Paul Ryan Responds To "Gang Of Six" "Bipartisan" "Deficit-Cutting" "Plan"

Tyler Durden's picture

When we presented the Gang of Six joke of a deficit-cutting "plan" we called it a "talking point bulletin full of ridiculous fluff with nothing substantial." It appears that at least Paul Ryan seems to agree: "The plan is not a budget.  It is a set of talking points and graphs
that outlines an ambitious proposal that has serious flaws but also the
potential for worthwhile budget and tax reforms." The Wisconsin Congressman has just released a much needed follow up to the 4 page chart book (disclosed previously here), which confirms that the "Compromise" plan is DOA in the Congress.... 48 hours away from D-Day: "The following analysis
examines these problems, raises questions about the lack of detail in
the plan, and notes the areas where there is potential to make progress
on spending restraint and tax reform."


The Gang of Six Budget Effort
Problems, Questions and the Potential for Promising Reforms

Earlier today, a group of U.S. Senators (“Gang of Six”) released “A Bipartisan Plan to Reduce Our Nation’s Deficits.” 
The plan is not a budget.  It is a set of talking points and graphs
that outlines an ambitious proposal that has serious flaws but also the
potential for worthwhile budget and tax reforms.  The following analysis
examines these problems, raises questions about the lack of detail in
the plan, and notes the areas where there is potential to make progress
on spending restraint and tax reform.

Of note, in response to release of the Gang of Six plan, House Budget
Committee Chairman Paul Ryan issued the following statement:

“The proposal put forward by a group of seven senators today is a
useful addition to the budget debate.  I share the frustration that
these senators appear to have with the U.S. Senate’s inability to pass a
budget in over 800 days.  While the proposal lacks detail in many
respects, it includes some reforms that could help put our country on a
sounder fiscal footing.  Most importantly, it reflects a bipartisan
recognition that lower tax rates are essential to help spur economic
growth.  Unfortunately, it increases revenues while failing to seriously
address exploding federal spending on health care, which is the primary
driver of our debt.  There are also serious concerns that the
proposal’s substance on spending falls far short of what is needed to
achieve the savings it claims.  Nevertheless, this effort serves as a
sign that we can work together on a bipartisan basis to make a serious
down payment now to avert the debt-fueled economic crisis before us.”



Heavy Reliance on Revenues.  The plan claims to increase
revenues by $1.2 trillion relative to a “plausible baseline.”   It also
claims to provide $1.5 trillion in tax relief relative to the CBO March
baseline.  The CBO baseline assumes the expiration of tax relief,
resulting in a $3.5 trillion revenue increase.  As a result, the plan
appears to include a $2 trillion revenue increase relative to a current policy baseline
If the $800 billion in tax increases from the new health care law are
included, the plan appears to increase revenues by $2.8 trillion,
without addressing unsustainable health care spending that is driving
our debt problems. 

Elusive Spending Restraint.  It is unclear how much the plan
achieves in spending savings.  Based on released documents, it appears
to primarily rely on cuts in the defense budget through $886 billion in
reductions from the President’s budget for “security programs.”[1] 

Lack of Entitlement Reform.  The plan does not address the
$1.4 trillion in spending expansions in the new health care law.  The
health care law increases eligibility for the Medicaid program by
one-third and creates a brand new health care entitlement.  It does not
appear to include reforms to the Medicare program.  While it appears to
pursue Social Security reform, it could end up creating barriers to
enactment of these reforms.  


Unspecified Savings Relative to What?  The plan is described
as savings relative to a “baseline.”  The plan appears to use three
different baselines for showing savings:  1) CBO’s current law March
baseline; 2) an undefined modification to that baseline (what it calls a
“plausible baseline”); and 3) the Fiscal Commission’s baseline.  It
does not provide annual spending and revenue totals by category, relying
instead on savings relative to three different baselines.  So, it is
unclear what exactly the spending and tax proposals are.

Where Does the Revenue Come From?  It sets a tall order for
tax reform with what appear to be conflicting assumptions: 1) raise $1.2
trillion in revenue; 2) repeal the alternative minimum tax at a cost of
$1.7 trillion; 3) lower tax rates to encourage economic growth (top
rate of no higher than 29%); 4) do not eliminate tax expenditures for
health care, charitable giving, homeownership, retirement, and
low-income workers and families (the largest of the tax expenditures);
5) raise $133 billion in revenue by 2021 for the highway trust fund
without raising gasoline taxes. 

Where Do Health Care Savings Come From?  It claims $117
billion in additional federal health care savings over 10 years by
assuming that health care spending per capita grows no faster than
economic growth (GDP) plus one percent.  The new health care law already
requires the Independent Payment Advisory Board (IPAB) to cut Medicare
spending growth per beneficiary to achieve this growth rate starting in
2020.  CBO currently projects that Medicare spending will stay within
that growth rate through 2021.[2]  Therefore, it is unclear how the savings are derived. 

