Debunking The Top Lies About The Republican Medicare Scheme
Contrary to polling, special elections, and town hall uproar, Republicans have decided their Medicare scheme is a political winner — it's just that Democrats are lying to people. Rep. Paul Ryan (R-WI), the plan's architect, expressed the GOP mentality in a Fox News interview on June 2, 2011, saying that Democrats are "distorting and demagoging" the plan and once people "realize they've been lied to," Democrats "are gonna be one the wrong end of that exchange with the American people." He then proceeded to misrepresent the GOP's "Path to Prosperity" budget in a half-dozen ways, capping the falsehoods with another whopper: "When people know the facts about what we proposed, they're extremely supportive," Ryan claimed. The facts, unfortunately for Republicans, say otherwise.
Rep. Ryan Fits Six Falsehoods Into A Single Minute
REP. PAUL RYAN (R-WI): This is as gradual as it gets. We don't affect the benefits for people above 55 years old in Medicare. In fact, we restore their benefits by repealing the Obamacare raid on the Medicare fund and the rationing board they put in charge of Medicare. We repeal that, we keep Medicare for everybody 55 and above and reform it for the next generation so that we can save the program and so that we can cashflow it for the next generation of seniors. When people know the facts about what we proposed, they're extremely supportive. And when they know the facts are that we put out a plan to literally not just balance the budget but pay off the debt, get this economy growing, and save Medicare, at the end of the day I believe facts win.
RYAN "FACT": "We Don't Affect The Benefits For People Above 55 Years Old In Medicare"
REP. PAUL RYAN: This is as gradual as it gets. We don't affect the benefits for people above 55 years old in Medicare. [Your World with Neil Cavuto, 6/2/11]
ACTUAL FACT: For Current Seniors, Republican Plan Would Reopen Medicare "Donut Hole"...
"Path To Prosperity" Reopens Medicare "Doughnut Hole," Forcing Millions Of Seniors To Pay Higher Drug Costs "Immediately." From the National Journal: "[T]he GOP is doubling down on the idea that today's seniors won't be affected. That's partly true. Ryan's plan to convert Medicare into a limited insurance subsidy, the most controversial aspect of the budget, wouldn't take effect until 2022. But the proposal would also repeal last year's health care law, which means reopening a coverage gap in Medicare's prescription-drug benefit that the statute closed. The gap, commonly called the "doughnut hole," requires seniors to pay 100 percent of any prescription costs after the annual total reaches $2,840 and until it hits $4,550. Those who spend more or less have at least three-quarters of the costs covered. Under the 2010 health law, Medicare will pay 7 percent of the cost of generic drugs and 50 percent on name-brand pharmaceuticals; by 2020, the doughnut hole will be closed. If Congress were to pass Ryan's plan and repeal the law, as House Republicans want, the 3 million to 4 million seniors left in the doughnut hole each year would immediately face significant out-of-pocket costs." [National Journal, 6/3/11, emphasis added]
...And Encourage Healthy Seniors To Leave Medicare, Weakening The Program For The Most Vulnerable
Once Republican Voucher Program Begins In 2022, Healthy Seniors Still On "Traditional" Medicare Would Have Incentive To Leave — Endangering The Program For Less-Healthy Beneficiaries. From the National Journal: "The policies in the House GOP budget, if enacted, would begin affecting millions of seniors almost immediately by increasing their costs for prescription drugs and probably long-term care. Further, Medicare costs could rise over time if healthier seniors choose to abandon the traditional benefit program. [...] The plan to grandfather traditional Medicare for those older than 55 could also have negative consequences for current seniors: In 2022, when the limited-subsidy program would be introduced, seniors who qualified for traditional Medicare would be allowed to switch to the new program. If healthier or younger beneficiaries make the change to lower their out-of-pocket costs, those still participating in Medicare would be part of an insurance pool that is less healthy and more expensive. To cover those higher per-person costs, Medicare might well be forced to either raise premiums or limit reimbursements to health care providers-which could prompt many to stop taking Medicare patients." [National Journal, 6/3/11]
Centrist Think Tank: Despite Republican Claims, "Current Beneficiaries Are Not Protected In The Ryan Budget." According to a report from Third Way by David B. Kendall, Senior Fellow for Health and Fiscal Policy and Ryan McConaghy, Director of the Economic Program:
Despite promises to the contrary, current beneficiaries are not protected in the Ryan budget. Under the Republican proposal, traditional Medicare would quickly become second-class medicine. It would "wither on the vine," as then-House Speaker Newt Gingrich described a similar GOP effort in 1995.
