Ryan's Economic Projections. As reported by Talking Points Memo: "Even as Rep. Paul Ryan (R-WI) proudly touted his 'fact-based budget' and decried Democrats' 'budget gimmicks' yesterday, he prominently cited the think tank's absurdly rosy numbers, drawing widespread mockery from economists, budget experts, and health care wonks. Even the developer of the model that Heritage used to crunch the numbers can't figure out how Heritage reached its conclusions. 'The Heritage numbers are insane,' MIT economist Jonathan Gruber said in an interview with TPM." [Talking Points Memo, 4/6/11, emphasis added]

Economics Experts Call Projections "Essentially Worthless," "Half-Baked," And "The Rosiest Scenario [Ryan] Could Get." As reported by Talking Points Memo: "The numbers stand in stark contrast to analysis from the independent Congressional Budget Office, the gold standard used by both parties to determine the costs of legislation, which shows an increase in the deficit's share of the economy in the plan's first decade thanks to its massive tax cuts and then much tougher financial burdens for seniors in future decades as their health care benefits dwindle. 'CBO is what they use on the budget side -- as a matter of procedure, any numbers from the Heritage Foundation or anybody else are essentially worthless,' Bruce Bartlett, a former Treasury official under President George H.W. Bush, said in an interview. 'You can assert whatever you want to assert, but you can always find some half-baked tax think tank that will make up any number you feel like.' 'The idea he'd go to Heritage for that kind of support indicates he didn't like what the CBO was going to tell him,' Stan Collender, a former budget aide for both the House and Senate, told TPM. 'This is the same guy who said his budget has no gimmicks in it turning to the rosiest scenario he could get.'" [Talking Points Memo, 4/6/11, emphasis added]