Path to Prosperity or Decline?: The Ryan Budget

A few months ago the Republican controlled House passed Congressman Paul Ryan's idea of a budget plan, idealistically titled the "Path to Prosperity". The plan never passed in the Senate, but nevertheless addresses some core policy problems facing the country:

• reforming the complex tax code
• reducing the deficit
• reducing debt as a share of the economy
• reforming Medicare 

How did the CBO calculate this? 

This comes with lots of hidden assumptions...

1. Medicare

• Ryan claims that annual healthcare spending per household has increased fiftyfold since 1960 ($520/household) to 2012 ($25,300/household). Do these estimates account for inflation? 
• 10,000 baby boomers are added to Medicare everyday (wow- not good!)
• This screenshot of a House Budget Committee YouTube video accurately illustrates the status quo:

(Taxpayers give money to Medicare, Medicare reimburses providers, providers give care to patients.)

• The status quo disregards the quality of provider care
• Ryan ensures no changes for citizens 55 years or older
• This screenshot from the same video shows how the Ryan budget would enact patient-centered medicare where patients choose from a host of competitive providers, theoretically lowering costs and increasing care

• Poorer recipients receive more federal support while wealthier recipients receive less- a fair maxim

2. Tax Reform

• Reduces the corporate tax rate to 26% 
• Lowers the "individual rate that small businesses pay" to 23%
• Reforms the tax code to be "competitive, fair, and simple"
• Divides tax code into two brackets: lower bracket taxed at 10%, upper bracket taxed at 25%
• Big Problem: Offers no solutions to close/fix existing loopholes

Problems:

Paul Krugman

"And when I say fraudulent, I mean just that. The trouble with the budget devised by Paul Ryan, the chairman of the House Budget Committee, isn’t just its almost inconceivably cruel priorities, the way it slashes taxes for corporations and the rich while drastically cutting food and medical aid to the needy. Even aside from all that, the Ryan budget purports to reduce the deficit — but the alleged deficit reduction depends on the completely unsupported assertion that trillions of dollars in revenue can be found by closing tax loopholes."

~New York Times

Ezra Klein

"That’s a lot of numbers. But it’s also clarifying. The big cut here isn’t to health care for old people, though that gets the headlines. It’s to health care for poorer Americans. The biggest category of cuts is “everything else,” which shrinks to implausibly low levels, and Ryan, to my knowledge, has never detailed, even in broad strokes, how he gets it that low. But since he’s opposed to further defense cuts — he in fact raises spending on defense in the next 10 years — it seems inevitable that the non-defense side of “everything else” would have to shrink considerably, and that means cutting quite a bit from income supports and veterans’ benefits and infrastructure.

Then there’s the whole question of where Ryan gets the $6.2 trillion he’ll need to fill the hole in his tax plan."

~Washington Post