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freshjiva
04-09-2011, 06:07 PM
So I wanted to grab some details of Paul Ryan's budget proposal, which will be the next big debate in Congress after this theatrical government shutdown showdown.

Say what you will about Paul Ryan, but at first glance, this proposal is pretty gutsy. Maybe it's a political tool used by the GOP because they know it will be voted down by the Senate/POTUS, so why not show some boldness to con the American public while they're at it...? I don't know, that's all pure conjecture.

Here's what I do know:

1) Paul Ryan claims it will cut $6 trillion from federal spending over 10 years
2) Cuts will come primarily from nondefense discretionary programs
3) Tax cuts:


Full Repeal of the AMT. The alternative minimum tax originally was intended to apply to a small fraction of wealthy taxpayers. But because it was never indexed for inflation, it has in recent years threatened to ensnare millions of middle-income filers. To date, Congress has only extended protection from this AMT expansion on a year-by-year basis. This proposal eliminates the AMT entirely and permanently.

Elimination of Double Taxation of Savings. The current system essentially taxes savings twice: individuals pay tax on their earnings and, if they choose to invest those after-tax funds, they pay another tax on the return from their savings (i.e. interest, capital gains, or dividends). This proposal eliminates the second layer of taxation. Not only is this fair to individual taxpayers, it also is good for the economy. Greater savings leads to more investment and higher rates of productivity. Higher productivity ultimately drives increased living standards. The plan also eliminates the estate tax, another form of double taxation that is particularly harmful to small businesses.

Taxpayers Choice. The proposal allows individual income taxpayers to make their own choice about how best to pay their taxes. Within 10 years of enactment of this legislation, individuals choose one of the two tax systems. But they are allowed one additional changeover between the two systems over the course of their lifetimes. Individuals are also allowed to change tax systems when a major life event (death, divorce, or marriage) alters their tax filing status.

Simplified Income Tax Rates. In contrast to the six tax rates in the current code, the simplified tax has just two rates: 10 percent on adjusted gross income [AGI] (as defined below) up to $100,000 for joint filers, and $50,000 for single filers; and 25 percent on taxable income above these amounts. These tax brackets are adjusted each year by a cost-of-living adjustment as measured by increases in the consumer price index [CPI]. (See Table 7 and Table 8 on the next page for comparisons with current tax brackets.) Taxable income equals gross earnings minus a standard deduction and personal exemption.

This is what draws all of my interest: an outright elimination of capital gains taxes AND switching to a simplified two-tax rate system.

I have to admit, though, that these two tax changes would disproportionately benefit the wealthy, since most of us are pay 15-25% in personal income taxes anyway. I'd like to see 3 tax rates instead: 5%, 15%, and 25%, but I think cutting taxes of any kind for as many people as possible is always a good idea.

The proposal can absolutely do more (cutting wasteful military spending and ending the wars come to mind immediately), but I think we can pencil in Ron Paul voting 'Yea' on this budget.

sailingaway
04-09-2011, 06:12 PM
I understand the cuts are from Obama's proposed increases. I really see a lot of problems in the plan, not the least being its' weddedness to keeping historic state powers at the federal level. It also doesn't balance the budget for about 30 years, if then. I also don't like the particular approach he took to medicare which appears to freeze in all the cost curve raising regulatory side while shifting risk to the taxpayers individually, if taxpayers take risk of the increase in cost, the govt needs to stop CAUSING the increase in cost, this imho will be rationing a la Obamacare, just administered differently. Corporate interests covered, people not so much. I haven't looked at it closely and I'm sure it has some good points too, though. I far prefer Rand's plan.

eduardo89
04-09-2011, 07:47 PM
The proposal can absolutely do more (cutting wasteful military spending and ending the wars come to mind immediately), but I think we can pencil in Ron Paul voting 'Yea' on this budget.

