The proposed 2012 budget...

[Bilge_Rat]

Originally Posted by Sailor Steve

I see you mocking one side, but ignoring the problems of your own. It's an all-too-common idea around here: "I'm right and you're stupid."

Steve,

I was quite ready to look at the GOP budget objectively and I am not one to mock my opponents in debate. In my day job, I analyse financial statements and reports all the time and know what to look for. This is not a budget per se, but simply a political document.

A lot of things dont add up. They say they want to cut spending, but never mention specific programs to cut. Most of the savings would seem to come from cutting out fraud and mismanagement, but that could not account for more than say a 5% savings. Despite that, they still have spending remaining at around 20% of GDP out to 2035-2040.


On taxes, the GOP wants to cut taxes and say the tax cut would have the following benefits:

According the analysis, this budget would produce the following results:

Faster economic growth:

$1.5 trillion in additional real gross domestic product over the decade.

More jobs:

Nearly one million new private sector jobs next year and 2.5 million new private sector jobs in the last year of the decade.

Higher wages:
$1.1 trillion in higher wages, salary and income.

More prosperity:
$9.35 trillion in higher real household income, translating into an average of $1,000 per year in higher income for each family.

By achieving sustainable levels of spending, deficits and debt – along with growth-oriented reforms to the tax code, this budget sets the nation on a path to prosperity.

However despite the tax cuts, they have government revenue as a % of GDP increasing from 17.4% in 2012 to 18.3% in 2020. How can the % go up if the tax rate is going down? They could presume that a higher percentage of the population will enter the workforce, but that would require an explanation of what demographic factors would account for that.

On the other hand, the GOP is also asking for a Tax Reform to close "loopholes" at the same time as they reduce taxes. If the overall effect of reform is to increase the taxable income of households and therefore the tax bite, that would account for the increase, but that would be a disguised tax increase, not a tax cut. This would also contradict their listed benefits (see above).

They also have the budget switching to surplus after 2020 without explaining how that would happen.

I am quite willing to discuss this document, but lets be clear on what it is: it is the political manifesto of the GOP. It is not a government budget.