The House Budget Committee on Saturday quietly announced a manager’s amendment to correct some bloopers in Chairman Paul Ryan’s 2012 budget resolution, which the committee approved last week in a party-line vote. Notably, the committee acknowledged that it had overstated the plan’s interest savings substantially: by $48 billion in 2021, according to its press release, and by about $200 billion over ten years. But the committee stated that the savings from a federal pay freeze and civilian workforce reduction — two policies that it said it had planned to include in the budget all along but then accidentally omitted— completely offset the drop in interest savings.
My colleague Jim Horney was the first to spot the interest error. As Jim pointed out last week, the Ryan budget plan actually achieves little deficit reduction — once we remove the effects of winding down operations in Iraq and Afghanistan (which Chairman Ryan once called “phantom” savings) and calculate interest savings correctly.
That’s still true even after the committee tidied up its numbers. Of the $1.6 trillion deficit reduction that Chairman Ryan claimed over the 2012-2021 period, almost $1.3 trillion comes from phasing down that war-related spending, leaving less than $400 billion in true deficit reduction. (See graph.) Because Ryan’s revised budget claims additional program savings of about $200 billion, its deficit impact is a little bigger than the $155 billion we calculated for the original version of his budget.
As Jim explained, the Republican budget resolution amounts to a plan to cut taxes and whack spending, while leaving the next decade’s deficit outlook fundamentally unchanged. Citizens who follow the budget debate — and House members who will vote on the budget resolution later this week — deserve to know that.