I doubt it, it's still not a balanced budget, not even close.

sailingaway
04-09-2011, 07:51 PM
I doubt it, it's still not a balanced budget, not even close.

This. Ron hedged that MAYYYYYYBE if the cut were half of the deficit to start, he would go with it.... but Ryan's isn't near that....

I'm not ABSOLUTELY sure Ron would even vote for RAND's, but it is possible, if he really had it in front of him....

Occam's Banana
04-09-2011, 08:34 PM
1) Paul Ryan claims it will cut $6 trillion from federal spending over 10 years
2) Cuts will come primarily from nondefense discretionary programs
RANT = ON

As far as discretionary borrowing & spending go, Ryan's plan is total & utter crap.

It does not "cut" anything. Instead, it reduces the increases in borrowing & spending - when compared to Obama's plan.

And this amounts to saying that in real terms it won't reduce borrowing or spending at all.

Consider:

Say you have budget X (Obama's 10-year plan).
Then budget Y (Ryan's 10-year plan) comes along.

Under X (Obama) you would spend $6.2 trillion more than you would spend under Y (Ryan).
Under X (Obama) you would go $4.4 trillion deeper into debt than you would under Y (Ryan).

So you decide to use budget Y and congratulate yourself on you fine fiscal acumen.

After all, you just "saved" $6.2 trillion and avoided $4.4 trillion of additional debt!
But wait a minute! You arrived at those numbers by comparing two budgets (X & Y), one of which will NOT be implemented !!

You ought to have computed those figures (i.e., how much more or less you are going to be borrowing & spending) by comparing X & Y - not to each other - but to budget Z, which is what you are borrowing & spending THIS YEAR !!

It's like spending $100 on gumballs this year and planning to spend $200 on gumballs next year ...
... and then changing your mind and deciding you'll only spend $150 on gumballs next year ...
... and then claiming that you'll be spending $50 LESS on gumballs next year !!

No, you won't, DAMMIT! You'll be spending $50 MORE !!

OK. Sorry. I just get mad as hell when I think about this. And don't even get me started on how supine the media is when it comes to reporting on these alleged/so-called/non-existent "cuts."

I'm done now.

Oh, yeah. There is one more thing ...



I think we can pencil in Ron Paul voting 'Yea' on this budget.

I assume you mean Rand, not Ron, since Rand & Paul Ryan are senators & Ron is a House rep.
(In any case I can't imagine Ron even considering supporting this.)

If Rand goes along with this garbage, he will lose massive cred in my eyes.
He will make his recent prinicpled stand on the shutdown look like grandstanding.
And it will look like grandstanding because that's exactly what it will have become.

OK. Now I'm done.:)

RANT = OFF

source of my info:
http://reason.com/archives/2011/04/06/whats-worse-than-ruinous


Compared to President Obama's budget proposal, the Ryan plan is a model of restraint, calling for $6.2 trillion less in spending and $4.4 trillion less in new debt over 10 years. Even so, it would not balance the budget until 2040 or so, and it would increase the federal debt, currently about $14 trillion, to more than $23 trillion by 2021. As the Cato Institute's Chris Edwards notes, spending continues to rise during the next decade under the Republican plan, albeit at a slower pace than Obama envisions: 34 percent vs. 55 percent.

Occam's Banana
04-09-2011, 08:38 PM
I also don't like the particular approach he took to medicare which appears to freeze in all the cost curve raising regulatory side while shifting risk to the taxpayers individually, if taxpayers take risk of the increase in cost, the govt needs to stop CAUSING the increase in cost, this imho will be rationing a la Obamacare, just administered differently. Corporate interests covered, people not so much. I haven't looked at it closely and I'm sure it has some good points too, though. I far prefer Rand's plan.

Anyone who voted for Medicare Part D - as Paul Ryan did - has zero credibility when it comes to overhauling non-discretionary entitlement budgeting.

freshjiva
04-09-2011, 08:50 PM
RANT = ON

As far as discretionary borrowing & spending go, Ryan's plan is total & utter crap.

