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Ryan Plan –“Kick it down the road”

Bruce Krasting's picture




 
On his way to a presidential bid congressman Paul Ryan came forward with
a blockbuster budget. The suggestion is that we can trim (get this)
$6.2 Trillion out of future budgets. The result of this will be that we
get back to long-term fiscal balance. Gosh that sounds good! Actually it's bullshit.
We will never see the savings that Mr. Ryan has projected. We will
(economically) die first. The Ryan plan just kicks the can down the road
for a decade.

Consider the analysis done last night by the CBO (See this article at Zero Hedge) on the Ryan proposals. I want to focus on just the next ten years.

Compare the CBO Baseline to Ryan's plan out to 2022. Note that there is a
reduction of both expenses and income. Ryan wants a smaller government
and that would be most welcome. But the results don’t look so hot. Under the Ryan plan Debt Held by the Public would be larger than it is today as a percentage of GDP. It would be even larger than the CBOs baseline assumption. What’s so conservative about that outcome?

If adopted the Ryan plan would reduce the deficit as a percent of GDP
over the next decade. The CBO thinks we will be at 2 ¾% in ten-years.
Ryan gets that down to a mere 2%. That would be great. But it is not
going to happen. Mr. Ryan relies on a forecast for economic activity
that is simply off the charts. For example, his 2021 unemployment rate is assumed to be only 2.8%. That’s ridiculous.

So how does the Ryan plan do all of that good stuff and achieve those trillions in savings? Easy.
The plan makes dramatic changes in a number of critical programs
(primarily Medicare). Many of those big changes happen far away in 2022.
Some line items:

Starting in 2022, the age of eligibility for Medicare would increase by two months per year until it reached 67 in 2033.

People who turn 65 in 2022 or later years and Disability Insurance beneficiaries who become eligible for Medicare in 2022 or later would not……..

Beginning in 2022, the federal government would establish a medical savings account (MSA) for certain beneficiaries with low income.

People covered under traditional Medicare would, beginning in 2022, have the option of switching to the premium support system.


Starting in 2022, Medicaid block grant payments would be reduced to exclude projected spending for acute care services.

In the Ryan plan all of the “hard stuff” happens ten years from now. I
don’t really know if the proposals that would kick in then
would work or not. I suspect that they would make a difference. But, who cares? Under the Ryan plan we won’t survive for another decade. There will be a monetary and fiscal crisis that occurs well before ten years. Sorry Paul, nice effort, but we can’t wait as long as you seem to think.

 

 

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Wed, 04/06/2011 - 16:19 | 1142565 PLove
PLove's picture

Tea Party Patriots went to Washington to repeal

Obamacare, cut taxes, and support  the Constitution.   

We don't do unions.

 

Ryan's Budget would preserve the patient-doctor

relationship and cut taxes. 

 

And 40% of doctors, who would retire under

Obamacare, will stay in the doctor business.

 

 

Wed, 04/06/2011 - 12:11 | 1141326 Geoff-UK
Geoff-UK's picture

Ron Paul should be president, but won't ever make it.

 

Paul Ryan is the best candidate we can hope for that has a chance of winning.  Which means we're fooked.  Cover your balls and get out of the US Dollar.

Wed, 04/06/2011 - 12:21 | 1141378 Rogerwilco
Rogerwilco's picture

Obama will have a billion dollars to play with and only needs to convince 35% to vote for him.

Ryan has didly-squat in his war chest and needs 50% of the vote.

Gee, I wonder who will win?

Wed, 04/06/2011 - 15:53 | 1142450 DosZap
DosZap's picture

The minions of destruction.

Wed, 04/06/2011 - 12:09 | 1141316 geno-econ
geno-econ's picture

We need a Medicare and Medicaid Czar beholding to no one to go after  massive abuse in entire system from MDs to insurance firms to wheelchair pushers to hospital bill padders to pharmaceutical companies to diagnostic firms to Federal/State grants.  Entire system full of fraud and those involved know it well. Savings could be over 50% but unemployment would no doubt go up significantly in our new service economy model dependant on fiscal debt expansion.  

Wed, 04/06/2011 - 15:52 | 1142441 DosZap
DosZap's picture

Before we even start talking a CZAR w/ absolute say over the programs.( no one person can tackle this, and IF we could get this done, it would have to be totally OUT of the reach of the Gestapo.(good luck)

I say first the BEAST that is D.C., that pays more, more Bennie's, and play hell ever getting fired for life jobbers,and the useless Agencies they work for mare first on the Block for The Axe.

