Ten Miles Square

Blog

March 13, 2013 1:19 PM Paul Ryan’s Imaginary Numbers

By Jonathan Bernstein

How do you go about comparing imaginary numbers?

Kevin Drum says:

The fiscal cliff deal increased top marginal rates from 36 percent to 39.6 percent. Ryan’s plan is based on reducing top rates to 25 percent. In other words, not only does he want to get rid of the 39.6 percent rate, he wants to make it even lower than it was before the fiscal cliff deal. He doesn’t accept the fiscal cliff increases at all.
Right? What am I missing here?

While Suzy Khimm reads the same budget and concludes:

Buried in Rep. Paul Ryan’s new budget is one surprising detail: He wants to raise more revenue for the government than he did before.
Ryan’s budget sets a revenue to GDP target of 19.1 percent by 2023. That’s higher than his target last year (18.7 percent after a decade) and his target two years ago (18.3 percent), as the Urban Institute’s Howard Gleckman points out. It’s a notable shift as many Republicans have used an 18 percent revenue to GDP ratio as a benchmark to justify or oppose changes to the tax code—including Ryan (R-Wis.) himself.

Who is right? Both, either of them, neither…what’s important is to pay attention to what is real, and what is imaginary.

There are three ways to look at this. One is that we can basically trust the budget. In that case, we need to pretend that revenue-neutral tax reform will happen, and with real numbers.

Or, we can assume that tax reform will pass, but that the House will wind up ignoring the revenue targets in their budget, either through phony numbers or by just insisting on setting rates at a low number even if it means less revenue. In that case, it doesn’t really matter what Ryan puts in the budget.

And yet another possibility is that tax reform collapses. In that case…it doesn’t really matter what the budget said about it.

But step back, and you realize that all of that is imaginary. After all, this is the House Budget, and at best it winds up totally changing in negotiations with Democrats in the Senate and the White House. So we’re not really talking about a real budget that’s going to be carried out, regardless.

However, there is some reality in here: the budget, whatever it isn’t, is almost certainly the Republicans’ opening bid in budget negotiations. And yes, it probably does matter, at least to some extent, that Republicans start off that dealing by fully accepting a higher level of revenues than they did last year — just as it probably does matter that Democrats start by accepting the deficit targets in the Budget Control Act, including sequestration.

[Cross-posted at A plain blog about politics]

Back to Home page

tags

Post a Comment