It does not "cut" anything. Instead, it reduces the increases in borrowing & spending - when compared to Obama's plan.

And this amounts to saying that in real terms it won't reduce borrowing or spending at all.

source of my info:
http://reason.com/archives/2011/04/06/whats-worse-than-ruinous

Wow, I clearly was unaware of the fact that the $6 trillion in cuts was relative to what would be spent under Obama's plan.
So, here's my question: if Ryan's proposal passes the House/Senate/POTUS, what, if any, would be the total cuts in spending relative to the 2010 budget?

Also, keep in mind that even if Ryan's proposal does indeed cut $6 trillion from what we were "going to spend", you can still contend that it will reduce the deficits because the cap gains tax and income tax rate cuts are pro-growth in nature, and so they will actually increase tax revenue despite cutting tax rates.

bwlibertyman
04-09-2011, 08:54 PM
If the plan gets rid of the AMT, this could be huge. The main reason it is there is because of wealthy people who are able to spend money on things to get the tax credits and deductions. If you follow the logic, someone could realistically pay 0 dollhairs in income tax. The AMT is there so that some people will be forced to pay taxes. If we got rid of the AMT a good chunk of people could go an pay no taxes. The downside is obviously they have to spend money on things that they probably don't need and probably don't want but I personally would rather buy more things than pay taxes.

I agree that the plan probably doesn't do much and it sounds good. 10 years is a long time.

My minimum is cutting 750 billion dollhairs this year. I think cutting half of what we don't have in one year is a reasonable compromise. I'm 22 and I don't care where it comes. If you want to take all the social security and medicare money I've already paid in that's fine. If you want to end education subsidies that's fine. If you want to end transportation dollhairs for the roads that I drive on that's fine. I'd rather have little to no debt as opposed to all these "freebies" anyway.

The argument that the democrats have come more than halfway is obviously wrong. I'm compromising at cutting 750 billion instead of cutting 1500 billion all in one year. Stupid legislature.

anaconda
04-09-2011, 10:20 PM
Cut to the chase: Ryan's plan cuts spending but adds monstrous sums to the federal debt (his "cuts" still leave massive deficits for many years). We will default on the debt decades before Ryan balances the budget.

Occam's Banana
04-10-2011, 12:45 AM
So, here's my question: if Ryan's proposal passes the House/Senate/POTUS, what, if any, would be the total cuts in spending relative to the 2010 budget?

None at all - :eek: - BIG surprise!

Actual total spending by the federal governemnt for fiscal year 2010 was $3456.2 billion.
(source: http://www.usgovernmentspending.com/classic.html?year=2010)

The per-year spending estimates for the 2012 budget (1st budget year under Ryan's plan) are:
(source: http://www.usgovernmentspending.com/ryan_budget_plan)

$3,618.0 billion for FY2011 # NOTE: they'll be appropriating for FY2011 next week (Thursday ?)
$3,529.0 billion for FY2012
$3,559.0 billion for FY2013
$3,586.0 billion for FY2014
$3,671.0 billion for FY2015
$3,858.0 billion for FY2016
... and so forth
(see:http://www.cato-at-liberty.org/federal-spending-ryan-vs-obama/ (http://%29%3Ca%20href=%22http://www.cato-at-liberty.org/federal-spending-ryan-vs-obama/%22%20target=%22_blank%22%3Ehttp://www.cato-at-liberty.org/federal-spending-ryan-vs-obama/%3C/a%3E))

As you can see - except for an estimated $89 billion blip downward for FY2012 - there are no cuts in total spending at all, just year-after-year increases.

And I doubt that that $3.618B figure for FY2011 accounts for the $60B or so they're cutting now, so if Ryan's estimate for FY2011 is correct, it will only take about $39B of cuts to get to Ryan's estimate for FY2012. These are all just estimates, but even if they're dead-smack-on, the cuts are so puny they'll amount to rounding errors!



