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Krugman’s main criticism of the Roadmap is that it does not raise the revenues that Ryan says it will.
Mr. Ryan’s plan calls for steep cuts in both spending and taxes…. The Post also tells us that his plan would, indeed, sharply reduce the flow of red ink: “The Congressional Budget Office has estimated that Rep. Paul Ryan’s plan would cut the budget deficit in half by 2020.”
But the budget office has done no such thing. At Mr. Ryan’s request, it produced an estimate of the budget effects of his proposed spending cuts - period. It didn’t address the revenue losses from his tax cuts.
And Krugman goes on to cite a Tax Policy Center analysis that found that Ryan’s plan wouldn’t raise the revenues assumed in the Roadmap.
What Krugman leaves out is that the Roadmap is intended to be a plan for achieving long-run fiscal solvency by cutting spending, and that it assumes a certain level of revenue. If the plan as specified doesn’t bring in as much revenue as projected in the initial Roadmap, it will be adjusted, and rates would be raised, to bring revenues back to roughly 19 percent of GDP — as Ryan has made clear.
Stepping back a bit, Krugman’s charge that the Roadmap won’t bring in enough tax revenue is a little absurd. The challenge facing U.S. policymakers is how to rein in entitlements — not how to raise taxes. We do not need a Roadmap on how to raise tax revenues.
Krugman also includes some specific problems he has with Ryan’s entitlement-reduction measures. For instance:
The only way the Ryan plan could save money would be by making those [Medicare] vouchers too small to pay for adequate coverage. Wealthy older Americans would be able to supplement their vouchers, and get the care they need; everyone else would be out in the cold.
Know what else would leave poor older Americans out in the cold? An economic collapse brought on by a debt crisis. Ryan’s plan is the only one that the CBO has forecast to prevent such a scenario.