Comparing the Ryan and Obama deficits to Bowles-Simpson

Keith Hennessey Blog ^ | 3/22/2012 | Keith Hennessey

[PhxRising]

Here is the series so far:

• 1. President Obama’s proposed medium-term deficits
• 2. The Ryan budget proposes lower deficits and less debt than the Obama budget
• 3. How will President Obama respond to Chairman Ryan’s lower deficits and less debt?
• 4. Comparing the Ryan and Obama long-term deficits and debt

  Yesterday I showed you the long term deficit and debt paths for both Chairman Ryan’s and President Obama’s budgets.

  Today will be easy. I’m just going to add the Bowles-Simpson long-term deficits in the mix.

  In early 2010 President Obama created a bipartisan fiscal commission co-chaired by former Clinton White House Chief of Staff Erskine Bowles (D) and former Wyoming Senator Alan Simpson (R).

  Although Messrs. Bowles and Simpson failed to get the 14 of 18 vote 3/5 supermajority the President required of them, I maintain that they succeeded. They build a bipartisan plan that would have significantly reduced future budget deficits and that quite surprisingly had support from Senate Democratic Whip Durbin (D-IL),Senate Budget Committee Chairman Kent Conrad (D), the then-ranking Democrat on the House Budget Committee, John Spratt, and Republican Senators Coburn, Crapo, and Gregg.

  The President did nothing with the recommendations of this commission that he created.

  Here are the long term deficit paths from yesterday with one addition: the Bowles-Simpson recommendations are a new purple line.

  

  The long-term deficit story is fairly clear. You can see that the purple line ends up below the red line and the two track closely together. Bowles-Simpson is therefore slightly more aggressive on deficit reduction than the Ryan budget in the long run. Bowles-Simpson and Ryan have quite similar deficit paths, both of which are sustainable in the long run and are therefore quite different from the President’s proposed long run path.

  Having similar deficit paths is not enough for us to adequately compare the Ryan and Bowles-Simpson plans. To do that at a minimum we need to look at the gross spending and revenue components of each plan. We’ll get to that next week.

  For now we can draw two conclusions by adding the Bowles-Simpson plan to this graph:

• 1. The Ryan and Bowles-Simpson plans have similar deficit paths.
• 2. It is silly to claim, as President Obama’s team does, that President Obama’s budget is similar to Bowles-Simpson, at least in terms of long term deficit reduction. Bowles-Simpson is a fiscally sustainable long run path while the President’s budget is not.

[PhxRising]

This is the 4th article in a series by Keith Hennessey, the senior White House economic advisor to President George W. Bush. You can read more at Keith's blog here

[arthurus]

“Lower deficits” means increasing debt. There is no gradual step by step road to solvency. You either do what is necessary all at once or it does not get done at all. The system is maintained by politicians all of whom fear they would lose their gravy trains if they vote against some special dependent constituency. Every plan that extends beyond THIS YEAR is a phony plan because the Congress cannot bind even themselves beyond the present term. There is no salvation sort of massive failure including a failure of the executive to use the economic failure to grab and consolidate total political control.