Also, keep in mind that even if Ryan's proposal does indeed cut $6 trillion from what we were "going to spend", you can still contend that it will reduce the deficits because the cap gains tax and income tax rate cuts are pro-growth in nature, and so they will actually increase tax revenue despite cutting tax rates.

It's SOP for budget plans like this to incorporate "anticipated" revenue increases & surplusses. So Ryan's plan may very well already account for what you're talking about. The track record for such projections is abysmal, however. For example:



http://www.ronpaulforums.com/images/misc/quote_icon.png source: http://en.wikipedia.org/wiki/2010_United_States_federal_budget

The U.S. budget situation has deteriorated significantly since 2001, when the Congressional Budget Office (CBO) forecast average annual surpluses of approximately $850 billion from 2009–2012. The average deficit forecast in each of those years is now approximately $1.215 trillion.
In 2001, the CBO was predicting a surplus of $850 billion for this year (2011).
In 2010, the CBO was predicting a deficit of $1.215 trillion for this year (2011).

That's a difference of more than $2 TRILLION. What happened? The CBO wasn't able to predict the housing bubble, TARP, bailouts of GM & Chrysler, etc. That's what happened.

I don't remember, but I wouldn't be shocked to learn that Dubya's administration used the CBO's 2001 numbers (or something similar) to justify things like Medicare Part D (which Ryan voted for, BTW) - which made the non-discretionary entitlement mess even worse (as if all the other crap that was going to blow up wasn't enough).

I DO recall the Clinton administration swaggering about it's projected surplusses (due to the dot-com boom). They jacked up planned future expenditures in their multi-year budgets based on projections of big, fat year-after-year revenue streams. And then NASDAQ went kerflooey. The revenue streams dried up, but the expenditures based on them stuck around - and it was "bye-bye surplusses, hello deficits."

Anyway - with or without revenue increases - I see no reason to think Paul Ryan will fare any better at predicting the unpredictable. These multi-year budget monstrosities (and Ye Gods! Ryan's even stretches its tentacles out to 2040 !!! :eek:) are nothing but fanciful works of sheer fiction. Their consequences are all too real, however.

anaconda
04-10-2011, 01:45 AM
None at all - :eek: - BIG surprise!

Actual total spending by the federal governemnt for fiscal year 2010 was $3456.2 billion.
(source: http://www.usgovernmentspending.com/classic.html?year=2010)

The per-year spending estimates for the 2012 budget (1st budget year under Ryan's plan) are:
(source: http://www.usgovernmentspending.com/ryan_budget_plan)

$3,618.0 billion for FY2011 # NOTE: they'll be appropriating for FY2011 next week (Thursday ?)
$3,529.0 billion for FY2012
$3,559.0 billion for FY2013
$3,586.0 billion for FY2014
$3,671.0 billion for FY2015
$3,858.0 billion for FY2016
... and so forth
(see:http://www.cato-at-liberty.org/federal-spending-ryan-vs-obama/ (http://%29%3Ca%20href=%22http://www.cato-at-liberty.org/federal-spending-ryan-vs-obama/%22%20target=%22_blank%22%3Ehttp://www.cato-at-liberty.org/federal-spending-ryan-vs-obama/%3C/a%3E))

As you can see - except for an estimated $89 billion blip downward for FY2012 - there are no cuts in total spending at all, just year-after-year increases.

And I doubt that that $3.618B figure for FY2011 accounts for the $60B or so they're cutting now, so if Ryan's estimate for FY2011 is correct, it will only take about $39B of cuts to get to Ryan's estimate for FY2012. These are all just estimates, but even if they're dead-smack-on, the cuts are so puny they'll amount to rounding errors!



