Word is getting around that CBO has blessed a major budget reform plan proposed by Representative Paul Ryan (R-WI) as, in the words of National Review Online, “a roadmap to solvency.” It isn’t true.
... All this confusion is due to a letter written on Jan. 27 from CBO director Doug Elmendorf to Ryan. In that 50-page document, CBO suggests the plan could eliminate the deficit in 50 years and, even more impressively, eliminate the debt by 2080.
But, and this caveat is a whopper, CBO assumed this wonderful outcome would occur only if the revenue portion of Ryan’s plan generated 19 percent of GDP in taxes. And there is not the slightest evidence that would happen. Even though Ryan’s plan has a detailed tax component, his staff asked CBO to ignore it. Rather than estimate the true revenue effects of the Ryan plan, CBO simply assumed, as the lawmaker requested, that it would generate revenues of 19 percent of GDP.
... That’s not all. CBO does not actually analyze many of the specifics of Ryan’s plan. Rather it looked only at what Doug called a “highly stylized” version of Ryan’s tax and Medicaid reforms.
Gleckman notes that Paul Ryan and the CBO are assuming a pretty big can opener:
You know the old joke: Two economists are stranded on a desert island with only canned food to eat. But they have no way to open the containers. What do we do,” asks one. “Assume a can opener,” replies the other.
When it comes to Ryan’s plan, CBO has, in effect, assumed the can opener.
Paul Ryan: Not credible.
Cross-posted at Brew City Brawler.