Initial observations on the White House budget:
1) The White House assumes 3% annual GDP growth, vs. 2% for CBO. That $21 trilllion in added GDP over the decade translates into $3.7 trillion in added growth revenues. They also (quietly) assume $1.4t in 2017 tax cut extenders.
1) The White House assumes 3% annual GDP growth, vs. 2% for CBO. That $21 trilllion in added GDP over the decade translates into $3.7 trillion in added growth revenues. They also (quietly) assume $1.4t in 2017 tax cut extenders.
2) A lot of magic asterisks -- much of the $1.55 trillion in savings from non-defense discretionary spending over the decade are not specified in the detailed tables. $844 billion in health reform savings is a placeholder figure.
3) Even defense is not spared. Since 2011, DOD has fallen from 4.5% to 3.2% if GDP. White House would push it down 2.2% a decade from now - by far a post-1930s low.
(Domestic discretionary's proposed 1.6% of GDP by 2030 is even lower).
(Domestic discretionary's proposed 1.6% of GDP by 2030 is even lower).
4) Like last year, critics will seize on "historic Medicare cuts" without noting that these are mostly (modest) provider & waste reforms that would not affect beneficiaries -- and are often renewals of bipartisan proposals that President Obama also included in his budgets.
5) The main problem is the deficit-reduction's reliance on heroic GDP growth, and huge (and often unspecified) savings from low-income and domestic discretionary programs -- all to make room for Social Security & Medicare soaring from $1.7 to $3.2 trillion annually.
6) More broadly,the great budget myth of the right is that we can fix the budget deficit (nearly 7% of GDP within a decade) through huge economic growth and dramatic cuts to the 7% of GDP spent on antipoverty and domestic discretionary programs.
7) And the great budget myth of the left is that we can fix the budget deficit (and pay for trillions in new spending) by taxing the rich and cutting defense. Even a cursory understanding of the budget reveals that is not the close to the case.
8) So, both sides will continue to ignore the elephant in the room (SocSec & Medicare), pander to seniors, and wait until all the seniors have retired and locked in benefits. At that point, we'll get a 15%-20% VAT, higher payroll taxes, and social spending squeezed. How European.
P.S. I'm now hearing from Sanders/Warren supporters -- you know, the M4A people -- how Trump proposing to trim a few Medicare provider rates are a Republican outrage and will destroy health care.
Should I tell them?
Should I tell them?