Then we move to an Independent panel, to look and negotiate deals w/ the Pharmas, and Health Insurance Co's.

After we find out the reason why it cost $2k for a root canal and a crown, in India by certified US Approved boards(meaning their stds are like ours), and it cost $200.00.

Then we may be onto something.

Heart ByPass, best Dr's, and hospitals, $2-$5k.

Hip replacement state of the art, $10k,instead of $50k+Dr's part.

ICU patients get one on one care 24/7.

Major surgeries get a small cottage, or fairly large area, where they are served, and meals cooked and cared for until healed.

All for under $20k.

Somethings broken, and #1 on my list is Big Pharma is making, has been ,making the US citizens pay for 90% of all R & D.

Get a scrip here, costs $76.00, Mexico, $20.00, Canada, $35.00..........

We have been taken to the cleaners for my whole life.And we never had a reason to bitch, as long as the jobs were there, and a decent wage was earned.

Well, No Mas.

Wed, 04/06/2011 - 12:06 | 1141296 aerial view
aerial view's picture

The major cuts start in 10 years  and are all based on PROJECTIONS. Please tell me when any projections 10 years out used by govt have been accurate. Mr. Ryan like the rest of the poli-actors in Washington are also very good POKER PLAYERS! When the final agreement turns out to be $40 billion or so, will we all feel like something meaningful was actually done? Isn't that equal to about a week's worth of POMOS?!

Wed, 04/06/2011 - 11:48 | 1141212 alexwest
alexwest's picture

++++++++=
04-06 11:37: Obama administration says IRS would shut down if budget not passed
+++++++++

who would object to that? :)))))))
alx

Wed, 04/06/2011 - 13:44 | 1141820 DosZap
DosZap's picture

Washington ALL OF IT shutting down would be damn skippy for me.We do not need any more destruction.

We have enough to last several lifetimes now.

Owhamba can go play Golf, and Vacation till the end of his term as the worst POTUS ever to have been elected.

Fascists, were never meant to be Presidents of America.

Wed, 04/06/2011 - 11:50 | 1141207 naiverealist
naiverealist's picture

Nothing in this controls the gorilla in the room, costs.  Both parties are still protecting their campaign/retirement funds from health/pharm corporations.  For example, where has either party rescinded the law making it illegal for the government to negotiate prices paid for drugs?  Neither party wants to do this, and as such are taking care of the obscene profits from the lobbyists organizations while continuing to twist the knife in the back of taxpayers.  Send a letter to your reps and senators asking when this little caveat is going to be rescinded and listen to the BS.  I have, and it is disgusting.

Wed, 04/06/2011 - 11:49 | 1141167 ebworthen
ebworthen's picture

 

We are way past the point where any politician of any persuasion can do anything.

The noise, the whoosh of hot air, the stench emitting from Washington is simply the spittle laden protestations of a dying polity and the dreams and hard work of generations.

Only maggots, crows, and hyenas will solve this problem - it is beyond the ability of government.

 

Wed, 04/06/2011 - 11:39 | 1141161 Downtoolong
Downtoolong's picture

Two things I’m sure of:

1)      We’re all going to die one day.

2)      There isn’t enough money in the entire world for every U.S. citizen to get the same amount of health care that Ted Kennedy got just before he died.

The implicit myth in all discussions of health care that I hear, government sponsored or private, is that number 2 can be overcome, i.e., we are all entitled to and can receive the best available, state of the art health care whenever we need it. That’s impossible. We can argue where to draw the line, but, there is no escaping that a line will be drawn somehow.

Wed, 04/06/2011 - 11:31 | 1141106 web bot
web bot's picture

.

Wed, 04/06/2011 - 11:27 | 1141072 TaxEstate
TaxEstate's picture

I couldn't make it past the 1st sentence without raising an eyebrow: On his way to a presidential bid congressman Paul Ryan came forward with a blockbuster budget. Ryan has absolutely no aspirations to run for President in 2012. None. He has two young children and has stated that he doesn't want to put his family through a Presidential campaign. He's from my district in WI, and I can assure you he won't be a Presidential candidate in 2012.

As for: "his 2021 unemployment rate is assumed to be only 2.8%"

Umm, where is that cited?

I don't recall, but were you as critical of ObumsterCare's backloading of benefits? 

