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Thread: Ryan Disects the Gang of 6 Plan

  1. #1

    Ryan Disects the Gang of 6 Plan

    Ryan Dissects the Gang of Six Plan
    July 20, 2011 9:41 A.M.
    By Andrew Stiles
    House Budget Committee chairman Paul Ryan (R., Wis.), who also sat on President Obama’s deficit commission (and voted against its final report), has released an initial analysis of the $3.7 trillion deficit-reduction proposal unveiled by the Gang of Six on Tuesday. The plan, which Ryan points out “is not a budget,” is woefully short on details (e.g., it instructs Congress to “encourage greater economic growth” and “spend health care dollars more efficiently”), but the House Budget chair does his best to tease out the plan’s shortcomings and unanswered questions, as well as its “potential for worthwhile budget and tax reforms.”

    On the positive side, Ryan praises the plan for acknowledging the need for tax reform and he approves of many of its recommendations, for example: lowering the top marginal tax rate to 29 percent, transitioning to a territorial tax system, and requiring any unexpected surplus in revenue be used to further reduce rates, rather than fuel new spending. However, Ryan argues that the latter proposal, while “laudable,” falls short because it appears to lack an enforcement mechanism, such as a firm cap on total spending and revenue.

    Ryan also points to proposed caps on discretionary spending and the plan’s requirement that committees come up with significant savings in the mandatory portion of the budget or face automatic spending reductions as promising elements. Other positive signs: repeals of the CLASS act included in the health-care law; calls for medical malpractice reform; and reforming the “emergency spending” process.

    As for the negatives, Ryan blasts the plan, which “appears to increase revenues by $2.8 trillion,” for relying far too heavily on tax increases. He also raises concerns over the composition of the proposed spending cuts in the plan, which appear to achieve most of their “savings” through cuts to the defense budget — for example, a $890 billion reduction to “security programs.” And last but not least, Ryan is not pleased with the plan’s failure to address the budget-busting consequences of Obamacare, which was a primary reason why he opposed the deficit commission’s recommendations.

    Additionally, Ryan raises the following questions:

    Unspecified Savings Relative to What? The plan is described as savings relative to a “baseline.” The plan appears to use three different baselines for showing savings: 1) CBO’s current law March baseline; 2) an undefined modification to that baseline (what it calls a “plausible baseline”); and 3) the Fiscal Commission’s baseline. It does not provide annual spending and revenue totals by category, relying instead on savings relative to three different baselines. So, it is unclear what exactly the spending and tax proposals are.

    Where Does the Revenue Come From? It sets a tall order for tax reform with what appear to be conflicting assumptions: 1) raise $1.2 trillion in revenue; 2) repeal the alternative minimum tax at a cost of $1.7 trillion; 3) lower tax rates to encourage economic growth (top rate of no higher than 29%); 4) do not eliminate tax expenditures for health care, charitable giving, homeownership, retirement, and low-income workers and families (the largest of the tax expenditures); 5) raise $133 billion in revenue by 2021 for the highway trust fund without raising gasoline taxes.

    Where Do Health Care Savings Come From? It claims $117 billion in additional federal health care savings over 10 years by assuming that health care spending per capita grows no faster than economic growth (GDP) plus one percent. The new health care law already requires the Independent Payment Advisory Board (IPAB) to cut Medicare spending growth per beneficiary to achieve this growth rate starting in 2020. CBO currently projects that Medicare spending will stay within that growth rate through 2021.[2] Therefore, it is unclear how the savings are derived.

    Also, if there are savings to be achieved, there is no enforcement mechanism for achieving them since the plan would “require action by Congress and the President” to limit growth to these levels. Current law requires the President to submit a plan and Congress to enact legislation to make additional savings in Medicare that the President and Congress have ignored.

    Where are the Missing Mandatory Savings? The plan lists $516 billion in mandatory savings for Committees to achieve (including program integrity savings and savings from modifying the CPI), but then claims $641 billion in mandatory savings, leaving $125 billion in missing savings.

    Pathway or Roadblocks to Social Security Reform? While the plan seems to be a well-intentioned effort to move Social Security reform forward, it sets out procedures that could derail both Social Security reform and additional spending savings called for in the plan. First, it does not allow a Social Security reform bill to proceed until the Senate has gotten 60 votes to pass additional deficit reduction. Second, it blocks the additional deficit reduction bill if the Senate does not get 60 votes to pass the Social Security bill.

  2. #2
    My Take. It was interesting that the President came out with support for the plan yesterday when admittedly had not seen it. I looked at the outline and it is woefully short on specifics. Ryan hit the nail on the head on that article. That said the plan is not even close to ready to become legislation. There is an outline there that could be adjusted in the House and has the potential to be a good thing. That said this is not a possibility in the current debt ceiling debate. There is simply not enough time and the plan remains way too vague. It is a shame.

  3. #3
    any deal is better than no deal.

  4. #4
    [QUOTE=bitonti;4064507]any deal is better than no deal.[/QUOTE]

    Strongly disagree.