The traditional Medicare plan, which covers three-fourths of today's beneficiaries, relies on its huge size to keep costs down. Doctors and hospitals are not required to participate in it, but they have little choice if they wish to treat any seniors, who are the nation's biggest health care consumers.
Fewer doctors would participate in the traditional Medicare plan if there were an alternative. The traditional plan pays physicians about 20% less than private health insurance plans. Today, that is essentially a discount for the large volume of Medicare patients. Under the Ryan budget, it would become a reason for doctors to leave the traditional plan.
By 2030, only 55% of Medicare beneficiaries would still be eligible for traditional Medicare according CBO. Actual enrollment would be less than half of Medicare beneficiaries because many seniors would continue to enroll in private health care coverage under Medicare Advantage. By 2040, traditional Medicare would have only about 20% of Medicare beneficiaries. [ThirdWay.org, 4/14/11, internal citations removed for clarity, emphasis added]
ACTUAL FACT: GOP Plan's Cuts To Medicaid Would Affect Seniors Immediately
9 Million Seniors Receive Medicaid As Well As Medicare. From the National Journal: "Some 9 million seniors qualify for both Medicare and Medicaid benefits, and about two-thirds of all nursing-home residents are covered by Medicaid." [National Journal, 6/3/11]
GOP Budget Cuts $744 Billion From Medicaid Over The Next Decade. From the National Journal: "Perhaps more jolting, the Republican budget would cut spending on Medicaid-health care for the poor-much of which goes to long-term care for the elderly. [...] The GOP budget proposes cutting some $744 billion from Medicaid over 10 years by turning the system into block grants that limit federal contributions and give states more choice in structuring benefits. No one knows exactly which Medicaid services states would choose to cut back, but senior citizens account for a disproportionate share of Medicaid outlays and would almost certainly bear some of the burden." [National Journal, 6/3/11, emphasis added]
REP. PAUL RYAN: In fact, we restore their benefits by repealing the Obamacare raid on the Medicare fund and the rationing board they put in charge of Medicare. [Your World with Neil Cavuto, 6/2/11]
ACTUAL FACT: GOP Budget Doesn't "Restore" That Money At All — It Keeps The Savings
AP: House GOP Budget Retains Affordable Care Act's Medicare Spending Provisions. As reported by the Associated Press: "In a postelection reversal, House Republicans are supporting nearly $450 billion in Medicare cuts that they criticized vigorously last fall after Democrats and President Barack Obama passed them as part of their controversial health care law. The cuts are included in the 2012 budget that Rep. Paul Ryan, R-Wis., unveiled last week and account for a significant share of the $5.8 trillion in claimed savings over the next decade." [Associated Press, 4/13/11, via Yahoo.com]
Wall Street Journal: House GOP Budget Keeps Medicare Spending Provisions, Applies Savings To Debt. As reported by the Wall Street Journal:
A total of about $70 million was spent on TV ads attacking Democrats on Medicare, mostly for supporting the cuts in the health care law, according to tracking by Campaign Media Analysis Group.
But Republicans may not be all that hostile to those reductions after all.
This week, Rep. Paul Ryan, chairman of the House Budget Committee, released his budget proposal. It included a major restructuring of the Medicare program, and repealed much of the Democratic health care law. But his plan keeps in place the Medicare reductions.
That annoyed several health industry groups, who agreed to the cuts in exchange for more insured Americans who would be able to pay their health care bills.