Lastly, based on numbers between NOW and 2022, would you rather have Ryan's budget proposal, or Obummer's? Hmmm?

Wed, 04/06/2011 - 11:16 | 1140987 alien-IQ
alien-IQ's picture

Bruce...I think you've missed the genius of his plan. A plan that would not even kick in for 10 years is perfect for him. ESPECIALLY if the plan would, once it kicks in, be a total failure. Let me explain why:

If he can get idiots now to believe his plan will work "sometime in the future"...then he increases his chances of being elected President now. Winning the next election and then being reelected would finish his second term right in time for his plan to "begin to work". However, when the plan fails to work, he will happily explain to everyone how it would have worked were it not for (fill in the blank)...of course, this explanation will not come for free...there will be a speaking fee...which should fetch him an easy six digit payday for about 45 minutes of bullshit.

Let's face it...It's fuckin brilliant!

Wed, 04/06/2011 - 14:45 | 1142081 flattrader
flattrader's picture

Ryan is bought and paid for.

http://www.bloomberg.com/news/2011-04-06/ryan-s-budget-proposal-would-ai...

President, senator, whatever...He will continue to be a compliant whore for his Johns,

Wed, 04/06/2011 - 13:37 | 1141618 DosZap
DosZap's picture

Let's face it...It's fuckin brilliant!

Owbamba has done it, and is going to use the same strategy again, why not Ryan.

Wed, 04/06/2011 - 11:09 | 1140925 alexwest
alexwest's picture

++++++
IMF says US housing finance guarantee should be "fully accounted for" on governments balance sheets
+++++

so 6+ trln of debt more..

i'd start calling IMF financial terrorists organisation.. just an opinion

alx

Wed, 04/06/2011 - 11:25 | 1141056 Dr. No
Dr. No's picture

The are waiting for the debt ceiling to be raised.  Why commit a super-duper felony (a reg felony is >$1000 or so I think) when you can just wait a few weeks for them to change the law.  THe new debt ceiling will have room for the GSE's.

Wed, 04/06/2011 - 11:07 | 1140916 ZackAttack
ZackAttack's picture

And where's the F-35 in this plan? There's $290b back.

What about the DHS and its $45-going-to-60 billion budget that has produced all of two arrests?

And what about those two; no, three; no, four wars we have going on at a billion a week, all full of sound and fury yet accomplishing nothing?

How about shutting down the GSEs, putting back every bad piece of mortgage paper back onto the banks? There's another $400b over the next 5 years?

There you go. I've found almost $2 trillion in savings and the only people it pisses off are defense contractors and bankers, and, well, we're going to start hanging those fuckers anyway soon.  

Wed, 04/06/2011 - 11:06 | 1140915 web bot
web bot's picture

Bruce,

I disagree with you on this. Even if a plan says we will have zero defict in 10 years and there is a plan... it establishes a boundary that the market can at least price in. Today, there is no plan... there is no bottom... it is a black hole.

I agree with you that we're screwed... but I give Ryan credit for showing some leadership.

Wed, 04/06/2011 - 11:39 | 1141146 TaxEstate
TaxEstate's picture

The very first, most basic, common sense thing we need to do is means-test for SS and Medicare. I don't know what the figure should be, but anyone in the top 2% of income incomes, OR top 2% in ASSETS in this country ought to be cut off from SS and Medicare, IMHO. Warren Buffett, Bill Gates, and Donald Trump don't need government help. Period. 

Wed, 04/06/2011 - 11:03 | 1140877 ZackAttack
ZackAttack's picture

If you read the very top line of the projections, you'll note that the numbers are credited to The Heritage Foundation.

 

While noteworthy in many respects, this erstwhile and august institution is not noted for its mathematical prowess.

Wed, 04/06/2011 - 11:10 | 1140950 RichardENixon
RichardENixon's picture

When was The Heritage Foundation shut down?

Wed, 04/06/2011 - 10:53 | 1140838 Shameful
Shameful's picture

Oh course the plan is in the future.  Since when has a politician argued to take pain now?  Better to present a plan that cannot and will not be implemented in some unknown future to score a few PR points in the present.  Nothing more then a publicity stunt.  Paul Ryan might as well went on TV and partied with Snookie.

Wed, 04/06/2011 - 10:59 | 1140865 Vandelay
Vandelay's picture

Snookie would be a better budget chairman.