Also, if there are savings to be achieved, there is no enforcement
mechanism for achieving them since the plan would “require action by
Congress and the President” to limit growth to these levels.  Current
law requires the President to submit a plan and Congress to enact
legislation to make additional savings in Medicare that the President
and Congress have ignored. 

Where are the Missing Mandatory Savings?  The plan lists $516
billion in mandatory savings for Committees to achieve (including
program integrity savings and savings from modifying the CPI), but then
claims $641 billion in mandatory savings, leaving $125 billion in
missing savings.

Pathway or Roadblocks to Social Security Reform?  While the
plan seems to be a well-intentioned effort to move Social Security
reform forward, it sets out procedures that could derail both Social
Security reform and additional spending savings called for in the plan. 
First, it does not allow a Social Security reform bill to proceed until
the Senate has gotten 60 votes to pass additional deficit reduction. 
Second, it blocks the additional deficit reduction bill if the Senate
does not get 60 votes to pass the Social Security bill.

Potential for Promising Reforms

Tax Reform.  It acknowledges the need for tax reform, proposes
a top rate of not more than 29% and as low as 23%.  It calls for the
reduction of the top corporate tax rate to at least 29% and as low as
23%.  It recognizes the current tax code’s complexity and high marginal
tax rates hinders economic and job growth.  It calls for the tax code to
be reformed to move to a territorial system.  It calls for any
unanticipated additional revenues from economic growth to be used to
lower tax rates or deficit reduction, and not used for higher spending. 
While a laudable proposal, it appears to have no mechanism to ensure
this result.   To achieve this objective would require, at a minimum, a
cap on total spending and ideally a cap on revenues as well. 

Spending Caps.  It proposes to reinstate statutory caps on
discretionary spending.  It also sets out a budget reconciliation
process for committees to achieve mandatory spending savings and if
those savings are not achieved, it calls for across-the-board spending

Threshold for Waivers of Spending Limits.  It increases the
number of votes necessary to waive the budget from three-fifths to
two-thirds in the Senate and appears to provide a new requirement that
the House gain two-thirds margin to waive spending limits.

Other Positive Signs:

  • It repeals the CLASS Act, a misguided proposal included in the new health care law.

  • It calls for medical malpractice reform.

  • It calls for reforming the current process for “emergency spending” (though the reforms are unspecified).

View as a PDF here.

In the security category the Gang of Six reduced the security category
by $886 billion.  Department of Defense (DOD) spending comprises
approximately 85% of the security category.  The Gang of Six also
proposes a firewall that requires this $886 billion is cut from security

[2] In his April 13th
budget framework, the President has proposed to require the IPAB to
reduce per beneficiary growth to GDP plus 0.5% of GDP beginning in 2018.

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CPL's picture

Never.   Do your job or fuck off, the bad part is incoming, so get off your ass and move it kid.  Need a hand?


I dont' charge for humanity.  I offer what looks like a mean, smiley prick that will rip the smile off a politician.


This needs to be done fast if you are on the dark side.  Like yesterday fuckwad.

CPL's picture

Call and I have an Anon select to help.  Kids WILL get the fuck out of the way.

CPL's picture

In what universe would you have EVER met me?  Never unless you put it on Merx and I had to roll my eyes at you.


Get your shit in gear jackasses.  Shit to do.  People to save.

CPL's picture

useless civil servants....useless.   Keep tap dancing and that last hour will seem more precious.


make it happen or we'll watch other assholes make "it" happen.  Don't need a director or their kids to watch it happen.


I'm getting the feeling people are now looking...and are being told to fuck off.  That's alright...I and others are moving away from the central target offered.


Keep it easy...enjoy your desk.  btw stop phoning me.  I'm on contract.

Doyle Hargraves's picture

How about the Sierras? Sorry Denver is too far, the Sierras well easy trek with lots of cover!

CPL's picture

It was built and offered five years ago for good reason.   energy is available and water.  Why the sierras?   it's a flat plateau where the residents have to wander for water.

Doyle Hargraves's picture

Well as I said Denver=too far. Too many logistical issues getting people there especially if the insiders already know the deal they will be swarming that place. Eastern Sierras have plenty of water that LA steals every day via aqueduct. Just want to know if it would be a safe place to be if this all happens as advertised? BTW I didn't junk you!

Oh regional Indian's picture

Hah! Vic, anyoen reading that would think I'm a doomer or some such! ;-)


CPL's picture

Done with it.


I've kept my imprint off the web.   I built it, hire a crew and make sure it works.  I'm not sure now.  i don't get my information from anyone but other oldfags.


one Anon in london dead...not the first one.  The second ass.  So.  i might as well gush and disappear without a nym and warn anyone in charge to run as well.  If it goes sunlight and crash bang, this is a months head start.


