The Last Word | January 25, 2013
>> week in the world of politics, we had the inauguration, of course, followed by house republicans stepping back from the brink on the debt ceiling. but the big political story of the week got very little attention until tonight.
>> we're going to show the country here is an alternative path to the one that the president has us on.
>> the republican party 's big plan for renewal.
>> we're committed to producing a budget , a plan that will balance the budget in the next ten years.
>> balance the budget in ten years, ten years, that will be hard sledding. paul ryan 's didn't balance until 2040 .
>> we get closer to the sequester.
>> the sequester.
>> the sequester is coming? these automatic spending cuts.
>> it is painful and hard to sell.
>> the sequester is coming, we don't think we should ignore this.
>> what do you think the party must do better.
>> we have to stop being the stupid party.
>> stupid is as stupid does.
>> change the electoral college .
>> the new plan for electoral votes .
>> those who don't learn from history are doomed to repeat it.
>> we must compete in every state.
>> this republican plan would divide them up by congressional districts .
>> that is how we'll achieve republican renewal.
>> they're not giving up.
>> they're about as popular as lice.
>> stupid is as stupid does.
>> what do you think the party must do better?
>> what they say is no all the time.
>> we all voted no.
>> empire strikes back, was the best one.
>> the republican party made an incredibly important promise this week. it is a promise i cannot believe that they made. the first time i heard about this promise was actually in an article i was editing. and when i read the article, what the republicans said they were going to do i actually sent the article back to the writer and said this is wrong. you have to correct it before we can publish. and by the way, i want to say here on television, i'm sorry, susie, you're totally right. what the article said the republicans promised and in fact they did promise was they would release a budget , in the coming weeks. they would balance it in ten years.
>> it is time for us to come to a plan that will in fact balance the budget over the next ten years. it is our commitment to the american people .
>> that probably doesn't sound like a big deal , balancing the budget , households do it all the time, let me rephrase it for you. the republicans promised to release a budget that makes paul ryan 's previous budget look like squishy socialism. right now, the one that priaul ryan put together would not be what you call a centrist document. you want to know what it balances? 25 years from now, in 25 years i'm going to look something like that. that is how long paul ryan 's most recent budget takes to get to a balanced budget . i become an old person. it will take until 2038 , because balancing the budget while the country is getting older and while you won't raise taxes is really hard. to do it you have to embrace some really ugly policies, so to understand the trap, what they're about to tell the american people they're going to do you need to quickly understand what is in ryan 's original budget . he didn't balance until 2038 . so i made a graph for you. i want to be clear away they are. they're the numbers that paul ryan himself gave the congressional budget office . they are his own vision of his plan. they're what happens if everything goes exactly how he wants it to. and so what you're seeing here is the definition between paul ryan 's most recent budget and the law as it is currently read. and it is two different things, ten years from now. this gives you a very clear idea up until now of what ryan has been cutting. first, people tend to think that ryan 's budget is about medicare . but that is not where he gets savings, at least in the first ten years. it is only about half of gdp , or 10% of his cuts. then, he doesn't touch medicare at all. then there is this category of health care , which is mostly health care for poor people , medicaid , obama care, things like that. and now you begin to get into bigger numbers, ryan gets 1.5% of gdp , or more than three times of what he saves in medicare , but cutting mostly health care on poor people , about 10% of total savings. then there is everything else, food, education, infrastructure, everything else the federal government does. ryan doesn't really say exactly which programs he is really cutting here. but it is where he is cutting. he gets four and a half times this budget as he does from medicare . it is about half the total cuts and it is a huge cut. we don't know the programs that will get the axe, but he has given us enough detail on it, to say that about two thirds of ryan 's budget cuts comes from programs for the poor. but that is quite a bit. and he is still not balancing the budget until 2038 . so how is ryan going to take the budget , which is already pretty rough and has pretty unpopular policies in it and get it to balance in ten years as opposed to 30? ironically, one thing that actually helps him a lot is the fiscal cliff deal, baecause it actually raises taxes. here is his explanation.
>> all right, can you get to balance in ten years and not raise revenues?
>> yes, yes, the revenue baseline is obviously higher now that we have this cliff behind us.
>> i want you to listen to that again. they asked paul ryan , he asks paul ryan , can you balance the budget in ten years? and paul ryan says yeah, we're much better off now because we raised taxes. listen.
>> all right, can you get to balance in ten years, and not raise revenues?
>> yes, yeah, the baseline, the revenue baseline is obviously higher now that we have this cliff behind us.
>> well, would you look at that? raising taxes does help you balance the budget . who knew? perhaps the republicans could take this insight further, but they're not. ryan says no more revenue increases at all. and so what is ryan going to do beyond the tax increases democrats forced on republicans , how will he get that budget balanced? he won't say.
>> going back to the math question, you said that the reforms to medicare wouldn't apply to -- to people who are say, 55 or older. but -- as some members have suggested, wouldn't it be necessary in order to balance the budget in ten years to make those reforms applicable to people who are say six, seven, eight years into the program?
>> you know, i am just not going to get into that. i haven't sat down with the committee members, i don't even have a baseline. it would be premature to comment on where i'm going to go.