Wed, 04/06/2011 - 10:54 | 1140836 Rogerwilco
Rogerwilco's picture

The obvious answer is staring us in the face. Bernanke is going to pull the plug and crash everything. In weeks, the EU, BRICs, etc., are all on their ass in flames. Commodity prices reset to sustainable levels. Is it ugly here in the U.S.? Yes, but not unlike the situation after WWII. Enter Obama to save the day waltzing his way to a second term. Nothing beats a good-ol' national emergency to bring up those poll numbers and provide cover for eliminating his adversaries.

Like a good stunt man, the Fed thinks they can finesse the fall and limit the damage. We'll see soon enough.

Wed, 04/06/2011 - 10:48 | 1140811 RagnarDanneskjold
RagnarDanneskjold's picture

Why not raise it to 67 now, for people aged 60, and start hiking it up to 70 for everyone else, and then index it to life expectancy?

Wed, 04/06/2011 - 13:04 | 1141578 DosZap
DosZap's picture

Rag, what do these people live on now?, no jobs, no insurance.

Talk about Hell,why not just screw them all, and steal the rest of what the govt stole.

If the Gv't can loan billions, upon billion s to Foreign Banks, where most of  the QE $ went, then the least they can do is use THESE folks money(remember it's not an entitlement, if you paid into the program all your life).

If it's a Entitlement it's because they paid, and they ARE Entitled to it.

Move the timeline till their sick as hell, and a couple of years away from death.It's very easy to PUSH other folks off a cliff, unless your a MEMBER of that group.

That will solve it all, meanwhile,WHO takes care of their needs?.

Personally, they can write me a check for what I put in for 35yrs. And we'll call it even.

Wed, 04/06/2011 - 10:58 | 1140859 Vandelay
Vandelay's picture

Because 60 year olds still vote and they will mostly be dead by 2022.  Why not just raise it to 67 today?  If you are 66 tough S.

Wed, 04/06/2011 - 10:44 | 1140782 Missing_Link
Missing_Link's picture

For fuck's sake, Bruce.  Are you really going to criticize Ryan's plan for not cutting enough?

Even getting this baby through DC is going to be a Herculean task.  At least recognize that keeping the debt from exploding for ten years would be doing America an enormous favor.

Look: debt is the ring of Sauron.

Paul Ryan is Frodo Baggings, the Ringbearer.

He may not be much, but he's the only hope we've got, and we need to support him.

Wed, 04/06/2011 - 16:35 | 1142630 Shell Game
Shell Game's picture

For fuck's sake, Link.  It is high time to stop opting for the lesser evil, for the 'better than nothing' mentality.  We may have one chance coming and we have to nail it.  For fuck's sake...

Wed, 04/06/2011 - 11:08 | 1140938 Bruce Krasting
Bruce Krasting's picture

I'd like to. I think he is one a few that makes any sense at all. But look at the plan. It does next to nothing for the next decade. That will not work in my opinion.

Wed, 04/06/2011 - 12:14 | 1141349 Bob Sacamano
Bob Sacamano's picture

If the conservatives propose a plan that does not work because it does too little / too late, the liberals unanimous abject condemnation of the plan is worse yet. 

Think the liberals will come up with a more aggressive plan in 2011 or 2012??  Not a chance. 

 

Wed, 04/06/2011 - 11:38 | 1141155 3.7.77
3.7.77's picture

Agreed. Anyone know why he is proposing these changes 10 yrs down the road and not now? My guess is he figures it is political suicide to do it now. This proposal may be a step in the right direction but we need bold leadership now.

Wed, 04/06/2011 - 11:38 | 1141151 Gordon Freeman
Gordon Freeman's picture

You're backpedaling, and you know it.  The whole thrust of your essay is to slag Ryan for even trying.  What would you prefer?  The Administration's plan??

Wed, 04/06/2011 - 21:29 | 1143677 Bruce Krasting
Bruce Krasting's picture

I hate all the plans. I don't think the administration has a plan. The current "plan" is the one the CBO refers to as the Baseline. Call that the administrations plan. Look at the raw results from the table. There is no defict reduction in the early years of this 40 year plan.

I like Ryan. But we have to focus on the next five years or so. No one has their eye on that ball.

Wed, 04/06/2011 - 11:43 | 1141172 3.7.77
3.7.77's picture

Wow, open your eyes.

Do you really think we can continue this farce for another 10 yrs?

Wed, 04/06/2011 - 11:03 | 1140881 Dr. No
Dr. No's picture

And unfortunatly for us, the hearts of men are easily corrupted.