Somehow i doubt it will change fuck all warning the world.  Just run.  Run away.

Prometheus418's picture

Gotta admit, you sound a little drunk.  That being said, I'm trying to puzzle this out, I recognize the pattern, if not the message.

If any of what you've posted above is legit, I get why you can't provide specifics, but any chance of GPS coordinates with radii of expected clear areas to run to?  Running without a destination doesn't do much good, and I might be set already.  Denver isn't going to happen- I won't be a mole-person, and will have to make do with the rabble.  Doubt that's a door I could open on short notice anyway.

If not, it'll be what it'll be.  I'm locked and loaded as best I can be- probably not enough, but that's life.  Us rednecks are kind of like cockroaches anyhow.  Gotta get some of us clear if we're going to kill them all, right?

Clay Hill's picture

He is drunk, or off his meds,... can't say he's not right though.

Denver... not in the club. The mole thing is do-able, just not on the timeline he's throwing out there. Takes a lot of chutzpah to pull off in secret, too.

good luck fellow cockroach.

CD's picture

While CPL has in the past imbibed-and-posted, there is internal consistency (if more than a little cryptic style).

My ignorant guess is that here he is suggesting that (dot)gov personnel head for said hills, as their presence in the general population will be extremely detrimental to their health and general well-being as a result of the details of this wonderful 'final solution' plan being made public. The chaos/violence likely to emerge in densely populated areas will make it less than attractive for average folks as well, if/when societal order breaks down as a result.

Then again, if said solution is in place and is IMPLEMENTED, all bets are off for everyone.

Getting ample supply of various (heavier) metals and survival necessities has been on the agenda here for a while -- CPL's scenario just suggests a rapid implementation of whatever preps are still possible to make. As it happens, I am going travelling soon -- there are OTHER mountainous areas that can be explored, just in case.

Clay Hill's picture

good luck mountianeering, CD.

Doyle Hargraves's picture

Thats the key if the final solution is implemented all bets are off for everyone...

heavy metals (brass, lead, copper, gold, silver, All terrain emp proof vehicles)-check

secluded, rugged, mountainous area nearby-check

ambush points and game feeding areas set up-check

friends with most of the locals and like minded people in the a/o-check

probably still not enough, but if God is willing maybe we can weather it out.


AgShaman's picture

Maybe there is something to the rumor of a million plus requests for visas (escape pods) for govt. employees in the 'District of Corruption' as of late.

Who really cares anyhow?

These traitors deserve the guillotine.


Doyle Hargraves's picture

 Pattern is there message is garbled at best. Denver would be an idiot's idea to begin with. I am not on that A list. Sounds too crazy of ramblings not not to be legit. GPS coordinates with radii would be nice, but mountains shield from blast and fallout if the nukes are gonna fly. So if ya got some of the hightops around might be time for an end of the month vacation. Just hope you got some non solid state way to get around because EMP will make it impossible after that. Good luck y'all!

PY-129-20's picture

17 July 1944
Feldmarschall Rommel injured.

20 July 1944
Operation Walkuere - assassination attempt on Hitler

21 July 1944
Battle of Guam starts.

23 July 1944
The first KZ (concentration camp) is captured by the Red Army; Germans hastily evacuated everything and weren't able to destroy the evidence.

31 July
The tank battle of Avranches; Exupéry never returns from a reconnaissance flight.

The delegates deliberated upon and signed the Bretton Woods Agreements during the first three weeks of July 1944. (according to Wiki: "July 22 – The Bretton Woods Conference ends with various agreements signed." - )

mayhem_korner's picture

Nice of him to throw in some commendations.  The true read is he's called it a hollow vessel.

I'm beginning to think that the longer this thing bakes in the Congressional oven, the uglier it's going to be when it hatches.

Cheesy Bastard's picture

 Strong, sweet tea

slaughterer's picture

These government leaders have no education in fiscal economics. Why is this deficit cutting "plan" being put together by them?

Long-John-Silver's picture

I'll actually be relieved when we awaken to the collapse so we can start over. RESET Bitchez!

cossack55's picture

You know, LJS, many of us here state that weekly.  Many of us here are growing very impatient, but the show must continue till the fat lady sings.  Anyone seen Kate Smith lately.

Ghordius's picture

Note: territoriality of US Code, while very civilized (only Uncle Sam and the German Finance minister tax you wherever you are), could result in a massive exodus of highest income individuals out of the US...

Timmay's picture

The more complicated the "solution" the deeper the problem will be. Not increasing the debt ceiling IS the solution, it balances the budget immediately. Simple.

Default? Let's do it. It is going to happen someday, why not today? Screw all of these politicians, all of them. Spend what you take in taxes and let's see what kind of country we have. My bet it that it is a better one where people actually have a clue about what is going on because they PAY FOR IT every stinking day.

web bot's picture

Obama is a teleprompter and an academic.