  5. #5
    [QUOTE=chiefst2000;4064519]Strongly disagree.[/QUOTE]

    well then sir, you aren't being realistic about the consequences of default.

  6. #6
    [QUOTE=bitonti;4064523]well then sir, you aren't being realistic about the consequences of default.[/QUOTE]

    There is a difference between any deal is better then no deal and allowing default to happen. Rather than a flawed comprehensive deal rushed at the last second they should put a small raise through in the limit in exchange for dollar for dollar spending cuts already agreeable to both parties then buy the time to craft good legislation.

  7. #7
    I wonder, what is the purpose of the debt limit at all? if raising it is routine?

  8. #8
    [QUOTE=bitonti;4064570]I wonder, what is the purpose of the debt limit at all? if raising it is routine?[/QUOTE]

    It is another in a list of failed legislation that had hoped to force congress to act with fiscal responsibility. Points to reasons why many people believe the only way to reign in on rampant irresponsible spending is through a balanced budget amendment to the constitution.

  9. #9
    [QUOTE=chiefst2000;4064585] Points to reasons why many people believe the only way to reign in on rampant irresponsible spending is through a balanced budget amendment to the constitution.[/QUOTE]

    wouldn't they just find a way around it, if they had to?

    for example imagine the USA was in the middle of WWIII (I know i've told Warfish this would never happen) does the balanced budget amendment take precedence?

  10. #10
    [QUOTE=chiefst2000;4064585]It is another in a list of failed legislation that had hoped to force congress to act with fiscal responsibility. Points to reasons why many people believe the only way to reign in on rampant irresponsible spending is through a balanced budget amendment to the constitution.[/QUOTE]

    This?

    Five Nobel Prize-winning economists joined forces Tuesday to send a letter to congressional leaders warning against adopting a balanced-budget amendment.

    [QUOTE]"A balanced-budget amendment would mandate perverse actions in the face of recessions. In economic downturns, tax revenues fall and some outlays, such as unemployment benefits, rise. These so-called built-in stabilizers increase the deficit but limit declines of after-tax income and purchasing power," economists Kenneth Arrow, Peter Diamond, William Sharpe, Eric Maskin and Robert Solow wrote. "To keep the budget balanced every year would aggravate recessions."

    The idea of changing the Constitution to require a balanced budget holds appeal because it appears to force lawmakers to live within their means. Every U.S. state but Vermont now requires a balanced budget from the governor and/or the legislature. Yet many of these states have found creative work-arounds.[/QUOTE]

    [url]http://www.mcclatchydc.com/2011/07/19/117852/amend-constitution-to-balance.html[/url]

  11. #11
    [QUOTE=bitonti;4064593]wouldn't they just find a way around it, if they had to?

    for example imagine the USA was in the middle of WWIII (I know i've told Warfish this would never happen) does the balanced budget amendment take precedence?[/QUOTE]

    No. The amendment allows for special situations to take precedence. A war or a similar economic melt down would allow congress to override the law for a period of time.
    See below:

    [I]There are two proposals floating around Congress, one authored by Rep. Bob Goodlatte (R-Va.) and another by Sens. Orrin Hatch (R-Utah) and Mike Lee (R-Utah). While the two bills are slightly different, they would:

    require 3/5 (House version) or 2/3 (Senate version) majority votes in Congress for spending to exceed revenue in a given year
    limit total spending to 18 percent of GDP, unless 2/3 majorities vote otherwise
    require a 3/5 vote to increase the debt limit
    bar courts from raising taxes to satisfy the above provisions (only included in Senate version)
    requirements could be waived during a declared war[/I]

    I believe the version passed by congress yesterday actually allowed for spending to max out at 19.9 % of GDP. That is the historical average. Essentially it requires large majorities in the house and senate to override the rules. Essentially it will give us a version of "balanced" or split government even if one party takes control of the house senate and presidency. Winston has been advocating this type of government here on the boards for a while and I agree that the best legislation often comes when govt is split.

  12. #12
    [QUOTE=cr726;4064606]This?

    Five Nobel Prize-winning economists joined forces Tuesday to send a letter to congressional leaders warning against adopting a balanced-budget amendment.



    [url]http://www.mcclatchydc.com/2011/07/19/117852/amend-constitution-to-balance.html[/url][/QUOTE]

    Maybe they didnt read the legislation that allows for spending over the limit with 2/3rds votes. This insures us that when omnibus spending bills are passed in the future both parties have a say in what is or isnt included.

  13. #13
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    [QUOTE=cr726;4064606]This?

    Five Nobel Prize-winning economists joined forces Tuesday to send a letter to congressional leaders warning against adopting a balanced-budget amendment.



    [URL]http://www.mcclatchydc.com/2011/07/19/117852/amend-constitution-to-balance.html[/URL][/QUOTE]

    A balanced-budget amendment is good theatre, and plays to the average Joe who thinks the government is the same as his mattress. It's absolutely terrible economic policy. Take away the flexibility to respond to the volatile cycles of the market and we'll have much unnecessary pain brought on all of us for nothing more than a foolish principle.

