Ryan budget and debt limit, ctd.

On March 22, 2012, the House of Representatives adopted the budget resolution that was reported out of the House budget committee (aka The Ryan budget). In doing so, House Republicans committed to increasing the public debt over the next decade, meaning the so-called debt limit will have to be raised continuously, even if the Ryan budget is implemented exactly. The debt limit implied by implementing this budget will be $17,072,810,000,000 in 2013, rising to $21,627,396,000,000 in 2022. I wrote about this a few weeks ago, but forgot until today to go back and update the necessary increases in the debt limit contained in the budget passed by the House of Representatives.

Here is page 6, lines 3-14 of the budget resolution, as passed by the full House:

DEBT SUBJECT TO LIMIT.—The appropriate
levels of the public debt are as follows:

p 6. top (start with line 1) [my comment]
Fiscal year 2013: $17,072,810,000,000.
Fiscal year 2014: $17,769,762,000,000.
Fiscal year 2015: $18,277,348,000,000.
Fiscal year 2016: $18,752,806,000,000.
Fiscal year 2017: $19,216,661,000,000.
Fiscal year 2018: $19,676,545,000,000.
Fiscal year 2019: $20,168,534,000,000.
Fiscal year 2020: $20,657,588,000,000.
Fiscal year 2021: $21,121,620,000,000.
Fiscal year 2022: $21,627,396,000,000.

Any budget that is not balanced will require an increase in the debt limit. Just remember that when we get to the absurd theater of the debt limit increase sometime from November 2012-January 2013 and remember that when we do, the question at hand will be whether we will pay for the spending we have already agreed to undertake.

CPC budget v. Ryan budget

It is easier to move toward a balanced budget if you are willing to raise taxes–that is the main take home for me from the Congressional Progressive Caucus (CPC) budget put forth yesterday. The Bipartisan Policy Center does a great job comparing this budget to other proposals. Here is the money graph that compares spending and revenues as a percent of GDP in 2022:

The CPC budget is not balanced in 2022–but then again neither is anyone else’s–not Bowles-Simpson, not Ryan’s, not the President’s, etc. showing that you cannot achieve balance or anything close quickly. The CPC budget is an interesting book end to Chairman Ryan’s budget because both achieve the same debt-to-GDP ratio (~62%) in 2022, but do so at very different levels of aggregate spending, as well as different spending priorities and tax burdens and distribution. When I look at Ryan v. CPC budget, the spending side for CPC is very plausible, while Ryan’s is a political fantasy. It is easy to imagine a majority of the nation getting behind the spending side of the CPC budget, but less easy to imagine them supporting the taxes necessary to pay for it. The converse is true for the Ryan budget.

At some point, we will have to grow up and decide, which of course will most likely entail a compromise, which seems both inevitable and impossible.

The debt limit and the Ryan budget

The debt ceiling debate and discussion as a secondary step outside of the federal budget should be abolished.

Today, the House Budget Committee will mark up, or revise the Chairman’s mark of the Fiscal Year 2013 budget (aka the Ryan budget). This means they will go through and set the high level budget figures for the Fiscal Year 2013 budget, and set targets for the federal budget through 2022. Revenues, taxes, etc. One of the items they will be filling in is the debt limit, or how much borrowing authority will be required to implement THIS budget. The figures can be found on pages 5 and 6 of the Chairman’s mark (concurrent budget resolution that was adopted on March 22, 2012):

p. 5 bottom (start line 25) [my comment]

DEBT SUBJECT TO LIMIT.—The appropriate
levels of the public debt are as follows:

p 6. top (start with line 1) [my comment]
Fiscal year 2013: $17,072,810,000,000.
Fiscal year 2014: $17,769,762,000,000.
Fiscal year 2015: $18,277,348,000,000.
Fiscal year 2016: $18,752,806,000,000.
Fiscal year 2017: $19,216,661,000,000.
Fiscal year 2018: $19,676,545,000,000.
Fiscal year 2019: $20,168,534,000,000.
Fiscal year 2020: $20,657,588,000,000.
Fiscal year 2021: $21,121,620,000,000.
Fiscal year 2022: $21,627,396,000,000.

