GOP Budget Plan To Reduce The Debt Actually Makes The Debt Worse

By Travis Waldron/Think Progress

House Budget Committee Chairman Paul Ryan (R-WI) released the GOP’s new budget this morning, and in doing so, he touted it as a plan to make America’s level of debt more sustainable. “We’ve shared with Americans a specific plan of action that cuts spending, pays off the debt and gets our economy back on the path to prosperity,” Ryan said.

The problem with Ryan’s rhetoric is that his plan fails to match it. By giving massive tax breaks to corporations and the top one percent and preserving unsustainable levels of defense spending, the House GOP’s plan to reduce the debt would fail to reduce the debt. In fact, because it assumes levels of revenue that are pure fantasy under his tax proposals, the plan would actually increase the debt, according to an analysis by Center for American Progress Tax and Budget Policy Director Michael Linden:

But the House budget’s entire claim to deficit reduction is built on the foundation of those fantasy revenue levels. Without them, the debt goes up, not down. In fact, with all the House budget’s tax cuts properly accounted for, revenue would average just 15.3 percent of GDP from 2013 through 2022, not 18.3 percent. The result: deficits would never drop below 4.4 percent of GDP, and would rise to more than 5 percent of GDP by 2022.

The national debt, measured as a share of GDP, would never decline, surpassing 80 percent by 2014, and 90 percent by 2022. By comparison, President Barack Obama’s budget proposal, released in February, would stabilize the debt by 2015, and bring it down to 76 percent by 2022.

As Linden notes, the GOP’s “debt reduction” isn’t just based on fantasy levels of revenue — it’s based on “massive, unrealistic” spending cuts as well. Medicaid would face $1 trillion cuts in the first decade, while education and workforce training programs would get cut in half and transportation funding would be reduced by nearly 25 percent. The plan, which also ignores previous deals and increases defense spending, would also require deep cuts in other vital domestic programs.

“If you agree it’s morally wrong to ignore the most predictable crisis in U.S. history, this is your budget,” Ryan tweeted yesterday. Apparently, though, it seems Ryan and his Republican colleagues got so wrapped up in creating a budget that benefits the top one percent, they forgot to actually reduce the debt.

ANALYSIS: Gingrich’s Tax Plan Would Cause Perpetual Trillion Dollar Deficits, Triple The Debt By 2024

BySeth Hanlon/Think Progress' guest blogger

2012 GOP presidential frontrunner Newt Gingrich is outdoing his Republican rivals in promising enormoustax cuts for the very wealthiest Americans. According to an independent analysis by the Tax Policy Center, Gingrich’s plan would violate basic notions of fairness by requiring middle-class families to pay higher tax ratesthan millionaires.

But that’s not all that’s wrong with it. Gingrich’s plan is by far the most fiscally reckless plan to be released by a major 2012 contender. The magnitude of the tax cuts he is proposing to the wealthy and corporations would drive the debt to unprecedented and dangerous levels even if federal spending is cut drastically.

Gingrich has not proposed specific levels for federal spending, so to analyze the effect of his plan on the debt, we assumed that he adopts all of the draconian spending cuts in House Budget Committee Paul Ryan’s (R-WI) budget. Gingrich originally dismissed the Ryan budget as “right-wing social engineering,” but later said he would vote for it.

The spending levels in the Ryan budget are unrealistically and irresponsibly low. And yet Gingrich’s tax giveaways are so enormous that there wouldn’t be nearly enough revenue to fund even this extreme conservative vision of government.

The Gingrich plan would reduce federal revenues by $1.28 trillion below CBO’s baseline, according to the nonpartisan Tax Policy Center, resulting in revenues of about 13.2 percent of GDP. That is an absurdly low level. Unsurprisingly, therefore Gingrich’s plan would pile up debt shockingly fast. Ultimately, Gingrich’s plan would:

– Result in perpetual trillion-dollar deficits: The budget deficit is expected to be 6.2 percent of GDP in the current fiscal year, but projected to decline in the coming years. With Gingrich’s tax plan in place, however, deficits would be even higher in perpetuity. In the best year under his plan, fiscal year 2015, the deficit would be $1.2 trillion, or 6.6 percent of GDP. Annual deficits would continue to mount, reaching $2 trillion in just over a decade. Again, this assumes that drastic spending cuts also take place.

