Republican budget tests credulity with balance claim

>>> i have been looking forward to this week two for a very long time. it is my favorite time of year. my favorite week. it's budget week. it's budget week. the beginning of budget season. that time of the year when americans gather together and wear their traditional week garb pocket protectors and things like that. eat their budget week meal and includes an extremely rich dessert. it's budget week. . festivities kick off on the hill tomorrow with the official release of the house republican budget . the following day, wednesday, senate democrats will celebrate budget week by releasing their budget . there will be dueling budget proposals. appendix tables. what is not to love? the reason why i've been looking forward to this budget week in particular, this republican budget in particular is this.

>> we're committed to doing a budget and a ten-year plan to solve our budget crisis and to balance our budget . and, frankly, i think it's time for the senate and the white house to produce a budget that will balance over the next ten years.

>> a balanced budget in just a decade. and, of course, the guy in charge of crafting the republicans house budget is paul ryan . congressman ryan is also the chairman of the house budget committee and the reason why it was so exciting to learn the republicans plan to balance the budget in ten years, is because this is way faster than paul ryan 's original deadline for balancing the budget . in congressman ryan 's last plan, we wouldn't have had a balanced budget for 25 years, until almost 2040 . when i learned he plans to do the same thing in a mere ten years, that he has shaved 15 years off that timetable, how? what was he going to cut? what new things would be in his budget ? what sort of cuts were we in for and what did i have to look forward on budget week? today on budget day eve we have learned some details how he plans to do it. it turns out paul ryan is balancing his budget in ten short years, in large part, by letting president obama raise taxes. watch.

>> the plan that you're going to release tuesday would balance the budget in ten years, not 25 years, like your last one. how do you do that? do you have to make even tougher, deeper spending cuts?

>> actually, not really.

>> let's look, congressman, at a couple of the reasons that you don't have it make big changes in this new budget to balance it in ten years. you include the 600 billion dollars as you just mentioned in tax increases that came from raising rates from the fiscal cliff debate. you also include 716 billion dollars in medicare cuts through obama care that you opposed in this last campaign. question. is it fair to say that at least those parts of the president's policies make it easier to balance the budget ?

>> it is fair to say that.

>> it is, indeed, fair to say that. paul ryan on fox news sunday with chris wallace . he went on to say his budget assumes the repeal of obama care and that statement from him that he is going to repeal obama care in his budget got a lot of headlines today and caused fox news anchor to do a bit of a double take in the interview.

>> are you saying that as part of your bug, you would repeal, you assume the repeal of the obama care?

>> yes.

>> well, that's not going to happen.

>> well, we believe it should. that is the point. that is -- this is what budgeting is all about, chris. it's about making tough choices to fix our country's problems.

>> paul ryan , though, he is not actually repealing all of obama care. he is repealing the part that gives people health insurance but keeping as he has in his other budgets the tax increases in obama care and the medicare cuts. those same medicare cuts that he and mitt romney ran against in the election. he repeals the care part and keeps the costing you more money part. when you put all of that together and you add in some tactical stuff about how congress's budget and score keepers have made the underlying estimates a bit optimistic when you put that together mr. ryan won't have to do much at all to balance his budget in ten years. all he has got to do is make peace with a bunch of obama increases in medicare cuts a number of times he and his party have bitterly opposed. that is the irony of ryan 's budget this year. the reason he can get it anywhere balance any time soon is republicans have passed a bunch of policies including tax increases and mmed medicare cuts that ryan 's party have sworn to. it's an interesting take on bipartisanship. i will denounce your policies in public but then i will use them in my plans. but in budget season, the happiest and most surprising time of the year, anything can happen. joining is peter orszag . peter, it's good to have you here. your family must be very excited about budget week.

>> you have your mom here for this great event!

>> indeed.

>> everyone is celebrating.

>> i want to talk to you about the goal here, balancing the budget . this has become a big thing for chairman ryan . what is the -- what is the argument for getting the budget balanced in ten years? i think intuitively we should have a balanced budget but a lot thinking hitting the target is not that important.

>> probably hitting it that soon is probably a mistake. what we want over time is get our fiscal house in order, by which i seen debt is no longer exploding as a share of the economy and that doesn't actually require balancing the budget and doesn't require it over a ten-year window.

>> and what happens? you're saying that if you balance a budget or if you cut the deficit too quickly it can be counterproductive. what do you mean by that? what do you expect to be the consequences of the budget here?

>> well, the problem with cutting the budget too soon when the economy is still weak and unemployment rate is high is that that can exacerbate. we want more stimulus up front and coupled with a lot of deficit reduction phased in gradually over time and gradually put us on a slol path and not the combination we will get from the ryan budget tomorrow.

>> i doubt it is. one of the things i thought was striking in that interview he did with wallace, was when it came to obama care, he said for at least the coverage side of it what he wanted to do is get it out of there. he thought the right policy is not have it there and as such that policy is roo intersecteflected in hi s budget . when asked about the fiscal tax increases he said he didn't want to revisit that. that is settled law. it seems to be an admission the awful things republicans have been saying will happen if we raise any taxes in this economy are not happening, will not happen, at least from this level of tax increase. and actually at this point they are happy to have that extra money in the budget so they can get their budget where they want it to be.

>> i think that's right. although you have to remember, i mean, the ryan budget will have a series of magic asterisks in it. a massive assumption what happens to medicaid spending and medicare and nothing which is going to happen. what they are doing by xeping the revenue is dialing back ever so slightly the size of the magic asterisk.

>> he is a " wall street journal " op-ed out tonight where they talk about it they want a tax reform that brings the it down to two rates only. 10% and 25%. he is not going to say in this budget how. he says forthcoming showing how. that seems to be a very difficult thing to do in a mildly progressive way.

>> it's mathematically possible to bring oun rates for high earners when you move to a rate structure like that without raising rates on low and middle income people if you're going to keep revenue constant. it's just not mathematically possible. so the trick in all of these tax plans is typically that there are some hidden, you know, shell somewhere because you can't accomplish all of the objectives at the same time. either it's a massive revenue loss or increase in revenue from middle and lower income taxpayers period.

>> i want to just ask you about this sequester quickly. we have in the coming months, we have these resolutions to fund the government and stop the government shutdown and after that we have another debt ceiling question coming up in the summer some time. do you think that one of these will actually force some sort of replacement for the sequester or do you think we are actually going to have this policy going forward?

>> i think the level of spending under the sequester may be perpetuated but with reallocation across the categories. even the democrats, be clear, even the democrats are locking into a revenue base that implies pretty steep redeductions in spend in the part of the budget set by 2018 and 20. i think it's hard to make the numbers work even under their approach. it's even worse under the republicans.

>> but it's true there is a substantial shift on the right in the democratic party on taxes in recent years, and i think locked in the fiscal cliff deal.

>> that's correct.

>> peter orszag , thank you for being here.

>> thank you.

>>> coming up next, the ezra klein challenge. sort of two-minute crossfit workout for my brain.