Ryan Releases Roadmap
Earlier today, Republican Congressman Paul Ryan released his update Roadmap for America's Future (and a nifty Website to go with it). Under this Roadmap, the Congressman proposes major changes to Social Security, Medicare, Medicaid, tax policy, and the budget process, and these changes would lead to significant long-term fiscal improvements. CRFB is quite encouraged to see that several proposals which address the debt situation, including Congressman Ryan's, have come out of Congress recently. As we wrote in a press release, today:
It is no longer sufficient for policymakers to acknowledge that we have a problem... You'd have to be blind not to know that. Now is the time to start proposing real solutions-and it is gratifying to see that a number of policymakers are taking that responsibility seriously."
Ryan's proposal is quite detailed, and even includes a CBO score. From a budgetary perspective, he would limit federal revenues to no greater than 19 percent of GDP (a bit above the historical average), while dramatically slowing spending growth. By 2020, primary (non-interest) spending would be almost 15% below CBO's alternative (="current policy") fiscal scenario; by 2040, it would be 30% below, and by 2080 it would be 60% lower. As a result, he would eliminate the debt entirely by 2080.
Unfortunately, even these significant cuts, alone, will not be enough to prevent the debt from hitting 100 percent of GDP in the early 2040s under his plan. And we worry that such levels of debt, even if brought down in subsequent years, could be quite dangerous.
Then again, it is important to view these numbers in light of the alternative. Under CBO's alternative fiscal scenario, debt would reach 250 percent of GDP by 2043. Even under CBO's unlikely baseline extended(="current law") scenario, the debt will hit 100 percent in the early 2040s (although it will be lower than under Ryan's plan for the first 30 years of implementation).
One option to reduce the still-too-high deficit and debt levels under his plan would be to finance his Social Security individual accounts, at least in part, through new contributions (so-called “add-on accounts"). Another option might be to target revenues to 20 percent of GDP, rather than 19 percent.
Other options aside, Congressman Ryan's plan offers far more detail and specificity than any other plan out there. He deserves credit for having the thoughtfulness and courage to propose such a plan.