– Explode the debt to historic levels: Under the Gingrich plan, the publicly-held debt would double by 2019, and triple by 2024. By the end of a second Gingrich term as president, the debt would reach $25 trillion, or more than 100 percent of GDP. The United States will have added about $12.5 trillion in debt during that period, with no end in sight.

– Commit the United States to trillion dollar interest payments on the debt: By enacting a tax plan with grossly inadequate revenues, the U.S. would be committing to pay ever-increasing sums of money to creditors like China. Under Gingrich’s plan, by 2021 the United States would be paying more than $1 trillion every year just in interest on the debt. Interest on the debt would represent nearly a quarter of all government spending.

Of course, if Gingrich can’t get spending down to the Ryan level, his deficits would be larger and his debt higher. In short, Gingrich’s tax plan simply cannot be taken seriously. As fiscal policy goes, it is every bit as ridiculous as his nutty proposals to replace school janitors with child laborers or colonize the moon.

Major Karl Rove Donor Ken Langone On Debt Negotiations: ‘I Should Pay More Taxes’

By Lee Fang/Think Progress


In Feb. 2010, Karl Rove and operatives from the U.S. Chamber of Commerce convened a meeting of mostly Wall Street titans to fund a set of Republican groups designed to run attacks on Democrats. Ken Langone, a wealthy Wall Street investor and controversial former head of the New York Stock Exchange, was one of the very first majordonors to the Rove campaign groups, which now include American Action Network, American Action Forum, American Crossroads, and American Crossroads GPS.

Yesterday on the Fox Business Network, Langone was asked by host Lou Dobbs about how to kickstart the economy. Langone repeatedly said high unemployment is the greatest problem, but conceded that corporations are doing better than ever. To get things going, Langone explained, everyone would have to feel “pain.” In a sharp contrast with his friend Karl Rove, Langone said wealthy guys like him “should pay more taxes”:

LANGONE: Well I say this as a devout Republican. I think in these negotiations, I think number one guys like me, I’ve said this before, there’s a caveat. I shouldn’t get Social Security. I should pay more taxes.

Watch it:

Langone says higher taxes on wealthy individuals like himself should go “entirely to paying down the debt.”

As President Obama and Democrats have pushed to include modest tax increases on the wealthy as part of the debt negotiations, as well as a repeal on tax subsidies to big oil companies (deemed a tax hike by some conservatives and those in the media), Rove’s front groups have hit back with nasty attack ads claiming any tax increase would hurt the economy. Perhaps Rove should listen more to his own wealthy donors.

Van Jones on the deficit: ‘We are not stupid. We can do the math.’

By Melissa Jeltsen

Van Jones, Obama's former green jobs czar, kicked off a new progressive movement at New York City’s Town Hall last night with an ambitious goal -- to build a vocal counterweight to the Tea Party, who he says has monopolized the dialogue on America’s economic woes. “We are trying to hit a big reset on the conversation we are having in America about how to fix our economy,” Jones told Raw Story in a post-event interview. “We are trying to change the conversation from one about war and austerity to a conversation about peace and prosperity.”

The movement, called Rebuild The Dream, hopes to bring traditional liberal factions -- environmentalists, labor groups, gay rights and immigration activists -- under one cohesive umbrella, united by a desire to protect and expand the disappearing middle class. “All of us are suffering economically,” Jones said. “We won’t be able to have equality and equal rights that are meaningful if the whole economy is collapsed.”

The event combined commentary by Jones, performances by The Roots and videos and graphics about the dwindling middle class. Artist Shepard Fairey kicked off the night with a DJ set, mixing Public Enemy, Ice Cube, The Verve and Jay-Z.

