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The Ryan Budget in Context

May 5, 2014 at 1:40 PM

Defending his budget’s $5 trillion in proposed cuts over the next decade, House Budget Committee Chairman Paul Ryan has noted that total federal spending would still be nearly $43 trillion over that period, implying that criticism of the cuts is therefore off-base.  But as I explained recently, this number by itself doesn’t tell anything about whether spending under the Ryan plan would be adequate or properly targeted.

Here’s some historical context for that ten-year cumulative $43 trillion figure, using spending as a share of the economy (gross domestic product, or GDP) — the standard measure that economists and analysts use to examine trends in spending over time:

  • Under current policies (i.e., without Ryan’s cuts), total federal spending — which reflects the costs for everything from Social Security and Medicare to defense, all other government functions, and interest — will average 21.3 percent of GDP over the next decade.  While Ryan implies this is excessive, it’s a bit below the 21.6 percent average during the Reagan years, even with today’s higher health care costs and the retirement of the baby boomers.
  • Moreover, at 21.3 percent of GDP, federal spending would be only modestly higher under current policies than its 20.5 percent average over the last four decades (1974-2013), again despite higher health care costs and the boomers’ retirement.
  • In contrast, under the Ryan budget, federal spending would average 19.1 percent of GDP over the coming decade, which would be well below the four-decade average and even further below the average for the Reagan years.

The amount of cuts in the Ryan budget is not in doubt; Chairman Ryan’s own materials specifically say that his budget “cuts spending by $5.1 trillion.”  And Chairman Ryan has not challenged our finding that 69 percent of those cuts would come from programs targeted on low- and modest-income families.  Instead, he cites the fact that under his budget, federal spending would total $43 trillion over the next ten years.

In short, $43 trillion is a big number that Chairman Ryan employs in a way that masks the deep cuts his budget aims at key programs for Americans of limited means.


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