The numbers are now blank because the House Budget Committee has to decide these amounts today. The numbers above are what was passed by the House of Representatives on March 22, 2012. Sometime next December, or January, the U.S. government will hit the currently approved debt limit, and there will be a circus discussion in Congress about whether Congress will grant approval for the U.S. Treasury to borrow more money to pay the bills that Congress has told the Treasury to incur. Keep in mind when we do that in the future that the budget resolution being passed out of the House Budget Committee today has already laid out what they say the debt limit will have to be through 2022 to pay the bills for the budget authority they today will vote to grant (many details of how to implement the budget will be carried out by the Ways and Means and Appropriations committees). However, the big picture is set in the budget resolution.

Because the debt limit is denominated in nominal dollars (not indexed for inflation or the size of the economy in any way) we will have to increase the borrowing authority of the U.S. government for a long time to come, even if the Ryan budget became law; later today after they set these figures, I will fill in the blanks above. Success from a fiscal standpoint would mean the debt-to-GDP ratio would decline; even if this happens the debt ceiling will have to be raised. The only way to not raise the debt ceiling is to only have balanced budgets going forward.

The time to debate the debt ceiling is today, not later, after we have already agreed to spend the money.

Should we take Ryan’s health policy plans seriously?

Only if the focus of attention quickly shifts to the Commerce and Ways and Means committees in the House of Representatives. That is where the heavy lifting of any health reform proposal must be done, as it was with the Affordable Care Act. As long as the Budget committee and Rep. Ryan remain the focus, the health policy aspects of the proposal are mostly talk.

Rep. Ryan this morning unveiled the beginnings of the House Budget committee’s budget resolution for the Fiscal Year 2013 budget, and here is CBOs early take, though it is important to remember that they have not analyzed the specific policies contained in the Budget Resolution.

The calculations presented here represent CBO’s assessment of how the specified paths would alter the trajectories of federal debt, revenues, spending, and economic output relative to the trajectories under two scenarios that CBO has analyzed previously. Those calculations do not represent a cost estimate for legislation or an analysis of the effects of any given policies. In particular, CBO has not considered whether the specified paths are consistent with the policy proposals or budget figures released today by Chairman Ryan as part of his proposed budget resolution.

CBO has essentially said, if this budget performs exactly as Chairman Ryan says it will, this will be the top level result; CBO will eventually weigh in on whether they believe the numbers add up, but they have yet to do so.

On the big picture health policy front, Marilyn Serafini has a quick take, and notes that the FY 2013 budget sets a Medicare growth target of GDP growth plus 0.5%–more aggressive than his 2012 budget target of GDP plus 1.0%–but matching the goal set out by President Obama’s budget. So, they have agreed on an overall health care cost inflation target for Medicare, but not on the details of how to get there.

The details are really important.

That is where the Commerce and Ways and Means Committee’s come in. They have jurisdiction over health care (as does the Budget Committee) and they will have to discuss, mark up and pass very detailed health policy legislation to bring about any sort of premium support/competitive bidding policy (TIE FAQ key reading on topic) such as what is suggested in this budget. It is instructive to remember that the health policy provisions contained in last year’s budget resolution did not see the light of day in either Commerce or Ways and Means, or the Budget Committee for that matter. Nor has Rep. Ryan’s Patients’ Choice Act (post on the PCA with multiple links), which is a plan to reform health insurance for the under 65 set that he introduced on May 20, 2009 ever been marked up by one of these committees so that it could be scored by the CBO. And Republicans have been claiming to be interested in replacing the ACA, but have taken no actual (hard) steps to do so.

So, there is a bit of a pattern here: lots of noise and no follow through on the health policy details. So, unless you start hearing more of the names Fred Upton (Commerce) and Dave Camp (Ways and Means) and less of Paul Ryan, you will know the health policy provisions contained in this budget are not serious.