It's SOP for budget plans like this to incorporate "anticipated" revenue increases & surplusses. So Ryan's plan may very well already account for what you're talking about. The track record for such projections is abysmal, however. For example:

(from: http://en.wikipedia.org/wiki/2010_United_States_federal_budget)

In 2001, the CBO was predicting a surplus of $850 billion for this year (2011).
In 2010, the CBO was predicting a deficit of $1.215 trillion for this year (2011).

That's a difference of more than $2 TRILLION. What happened? The CBO wasn't able to predict the housing bubble, TARP, bailouts of GM & Chrysler, etc. That's what happened.

I don't remember, but I wouldn't be shocked to learn that Dubya's administration used the CBO's 2001 numbers (or something similar) to justify things like Medicare Part D (which Ryan voted for, BTW) - which made the non-discretionary entitlement mess even worse (as if all the other crap that was going to blow up wasn't enough).

I DO recall the Clinton administration swaggering about it's projected surplusses (due to the dot-com boom). They jacked up planned future expenditures in their multi-year budgets based on projections of big, fat year-after-year revenue streams. And then NASDAQ went kerflooey. The revenue streams dried up, but the expenditures based on them stuck around - and it was "bye-bye surplusses, hello deficits."

Anyway - with or without revenue increases - I see no reason to think Paul Ryan will fare any better at predicting the unpredictable. These multi-year budget monstrosities (and Ye Gods! Ryan's even stretches its fingers out to 2040 !!! :eek:) are nothing but fanciful works of sheer fiction. Their consequences are all too real, however.

Nice post. Thanks. Intriguing links that I want to have a closer look at. What's "security?"

http://www.usgovernmentspending.com/ryan_budget_plan

Is that another term for military spending?

Occam's Banana
04-10-2011, 02:31 AM
Nice post. Thanks. Intriguing links that I want to have a closer look at. What's "security?"

http://www.usgovernmentspending.com/ryan_budget_plan

Is that another term for military spending?

I think so. There's nothing else that fits.
So that would make "Non-Security" = non-military spending.

I must say I do like his proposed spending for "President's Health Care Law." :D
I hadn't noticed that before.

dude58677
04-10-2011, 02:55 AM
The only serious cut will be is to get most states other than Utah to go on the gold standard.

Occam's Banana
04-12-2011, 02:33 PM
http://www.youtube.com/watch?v=IcWwtZDsdus

georgiaboy
04-12-2011, 03:05 PM
None at all - :eek: - BIG surprise!

...

$3,618.0 billion for FY2011
$3,529.0 billion for FY2012
$3,559.0 billion for FY2013
$3,586.0 billion for FY2014
$3,671.0 billion for FY2015
$3,858.0 billion for FY2016
... and so forth

...

These multi-year budget monstrosities (and Ye Gods! Ryan's even stretches its tentacles out to 2040 !!! :eek:) are nothing but fanciful works of sheer fiction. Their consequences are all too real, however.

+rep. great post.

Peace&Freedom
04-12-2011, 04:38 PM
Cutting to the chase, thanks to Occam's posts we can more clearly see that Ryan's budget increases spending, increases the deficit by a trillion+ and increases the debt by trillions. NOT conservative. We're back to the old Dole formulation "The difference between the Dmocrats and the Republicans is that the democrats want to increase spending by 20%, while the Republicans want to increase it by 14%." The GOP's answer to the Democrats taking three steps forward in expanding government, is to take two steps forward.

Matt Collins
04-18-2011, 11:10 PM
This is my understanding of Paul Ryan's plan:


- It allows for 10 more years of deficit spending
- It adds between $5-11 TRILLION dollars to the national debt
- It spends a total of $40 TRILLION over the next 10 years
- It will REQUIRE the debt ceiling to be raised
- It's obviously an unbalanced budget (in fact it doesn't fully balance until the year 2040)
- It actually continues to increase spending over the next few years (it merely slows the rate of spending, not actually cutting spending anytime soon)
- It is still bigger than the budget we had under Bill Clinton

Am I right correct???