  14. #14
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    [QUOTE=chiefst2000;4064632]Maybe they didnt read the legislation that allows for spending over the limit with 2/3rds votes. This insures us that when omnibus spending bills are passed in the future both parties have a say in what is or isnt included.[/QUOTE]

    Yeah, sure, until the Tea Partiers or some other political terrorist off-shoot decide to take Congress hostage and demand some new cut while protecting their own boondoggles. Divided congresses have a hell of time passing anything, much less reaching a 2/3rd majority. You're completely out to lunch on this...

  15. #15
    [QUOTE=long island leprechaun;4064636]Yeah, sure, until the Tea Partiers or some other political terrorist off-shoot decide to take Congress hostage and demand some new cut while protecting their own boondoggles. Divided congresses have a hell of time passing anything, much less reaching a 2/3rd majority. You're completely out to lunch on this...[/QUOTE]

    Political groups dont take congress hostage. People vote for them and they represent those people. We have a bunch of left wing nut jobs in the congress too. I don't call them terrorists they are simply called liberal Democrats. People voted for them. When there were enough of them in congress they enacted crazy legislation that most of the country rejected. The people voted them out and replaced them with another group of folks that promised to reign in on spending. You call those folks terrorists. I call them honest politicians that are doing what they said they would do when they campaigned.

    Part of the difficulty in even having rational discussions with ultra liberals is that they often say or campaign on one platform but do another thing completely. Old school Republicans had the same problem. The 80 or so tea party republicans ran on a platform of cutting spending and no new taxes. The country as a whole agrees.

    Interestingly Obama ran on a platform of cutting government waste and reducing the deficit as well. The country bought in to it. Unlike the tea party terrorists you so despise he did the opposite of what he said he was going to do. Thats the difference right there. I wont forget the speech Obama gave when he said he would go through every government program and get rid of the ones that aren't working. Apparently that was "just words".

    Obama is still doing the campaign tricks as President. When NYS passed the gay marriage bill Obama was asked whether he supports Gay Marriage Rights. His answer: (nervous chuckle) "I support civil unions and (nervous chuckle) I'm not ready to publicly state anything different today" (wink wink). F-ing Political BS right there. If your for it come out and say it!

    I think all of us left and right can agree that these people need to say what they are going to do and then do it. Whats the point of voting otherwise.

  16. #16
    [QUOTE]=chiefst2000;4064649]Political groups dont take congress hostage. People vote for them and they represent those people. We have a bunch of left wing nut jobs in the congress too. I don't call them terrorists they are simply called liberal Democrats. People voted for them. When there were enough of them in congress they enacted crazy legislation that most of the country rejected. The people voted them out and replaced them with another group of folks that promised to reign in on spending. You call those folks terrorists. I call them honest politicians that are doing what they said they would do when they campaigned. [/QUOTE]

    What seems to happen in the real world is the far left and the far right have districts that send those same people back over and over again. The real battle ground is in districts and States that tend to send more moderate Republicans and Democrats to Congress are the ones that tend to turn over. In the last election many moderate Democrats who made up a decisively left wing Caucus run by Pelosi were thrown out for very right wing Conservatives.

    We now actually have moderate Republican leadership in the House that can't control a moderate agenda replacing a somewhat moderate democratic caucus controlled by the far left.

    It's a little Ironic in some ways hopefully a more moderate caucus and leadership can be teamed together after the next couple of elections.

  17. #17
    According to the Democrats the world will end. Shut it down maybe Obama will finally wake up.

  18. #18
    Do you mean moderate like a John McCain.

  19. #19
    [QUOTE=MnJetFan;4064891]Do you mean moderate like a John McCain.[/QUOTE]

    No like George Bush Sr. who lost the Presidency because he did the right thing to get our fiscal house in order and it cost him his presidency because of his stupid no new tax pledge so Republicans abandoned him for Pie chart and got Clinton elected.

    Grover Norquist got it wrong on SR. He didn't lose because he raised taxes and cut spending which lead to a short thin reccesion followed by growth and a surplus, he lost because he pledged not to raise taxes and political reality, coupled with his duty got him to do the right thing in spite of his pledge.
    Last edited by Winstonbiggs; 07-21-2011 at 09:41 AM.

  20. #20
    [QUOTE=Winstonbiggs;4064980]No like George Bush Sr. who lost the Presidency because he did the right thing to get our fiscal house in order and it cost him his presidency because of his stupid no new tax pledge so Republicans abandoned him for Pie chart and got Clinton elected.

    Grover Norquist got it wrong on SR. He didn't lose because he raised taxes and cut spending which lead to a short thin reccesion followed by growth and a surplus, he lost because he pledged not to raise taxes and political reality, coupled with his duty got him to do the right thing in spite of his pledge.[/QUOTE]

    I though he lost because of the housing recession of 1991-1992 combined with the Huge Perot factor.

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