A spokesman for the House Budget Committee said that the Ryan plan allocates $10 billion to preserve the Medicare Advantage program for seniors. The health care law cut $136 billion over 10 years from that program, which allows seniors to enroll in private managed-care plans. The spokesman also noted that under the Ryan plan the Medicare spending cuts would go toward deficit reduction, rather than creation of a new spending program, as the Democratic health law creates. [Wall Street Journal, 4/6/11, emphasis added]
The Hill: GOP Budget Retains Health Care Law's Medicare Spending Measures. As reported by The Hill: "Like the House GOP budget that lawmakers will vote on next week, a conservative plan unveiled Thursday includes about $500 billion in Medicare cuts Democrats made in last year's healthcare reform law. Republicans over the past year widely panned the Medicare reimbursement cuts, which the Democrats enacted to help cover the cost of expanding coverage to 32 million new individuals." [The Hill, 4/7/11]
Getting Rid Of "Substantial Overpayments," Not A "Raid" On Medicare
New England Journal Of Medicine: The Affordable Care Act Phases Out "Substantial Overpayments" To Medicare Advantage Plans. From the New England Journal of Medicine:
A phased elimination of the substantial overpayments to Medicare Advantage plans, which now enroll nearly 25% of Medicare beneficiaries, will produce an estimated $132 billion in savings over 10 years.
The ACA also produces nearly $200 billion in savings by assuming that providers can improve their productivity as firms in other industries have done. On the basis of this presumed improvement, the law reduces Medicare's annual "market basket" updates for most types of providers - a provision that has generated controversy. [New England Journal of Medicine, 7/8/10]
FactCheck.org: Cost Saving Provisions "Not A Slashing Of The Current Medicare Budget Or Benefits." According to FactCheck.org: "Whatever you want to call them, it's a $500 billion reduction in the growth of future spending over 10 years, not a slashing of the current Medicare budget or benefits. It's true that those who get their coverage through Medicare Advantage's private plans (about 22 percent of Medicare enrollees) would see fewer add-on benefits; the bill aims to reduce the heftier payments made by the government to Medicare Advantage plans, compared with regular fee-for-service Medicare. The Democrats' bill also boosts certain benefits: It makes preventive care free and closes the 'doughnut hole,' a current gap in prescription drug coverage for seniors." [FactCheck.org, 3/19/10]
Health Care Reform "Will Keep Paying Medical Bills For Seniors." According to PolitiFact.com: "The government-run Medicare program will keep paying medical bills for seniors, but it will begin implementing cost controls on health care providers, mostly through penalties and incentives. The legislation would reduce payments for hospital-acquired infections or preventable hospital admissions. For Medicare Advantage, the federal government intends to reduce extra payments, taking away subsidies to private insurance companies. Insurers will likely cut benefits in order to not lose profits. The bill does not address the 'doctor's fix,' an expected proposal that Congress usually passes to prevent doctors' Medicare payments from severe cuts." [PolitiFact.com, 3/18/10; emphasis in original]
RYAN "FACT": Democrats Put A "Rationing Board" In Charge Of Medicare
REP. PAUL RYAN: In fact, we restore their benefits by repealing the Obamacare raid on the Medicare fund and the rationing board they put in charge of Medicare. [Your World with Neil Cavuto, 6/2/11]
ACTUAL FACT: Independent Payment Advisory Board Is Prohibited From Rationing Care, Increasing Taxes, Or Changing Medicare Benefits
IPAB Cannot Ration Care, Increase Taxes, Change Benefits Or Eligibility, Or Increase Premiums And Cost-Sharing Requirements. According to the Kaiser Family Foundation: "The Board is prohibited from submitting proposals that would ration care, increase taxes, change Medicare benefits or eligibility, increase beneficiary premiums and cost-sharing requirements, or reduce low-income subsidies under Part D. Prior to 2019, the Board is also prohibited from recommending changes in payments to providers and suppliers that are scheduled to receive a reduction in their payment updates in excess of a reduction due to productivity adjustments, as specified in the health reform law." [Kaiser Family Foundation, May 2010]
FactCheck.org: "It's Wrong To Say That The Advisory Board Will Ration Care." FactCheck.org addressed Rep. Paul Ryan's (R-WI) claim that IPAB rations care:
Ryan twice warns of Obama's plan to "ration" health care for the elderly. He also says, "The greatest threat to the health security of America's seniors is the President's plan to deeply and systematically ration Medicare."
