Ryan slashes deficits by $3.26 trillion vs Obama — Washington Examiner

House Budget Committee Chairman Rep. Paul Ryan, R-Wis., this morning unveiled an updated budget proposal aimed at overhauling Medicare and Medicaid, reforming the tax code and putting the nation on a sustainable fiscal path.

If implemented, the plan would reduce deficits by $3.26 trillion from 2013 through 2022 relative to President Obama’s budget, according to the Congressional Budget Office, while averting massive tax hikes. […]

Compared with the CBO baseline, which, among other things, assumes all Bush tax rates will expire and that Congress will actually go through with steep scheduled cuts to physicians payments under Medicare, Ryan’s budget would add $240 billion to deficits over the decade. Yet compared to Obama’s budget, Ryan would reduce spending by $5.3 trillion and taxes by $2 trillion, for $3.26 trillion in deficit reduction. Compared to his own budget from last year, public debt would be $1 trillion less by 2021.

But Ryan’s key Medicare reform doesn’t kick in until 2023, meaning that the major cost savings only come over time. Under a scenario in which the CBO assumes Congress will continue making policy as they have in the past, debt would rise to a staggering 194 percent of GDP by 2040. By way of comparison, Greece, which recently defaulted on its debt, had a debt to GDP ratio of 165 percent in 2011. Yet under Ryan’s reform, that number would be 38 percent. By 2050, the CBO model breaks down, but Ryan’s plan reduces debt as a share of the economy to 10 percent.

Keep reading…