On stage, Jones used his speech, at times funny, at times tragic, to push back on the idea that America is out of money. “We keep hearing America -- the richest country in the history of the world is broke,” he said. “This is a very dangerous lie, because once you believe this a whole lot of other things start to sound acceptable.”

Using graphics, he gave the audience an educational lesson on where American money is going: Wall Street ($144 billion in compensation this year, a record high), the Iraq and Afghanistan wars, the loss of revenue from the Bush tax cuts to the wealthiest Americans and corporate tax loopholes. “The pie, the country’s GDP, is getting bigger!” he said. “It’s just your slice that is getting smaller. The social contract between corporate America and the rest of America is broken.”

“Tax Wall Street fairly, wind down the wars responsibly, roll back the Bush tax cuts and close corporate loopholes,” Jones said. “We are not stupid. We can do the math.”

Justin Ruben, executive director of MoveOn.org, which is partnering with Rebuild The Dream, told Raw Story said that this is an extraordinarily dangerous moment in American history. “People have lots their jobs, veterans are coming home without jobs, kids are graduating from college, no hope of getting a decent job,” he said. “Yet in Washington, D.C., the debate around the economy is going on in this bizarre parallel world, where the only problem is our deficit, except when it comes to giving tax cuts to corporations, in which case the deficit doesn’t matter.”

Jones called now a ‘moral moment.’ “The pain point that people are experiencing is unbearable. If you drill one centimeter below where we are economically, it is freefall for tens of millions of Americans and they don’t know what to do, and no one cares.”

He said he admired the Tea Party for their ability to organize and educate their members, and said the progressive movement was not against them but for them, as they too will suffer without a middle class.

“This is about a very small amount of very greedy people against the United States of America,” he says. “We say no way.”

DeMint Wants Tax Deal To Reduce The Deficit And Permanently Extend The Bush Tax Cuts

By Ben Armbruster

While most Republicans on Capitol Hill have signaled support for the tax cut deal that their leadership brokered this week with President Obama, a small minority are opposed. Tea Party favorite Sen. Jim DeMint (R-SC) said he is against the deal because it includes a provision to extend unemployment benefits for 13 months. “We can’t just keep paying people to stay at home,” he said.

Last night on Fox News, DeMint expounded on his concerns about the deal. “This is a perfect example of how we got 14 trillion in debt as a nation,” he said. But then his reasoning quickly turned contradictory. “Republicans have something we know is good for the country, such as extending these tax rates.” Later in the interview, DeMint solidified his inconsistency. He said the measure should not increase the deficit; but, in his very next breath, he added that the deal should make the tax cuts permanent:

DEMINT: Rather than support something that is a bad deal, I think I would put my bets on a republican house fixing this thing the second week in January, when we are back in session. But I’d like to get the deal done now. But it should, in my mind not increase the deficit. And we should at least have a vote on making these rates permanent. If we do that, I think it will really help the economy the way it is structured now, I think it could actually hurt the economy by expanding the deficit. So, you know, I’ve heard countless times since I’ve been in Congress, this is the best deal we can make but frankly, with $14 trillion in debt, this is not what we need to do. We need to fight a little bit harder before we let this thing go.

Watch it:

DeMint did not say that there should be spending cuts to offset the federal revenues lost from the tax cuts, which for the wealthy alone, account for more than $800 billion over the next 10 years. Cutting taxes will increase the deficit; they are mutually constitutive. Yet, DeMint thinks the tax deal should decrease the deficit and make the Bush-era tax cuts permanent.

While the President’s priorities in the deal would help about 150 million more Americans than the GOP’s priorities would (and at less cost per person), the congressional Joint Committee on Taxation said that the tax deal would cost the government $801.3 billion over 10 years. While the 13 month unemployment benefit extension would cost $56 billion, the JCT said the two year extension of the tax cuts would cost more than $400 billion.

“This feels more than a bit surreal,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, about the tax deal’s cost. “On the heels of the work of the White House Fiscal Commission last week on how to get control of the national debt, the White House and Members of Congress choose to engage in a negotiation that involves adding increasingly larger amounts to the debt? It’s utterly exasperating.”