Wed, 04/06/2011 - 10:40 | 1140749 alexwest
alexwest's picture

each time when i read debt/gdp I scream..

hey suckers like CBO, mr Ryan, mr kasting etc
stop fucking make predictions what GDP is gonna be in 5,10 20 years..

IF YOU WOULD KNEW, YOU WOULD STOP BLUBBERING FOR FREE HERE ,AND INSTEAD YOU WOULD BE MAKING BILLIONS RUNNING MONEY...

nobody knows that..

only way to compare debt is using us goverment revenues.. nobody pays debt from GDP,, only from gov revenues..

so right metrics is debt/gov revenues, debt_sevicing/goverment revenues..

why I harping on that ? cause according BEA/NBER GDP grew all time from 2000..

problem is that fed income taxes (AKA biggest part of gov revenues) are less than in 2000, and if you see the chart its basically flat for last 10 yers.

GDP IS FAKE.. ITS NOT REAL MONEY.. GOV REVENUES IS REAL..
ALX

ps
i hope its not too hard to understand for readers here..

Wed, 04/06/2011 - 10:42 | 1140746 AN0NYM0US
AN0NYM0US's picture

a neocon perspective on Ryan's numbers

Ryan’s Rosy Job Numbers: Fact or Fantasy?

http://www.frumforum.com/ryans-rosy-job-numbers-fact-or-fantasy

Wed, 04/06/2011 - 10:38 | 1140726 lieutenantjohnchard
lieutenantjohnchard's picture

my thoughts too upon digging into the numbers a bit.

Wed, 04/06/2011 - 10:39 | 1140720 Bicycle Repairman
Bicycle Repairman's picture

They might as well say that any adjustments will be completely ad hoc i.e. informal rationing and death panels.

The insurance/health care oligarchy must be reformed for the sake of the entire economy.

Wed, 04/06/2011 - 10:38 | 1140718 dexter_morgan
dexter_morgan's picture

So, plan B is...........

Wed, 04/06/2011 - 11:57 | 1141245 DeadFred
DeadFred's picture

Plan B is to make a plan B for when the juggling stops and the balls all hit the floor.  When a ship goes down the difference between an unpleasant time and a complete catastrophe is whether someone has a good plan for getting people to the lifeboats (and that there are lifeboats to go to).  This ship is listing and looks like the pumps won't hack it.  Plan B is beyond my abilities, what about the rest of you?  Bruce?  You impress me as one of the sharpest minds on this site.  And as much as one can tell from writing alone you seem to have a good heart.  A few good ideas at the right time can change the course for a lot of people.  

Wed, 04/06/2011 - 11:24 | 1141035 kaiten
kaiten's picture

QE to infinity and beyond.

Wed, 04/06/2011 - 10:23 | 1140628 Sudden Debt
Sudden Debt's picture

ODISY 2022!

 

Wed, 04/06/2011 - 10:22 | 1140617 Dr. No
Dr. No's picture

Under the Ryan plan Debt Held by the Public

 

By Public, do they mean non foreign central banks?  Then yes, since the Fedral reserve is a private company, I assume it fits within the catagory of "publicly held".

Wed, 04/06/2011 - 10:20 | 1140610 SWRichmond
SWRichmond's picture

All they can do is make promises about some time in the future.  They cannot cut spending because the economy will collapse, and it's apparently not time for that yet.

Use the time they're giving you to prep your little ass off.  Don't overlook PT.

Wed, 04/06/2011 - 10:44 | 1140764 flattrader
flattrader's picture

All the Tea Party fucktards can do is rail against against the obvious to score political points.  Those on Medicare need an opportunity to sit down with their doctor, when they are not sick, debilitated and being admitted to the hospital, to discuss their advanced directives and end of life options so the patient gets the care they want--no more, no less.

How these morons equate this with "Death Panels" is beyond me.  They are insuring that we will have formal government Death Panels for Medicare recipients as they now have in Arizona for Medicaid transplants.  Where is their hue and cry over this BIG GOVERNMENT intursion?

They won't give a crap about pulling the plug on Granny as they claimed in their Summer town hall meeting protests when Granny costs too much.

Yet, they're wholly opposed to letting Granny make up her own mind in a one on one private discussion with her doctor.

If this weren't so pathetically moronic, with dire consequences for patients, their families and the future economic well-being of the nation, it would be slap-ass funny.

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