>> gotten the base stick -- wouldn't that be a logical --
>> i'm just not going to get into it. it would be premature.
>> it would be premature. it is not premature to say where the budget is going to be balanced, of course. but premature to say how we'll get there yet. mr. ryan will tell us soon enough. we can get the lay of the land , in 2023 , to get it balanced, even after all the new taxes, ryan needs an $800 billion in that cut alone, that is trillions over the next ten years. he ruled out tax increases. house republicans don't want to cut defense spending , in fact, in the romney campaign they wanted to raise it quite a bit. in theory, you shouldn't cut medicare for anybody retiring in the next ten years, so you can't get cuts there if you stick to that. the whole budget , it is only about a trillion and a half dollars. that is all of our spending on the poor and education, and skills training and research, everything else we're doing, it is about a trillion and a half. and ryan needs $800 billion. is ryan really going to cut all that by half, by more than half? that would be the most unpopular budget in history, it would be a disaster. or would the republican party change their promises and cut into medicaid or social security in the next ten years? this is what they have backed themselves into, these choices. there is a reason why ryan , who is really a conservative guy, who is trying to create a budget , that was a genuinely conservative guy, if you're not raising taxes you can't do it in a reasonable way. there is a reason he is having to do it now. it was a price house conservatives demanded for delaying the debt ceiling just by three months. so this is a deal that republicans made with their members just this week, a deal that will define our budget arguments over the next week. they made this deal, if you don't force us into a politically disastrous showdown, we'll do it with an equally disastrous budget deal. i don't understand what is happening in the republican party right now, but it is not good for them. joining me now, robert greenstein , a man who always understands exactly what is happening. bob, good to see you.
>> good to see you, ezra.
>> so i guess my question is how, how do you make the budget balance in ten years, and keep to all of these different promises? do you know budget -- you know budgets better than anybody i know, so how?
>> so there are three things to start with, and you have already mentioned perhaps the most important. he will take advantage of the revenue increases from the fiscal cliff deal. the second thing is since ryan issued his budget a year ago, the congressional budget office who does the forecast of what the deficit will be, that you have to shrink to get to balance, cbo has changed its forecast. it is more optimistic. it now forecasts $750 billion less in deficits over ten years, with no changes in policy than it did a year ago. so ryan is going to take advantage of the fact that the amount by which you have to shrink the deficit to get to balance is smaller than it looked like a year ago. the third one is interesting. remember, ezra, in ryan 's budget a year ago he took credit for all the savings in medicare that are in the affordable care act , then he and romney disowned them. i bet they're right back in budget like they were last year. he will do all of those things, and then on top of them he will have huge cuts in, as you said, the part of the budget that is everything other than defense and everything other than entitlement programs , where education and environmental protection and food safety is. and the advantage for him there is he just lowers the total dollar amount for that part of the budget . and he does not have to identify a single specific program he would cut. and as you also suggested, i think he will have huge cuts in areas like medicaid , health care for the poor, food stamps and he does that by converting the programs to block grants and just giving states lots less money. and the states have to be the bad guys, ryan doesn't have to say which people lose the benefits and go hungry or become uninsured. so it will be an exercise in huge vagueness that will be very difficult for people like you or me to say that a certain individual would lose this benefit or have their income fall by that amount. it will just be one thing where everything is vague, but on paper the numbers make it look like it is balanced.
>> so let me ask you something, when people hear it is going to be a balanced budget in ten years, well, of course, why is it even taking ten years? they balance budgets all the time. we actually don't need to balance the budget . because of growth in this nation, we can manage small buffets, 1%, 2% of gdp , going forward, tending to be what we did in the last 20 or 30 years. but i would like to hear you on this, do we need a balanced budget ? and certainly any time soon?
>> well, it would be a mistake to have one real soon . because that could put us back in a recession. it would pull too much demand out of the economy. for the long-term when people say correctly, we have a serious, long-term fiscal problem, the cause of the problem is that if we don't do anything the debt will rise faster than the economy grows. and ultimately we'll have to pay so much in interest payments, we're in big trouble . but what we need to do to prevent that is to keep the debt stable. to keep it from rising faster than the economy grows. and to do that you need deficits below about 3 or maybe 2 and a half percent of the gross domestic product each year. you don't need the deficits at zero. you don't need the balance. and in fact, the difference between a small deficit to 2, 2 and a half percent of gdp , if the difference was if you shorted funding for education and highways and roads and bridges and basic scientific research , you would probably have a smaller economy in the long run, not a bigger one. because you would have starved the very kind of investments you need to fuel long-term productivity increases and growth in the economy.
>> all right, this is a crucial point that you can -- by cutting too much now and not making investments in your future you can actually hurt long-term growth and make long-term deficits higher. bob greenstein , always good to see you.
>> my pleasure.
>>> john boehner says president obama is trying to annihilate the republican party . but up next, i'll explain why the gop is kind of doing a good job of it itself. and on that path, some republicans are trying to gerrymander it. some are saying we can't change the rules of the presidential election just because we lost one. meanwhile, threatening to filibuster, a deal was reached. others say it doesn't reform anything.
>>> and crazy things happening in washington, we'll let you weigh in on the scandal of