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How Paul Ryan's budget fails

By Rick McGahey
updated 12:42 PM EDT, Wed April 16, 2014
STORY HIGHLIGHTS
  • The House recently approved the budget designed by Rep. Paul Ryan
  • Rick McGahey: Ryan's proposal fails on basic math and will restart budget wars
  • He says Ryan is signaling his presidential ambitions by appealing to GOP radicals
  • McGahey: Republican intra-party battles continue while moderates lose out

Editor's note: Rick McGahey teaches economics and public policy at the Milano School of International Affairs, Management and Urban Policy at the New School. He served as executive director of the Congressional Joint Economic Committee and as assistant secretary for policy at the department of labor in the Clinton administration. The opinions expressed in this commentary are solely those of the author.

(CNN) -- The House recently approved the budget designed by Rep. Paul Ryan, a leading contender for the Republican presidential nomination in 2016.

Ryan claimed that his budget is balanced and "harnesses the power of economic freedom and respects the dignity of every person." But the problem is that it fails on basic math and will likely put Washington back in the budget wars.

Moreover, it signals that Ryan has big ambitions, including running for president. Will Ryan's budget plan help him succeed? It's hard to say.

Rick McGahey
Rick McGahey

Americans want members of Congress to work together. In a CNN poll after Obama's State of the Union address, 67% said they want "bipartisan compromise with Congress on major issues."

Ryan's budget rejects compromise in favor of appealing to hard core Republican values.

The House's passage of Ryan's budget indicates that we are being dragged back into ideological battles that most Americans reject. This budget won't go anywhere in the Senate, as it breaks last year's fragile compromises that avoided a government shutdown and threatened a dangerous default of America's debt. Passing this budget also means Congress will pass very few or no appropriations bills, with lawmakers posturing and casting symbolic votes as the 2014 midterm elections approach.

Unlike the current budget deal that was reached last fall, which cuts defense and domestic spending equally, Ryan would increase military spending and provide large tax cuts for millionaires, with deep cuts in non-defense spending footing the bill. But the House cannot cut enough discretionary spending to fund Ryan's budget. So it attacks Obamacare, Medicare and Social Security, with a plan to increase the Medicare eligibility age and turn it into a voucher program.

Inside Politics: 'Stinkburger'

Breaking America's health and income security programs is the long-term political game for Republicans. The smarter ones know they cannot achieve budget balance and more tax cuts for the wealthy by cutting only domestic discretionary spending, which is just under 17% of the total federal budget . So they attack entitlements.

How can Ryan claim that his budget is balanced? By invoking what used to be called "voodoo economics" -- assuming budget cuts and unfair tax cuts will unleash economic growth and generate adequate tax revenue.

Former Reagan administration economist Bruce Bartlett has criticized this approach as "just another way for Republicans to enact tax cuts and block tax increases. It is not about honest revenue-estimating; it's about using smoke and mirrors to institutionalize Republican ideology into the budget process."

Of course, Paul Ryan isn't stupid, so why the phony budget math and the return of voodoo economics? Because it serves his presidential ambitions.

Ryan's budget satisfies two wings of Republican true believers -- budget balancers, and anti-tax zealots who want not only no new taxes, but further tax cuts for the wealthy. These groups used to fight with each other about deficits, but modern Republican politics have united the two positions.

Since Ryan's budget will not likely pass the Senate, it is really an attempt to strengthen him in the 2016 Republican primaries, where candidates will ignore basic math and pretend they can balance the budget solely through spending cuts and still have money left over for regressive tax cuts.

This is a key Republican battle, and the shocking response is that other Republican conservatives say Ryan didn't go far enough. Sarah Palin called Ryan's plan a "joke," because it does not deal adequately with "wasteful government overspending."

When it comes to basic math, the Republican budget debate reminds one of the movie, "Dumb and Dumber," or "Phony and Phonier." And compared to Sarah Palin, Paul Ryan might in fact look like a reasonable budget analyst. But his ideas are deeply dangerous. Even if you think balancing the budget is the most important economic challenge we face (it isn't) the numbers simply don't add up.

True budget balancers and fiscal conservatives, who would be looking for both spending cuts and increased revenue, have virtually been driven out of today's Republican Party. This happened in Kansas where moderate Republicans worried that deep tax cuts would harm the state's finances and gut basic services like education. But they were defeated in primary elections by more strident Tea Partiers, backed by the deep pockets of the Koch brothers and other big money interests.

So Ryan's budget is best viewed as his opening shot in the 2016 presidential contest. To win the nomination, he must appeal to the most uncompromising elements in his party. Sanity once again is playing second fiddle to intra-party Republican battles, and those battles could drag all of us back into the divisive and unproductive budget wars of the past several years.

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