Ryan spokesman Conor Sweeney told us in an e-mail that the claim of rationing refers to funding for the Independent Payment Advisory Board created by the federal health care law.But it's wrong to say that the advisory board will ration care or that it will be run by bureaucrats, as we wrote when Sarah Palin made a similar claim.
The Patient Protection and Affordable Care Act says the advisory board "shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums." Also, the board isn't made up of Washington bureaucrats. The 15 voting members will be appointed by the president in consultation with congressional leaders; they must include doctors and other health care professionals, economists and health care finance experts, and representatives of consumers and seniors, as the American Medical Association explains. There will also be three non-voting members: the Health and Human Services secretary, and the administrators of the Centers for Medicare and Medicaid Services and the Health Resources and Services Administration. [FactCheck.org, 5/6/11, emphasis added]
For much more, read our full IPAB primer.
RYAN "FACT": GOP Plan Will "Save" Medicare For Future Generations
REP. PAUL RYAN: We repeal that, we keep Medicare for everybody 55 and above and reform it for the next generation so that we can save the program and so that we can cashflow it for the next generation of seniors. [Your World with Neil Cavuto, 6/2/11]
ACTUAL FACT: Republican Proposal Would Replace Medicare Program With Vouchers, Doubling Out-Of-Pocket Expenses For Future Seniors
CBO: Under The GOP Budget, "Most Elderly People Would Pay More For Their Health Care Than They Would Pay Under The Current Medicare System." According to the Congressional Budget Office: "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." [CBO.gov, 4/5/11]
Wall Street Journal: GOP Plan "Essentially End[s] Medicare" For Americans Under 55 Years Old. As reported by the Wall Street Journal: "The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program's soaring costs. Medicare cost $396.5 billion in 2010 and is projected to rise to $502.8 billion in 2016. At that pace, spending on the program would have doubled between 2002 and 2016. Mr. Ryan's proposal would apply to those currently under the age of 55, and for those Americans would convert Medicare into a 'premium support' system." [Wall Street Journal, 4/4/11]
Currently, Medicare Part A Pays Hospital Bills For Americans 65 And Older Who Paid Social Security Taxes For At Least 10 Years. From CNNMoney: "Medicare Part A provides coverage if you're hospitalized. This coverage is 'free' - meaning you pay no premiums - if you paid into the Social Security pool for at least 10 years [and are over age 65 or disabled]." [CNNMoney, accessed 4/24/11]
- Medicare Also Gives Seniors The Option To Purchase Additional Coverage For Things Like Doctor Visits And Prescription Drugs. From MarketWatch: "Medicare Part A, which covers hospital stays and services, is premium-free for most people. But that's where the freebies end. Traditional Medicare involves a matrix of premiums, co-payments, coinsurance and deductibles. For instance, you'll have to meet a deductible - $1,132 for 2011 - before Part A coverage kicks in for hospital stays of up to 60 days. For beneficiaries new to Medicare this year, the average premium for Medicare Part B is $115.40 a month. But if you earn more than $85,000 if you're single, or $170,000 for a married couple filing jointly, you'll pay more. And starting this year, high earners with Part D prescription-drug plans will face a surcharge ranging from $12 to $69.10 per month, depending on income." [MarketWatch, 4/24/11 via Mail Tribune]
The GOP Budget Turns Medicare Into A Voucher System. From "The Path to Prosperity":
Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs. These future Medicare beneficiaries will be able to choose a plan the same way members of Congress do. Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks. [The Path To Prosperity, 4/5/11, emphasis added]
Cato Institute Senior Fellow: Republican Plan Replaces Medicare With A Voucher System. In a New York Post op-ed about the "Path to Prosperity," Cato Institute senior fellow Michael Tanner wrote: "Those getting close to retirement will also still go into Medicare, just as they would have before. But beginning in 2022, people who are younger than 55 today will begin to transition to a new system. Instead of going into Medicare at age 65, they will receive a voucher from the US government to help them purchase private health insurance. Initially that voucher is expected to be for roughly $15,000 per recipient. Lower income seniors and those with higher health care costs because of illness will receive a bigger subsidy. Seniors can use these vouchers, combined with whatever they wish to spend of their own money, to choose an insurance plan that has a cost and mix of benefits that best meets their needs. Instead of a one size fits all system, seniors will have many more choices than they have today." [Tanner Op-Ed, 4/10/11, emphasis added, via Cato.org]
In 2022, A Typical 65-Year-Old Would Be Paying Approximately Double Compared To Current Levels. The Center on Budget and Policy Priorities prepared a graphic comparing health care spending for a typical 65-year-old under the current system to the same spending under the Republican budget:
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 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. [CEPR.org, 4/6/11, emphasis added, all parentheses original, internal citations removed for clarity]
If Medical Costs Continued To Increase Faster Than Voucher Values, "The Average Retiree Would Be More Than $50,000 In The Hole." According to an op-ed in the Huffington Post by R.J. Eskow, Senior Fellow with The Campaign For America's Future:
Even if the voucher is given full Medicare value in Year One (which we question), things start to get really bad after that. If medical costs continued to increase at 9% each year, which isn't at all impossible, and the voucher's value continued to increase at 5%, here's what would happen 10 years later using my figures:
By 2031, the cost of Medicare-equivalent coverage would be $73,000, and the voucher would be worth $18,000. By my calculation, the average retiree would be more than $50,000 in the hole. [Eskow Op-Ed, 4/6/11 via Huffington Post, emphasis original]
Republicans Claim Patients' Use Of Vouchers Will "Deny Business To Inefficient Providers," But That Won't Work With Complex Health Care Market. Former White House economist Jared Bernstein explains:
[Rep. Ryan said on Meet the Press that] 'Our plan is to give seniors the power to deny business to inefficient providers...their plan [Affordable Care Act] is to give government the power to deny care to seniors.' [...]
To get why this "market solution" can't work, you have to understand a bit about how Ryan's plan changes Medicare. As is by now pretty widely appreciated, including by many in his own party, the plan ends guaranteed health care coverage for seniors and replaces it with a voucher for them to shop for insurance on the street.
Importantly, the value of those vouchers start well below where they need to be to enable seniors to afford coverage comparable to Medicare today (in fact, beneficiaries costs would have to double), and their value falls increasing behind coverage costs over time.
Suppose you send me to the grocery store to buy you a gallon of milk. Milk costs $3.50 a gallon but you give me $2. I spend the whole day "denying business to inefficient providers"-i.e., grocers who all charge more than that-and at the end of the day, bring you back a pint.