He's never held a real job in his life. His lens of the world focuses on speeches and lots of privilege... something they give you at Harvard. We have an impractical idiot running the country.

mayhem_korner's picture

Obama is a teleprompter and an academic.

+1.  He has a PhD in advanced teleprompter studies with a minor in sock puppetry.  Says so on his ivy league transcript.

slaughterer's picture

Going to take more than two all-nighters to get this plan into shape.  We are going to default.  I am 99% sure of it.  

CPL's picture

Doesn't matter if you blow up the bank

sAusAge stroker's picture

CPL, not trying to be mean, but you seem hammered compared to posts in threads 1,2,3 weeks ago.  Normally I agree with your sentiment, but I have no idea what you're talking about. - sAusAge

Quixote's picture

Thought the same thing . . . your thread made some sense to me, but a lot of it didn't, then, today, this . . . "A group of computer hackers claims to have breached NATO security and accessed hordes of restricted material" . . . and CPL's narrative just got a bit scarier.  

Ghordius's picture

My money is on non- default. 99% sure, too.
Do you know how difficult it is for me dumb non-US resident to tell the presidents apart? Even with what the Italians call "nice built-in suntan?
Reagan did it, Obama will do it. The ceiling is made of paper.

Sudden Debt's picture

They'll break it like all the other times in the past.

Question is if they'll put in a new one or not.

Will it be raised with 4 trillion or more.

How high will QE3 and 4 be.

Will QE4 require another increase in the debt ceiling



JustPrintMoreDuh's picture

The debt ceiling will be raised, unless its not. 99% certain.

max2205's picture

Easy. Freeze medical to hmos and Drs Cut defense. Eliminate TSA. CUT CUT CUT

AssFire's picture

Raise my taxes, I can still work less.

Ghordius's picture

This little "from 23% to 29%" is soooooo near to a simple flat tax...

slaughterer's picture

Easy.  Sell Exxon and Apple to the Chinese.  

firefighter302's picture

Outstanding conclusions.

The "plan" is nothing but more illusions of cuts in the form of actual increased spending and taxation. 

Same old Socialist Obama and democrats.  More spending, more taxes and lies to hide the real effects of the policy. Which are debilitating debt and a climate of retarding business and jobs creation.

The taxation games to continue down the exact same path of spending and increasing debt and taxation is being exposed for what it is.  The exact path that got us to this point!

The same failures Obama, Reid, Pilosi and the Keynesian socialists have always supported. 

sodbuster's picture

The heck with the details- the Black Jesus and his Marxist buddies will let you know the details in about 6 months to a year.


MillionDollarBonus_'s picture

Many of the world's top economists, including Nobel Laureates Paul Krugman and Joseph Stiglitz have warned that cutting government spending could seriously de-rail the global economy. What these immature libertarians don't realise is that the economy is lacking aggregate demand. The ONLY way out of this is to keep pumping the system with liquidity so that people start SPENDING again. I can only hope that these silly libertarians wake up before they destroy the entire world economy. 

Clay Hill's picture

You can evade auto-junking by including a *sarc* when you post excellently satyrical commentary like that.

If you really mean it...

web bot's picture

Anytime you mention the name of Krugman, you need to include <sarc>...

If you look up his name in the ZeroHEdge dictionary, it means some not very nice stuff that I can't put down in words...

Anytime the name Krugman appears... the brain automatically shuts down into sleep mode.

CrashisOptimistic's picture

Paul Ryan understands the budget.

But he needs to take the final step out of the darkside of politics and recognize that:


The deficit doesn't matter.  Tax increases don't matter.

NOTHING MATTERS BEYOND FY2012 SPENDING CUTS.  Everything else is measured from growth curves based on imagination.

We increased spending 1 Trillion dollars in 2009.  In just 1 year.  No one said it would be the end of the world.  But if you say cut FY2012 just 400 Billion you'll have hands waving over heads about end of the world stuff.

They are wrong.  CUT FY2012 SPENDING.  PERIOD.  If cubicles do not empty, you did not cut.

cdskiller's picture

I stopped reading after "Paul Ryan understands the budget."

Paul Ryan doesn't even understand the words that come out of his mouth.

RKDS's picture

Ain't that the truth.

Not a single solitary cent will be shaved from any program that's really squandering our tax money.  He'll just "reform" away all of the stuff middle class taxpayers benefit from.  All so he can hand even more money to foreigners, the wealthy, and other generational dependants.

JLee2027's picture

Default appears to be inescapable. Thank God.


Libertarians for Prosperity's picture

Thank God?

If the United States defaults, why do you think the consequences will be so favorable?  Do you think about how the dominos fall, or do you just puke up libertarian talking points without having the slightest clue of the consequences?