Now, instead of milk, where I've got the information I need to be a smart shopper, suppose you give me the same under-priced voucher but ask me to bring you back a plan for treating that strange pain you've been experiencing on your left side on humid days. [JaredBernsteinBlog.com, 5/22/11, emphasis added]
REP. PAUL RYAN: When people know the facts about what we proposed, they're extremely supportive. [Your World with Neil Cavuto, 6/2/11]
ACTUAL FACT: Opposition To GOP Plan Jumps From 65 Percent To 84 Percent When Respondents Are Told The Vouchers Will Not Grow Along With Health Care Costs
Washington Post-ABC News Poll: 65 Percent Oppose Replacing Medicare With Direct Government Payments, And Over 80 Percent Oppose When Told Payments Are Projected To Grow More Slowly Than Costs. As reported by Ezra Klein of the Washington Post: "You know what's not popular? Reforming Medicare such that beneficiaries 'receive a check or voucher from the government each year for a fixed amount they can use to shop for their own private health insurance policy.' According to a new Washington Post-ABC News poll, 65 percent of Americans oppose the idea -- about the same number who dismissed it in 1995. And if they're told that the cost of private insurance for seniors is projected to outpace the cost of Medicare insurance for seniors -- which is exactly what CBO projects -- more than 80 percent of Americans oppose the plan." [Washington Post, 4/20/11, emphasis added]
When Those Who Support Replacing Medicare With Vouchers Are Told GOP Vouchers Won't Keep Up With Costs, More Than Half Jump Ship — Bringing Total Opposition To 84 Percent. Question 20 of the April Washington Post-ABC News poll (which was posed only to the 34 percent of total respondents who favored a generic voucher program in Question 19) asked, "What if the cost of private insurance rises faster than the value of the vouchers, so seniors have to pay more of their own money for health insurance? In that case, would you support or oppose replacing Medicare with a voucher system?" 60 percent of the sub-group who were asked that question said they would oppose replacing Medicare with vouchers that do not keep pace with increasing health care costs. Factoring in Question 20, opposition to the GOP Medicare plan jumps to 84 percent overall when the proposal is fully explained. Here is the relevant section from the poll's internals:
[Washington Post-ABC News poll, 4/14-17/11]
REP. PAUL RYAN: And when they know the facts are that we put out a plan to literally not just balance the budget but pay off the debt, get this economy growing, and save Medicare, at the end of the day I believe facts win. [Your World with Neil Cavuto, 6/2/11]
ACTUAL FACT: GOP Budget Increases Debt Over Short Term, Only Saves $155 Billion Over 10 Years
CBO Says That Republican Budget 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 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." [CBO.gov, 4/5/11, emphasis added]
CBPP: The GOP Budget Only Cuts $4.3 Trillion Compared To Current Policy, Factoring Out The Savings From President Obama's Planned Troop Withdrawals In Afghanistan And Iraq. From the Center on Budget and Policy Priorities:
The chairman claims that his plan generates $5.8 trillion in spending cuts over ten years, relative to the Congressional Budget Office (CBO) baseline. But that number falls by $1.5 trillion - to $4.3 trillion - once one corrects for two things:
§ $1.3 trillion in "savings" from the official CBO baseline that comes merely from the fact that the Ryan plan reflects the costs of current policy in Iraq and Afghanistan. The CBO baseline contains a large anomaly related to the costs of the Iraq and Afghanistan wars. Following the rules governing budget baselines, CBO's baseline mechanically assumes that current levels of U.S. operations - and costs - in Iraq and Afghanistan will continue forever rather than phasing down in accordance with current policy. The CBO baseline figures are thus much higher than the costs of current policy. Ryan himself said earlier this year on National Public Radio - in attacking President Obama's 2012 budget proposal for not doing enough to reduce deficits - that simply showing the costs of current policy in Iraq and Afghanistan produces "phantom savings" from an anomalous baseline, not real deficit reduction.
§ $200 billion in lower interest savings due to an error by Chairman Ryan's staff in calculating interest savings. [CBPP.org, 4/8/11]
$4.3 Trillion In Real Spending Cuts From GOP Budget Offset By $4.2 Trillion In Tax Cuts, Leaving $155 Billion In Real Debt Reduction. From the Center on Budget and Policy Priorities:
Even some critics of House Budget Committee Chairman Paul Ryan's budget plan have praised his 'courage' and his willingness to make 'hard choices' to address looming deficits. But, upon closer inspection, Chairman Ryan's widely reported claim that his plan produces $1.6 trillion in deficit reduction proves illusory. In fact, the numbers in his plan show that his budget produces just $155 billion in real deficit reduction over ten years (see graph).
That means that, despite proposing $4.3 trillion in what would be the most severe and wrenching budget cuts in U.S. history - two-thirds of which would come from programs for people of low or moderate incomes - the plan barely reduces deficits at all over the next decade. That's because his budget cuts are offset by $4.2 trillion in tax cuts that would go disproportionately to those at the top. In essence, at least for the next decade, this plan is far less a blueprint for addressing deficits and far more a proposal to redistribute large amounts of resources from those at the bottom to those at the top. [CBPP.org, 4/8/11]