Ryan runs into roadblocks on budget

Rep. Paul Ryan’s budgets have passed the House over the last three years without much drama, but 2014 is shaping up differently.

The Wisconsin Republican has just days to finalize his new budget resolution, and analysts say making the math work is less of a challenge than getting political buy-in from the GOP conference.

{mosads}No Democrat is expected to back the Ryan budget, so GOP leaders must minimize defections to get it through the lower chamber.

The blueprint is headed for a likely release next week, and a floor vote by mid-April, but the decision to even hold the vote came only last week after Republican members were polled.

In 2011, four Republicans voted “no” on the GOP budget. In both 2012 and 2013, there were 10 GOP “no” votes.

Assuming all members vote this year, Republicans can only afford 16 defections. There are many complicating factors this year, including the bipartisan budget deal that passed in December — which 62 House Republicans opposed — defense spending and the farm bill.

The basic parameters of the budget were outlined by Majority Leader Eric Cantor (R-Va.) last week: The budget must balance in 2024 without raising taxes and it must use the 2015 spending cap of $1.014 trillion agreed to in the two-year budget deal from December.

Speaker John Boehner (R-Ohio) said Tuesday that the budget will also keep the $521 billion cap on defense spending in 2015 despite advocacy from defense hawks to increase the cap in light of Russia’s invasion of Ukraine.

Armed Services Committee Chairman Buck McKeon (R-Calif.) has been “tirelessly” advocating for reversing the defense sequester, a GOP aide said.

To pay for the $350 billion in increased defense spending after 2015, Ryan would likely need to cut non-defense discretionary spending to keep the budget in balance, experts said.

But that could alienate appropriators and centrist members. Last year, the House had to pull a transportation funding bill written at sequester levels from the floor.

“The political support to enact all the individual pieces of the Ryan budget I don’t think is there,” said Marc Goldwein of the Center for a Responsible Federal Budget. “Even getting all Republicans on board to agree to something is a huge uphill climb.”

Analyst Josh Gordon of The Concord Coalition noted that including more than $130 billion in cuts to food stamps seems especially unrealistic given the farm bill, which cut the program by $8 billion.

“The House is already on record passing the farm bill with less in food stamp cuts,” Gordon said.

On tax reform, Ryan has to decide whether to incorporate or ignore details of the controversial reform plan crafted by Ways and Means Committee Chairman Dave Camp (R-Mich.).

That seems unlikely because Camp’s proposal calls for cutting popular deductions and has been panned by powerful industry groups.

Even if Ryan stays vague on tax reform, he will have to decide whether to assume an expired group of tax breaks will be extended.

That would reduce revenue further, Ed Lorenzen of the Committee for a Responsible Federal Budget pointed out.

“It will be much harder for Ryan to get to balance if he assumes some tax extenders are made permanent without offsets. But if he sticks with the position that tax reform will be revenue neutral relative to current law, it potentially puts him at odds with where Chairman Camp is headed,” Lorenzen said.

“Can you make it add [up] mathematically? You take $1 trillion out of entitlements. Does it make sense from a policy point of view or politically? It strikes me as absolutely bizarre,” said Scott Lilly of the liberal Center for American Progress.

He predicted that Ryan’s messaging on the budget will focus on poverty program cuts to distract from cuts that will affect seniors, a key GOP voting block in the coming midterm election.

Budget experts said that using the 2015 top-line figures, rather than the lower sequestration numbers in place prior to the deal Ryan struck with Sen. Patty Murray (D-Wash.), does not pose much of a mathematical challenge. But a dimmer economic outlook from the Congressional Budget Office (CBO) has made the numbers somewhat harder for Ryan.

The CBO projects a $1.074 trillion deficit in 2024, with revenue at 18.4 percent of the economy and spending at 22.4 percent. The revenue projection is 0.8 percent worse in 2024 than the CBO had projected in 2023 last year, due to a weaker economy.

All this means Ryan has to find a way to cut spending by 4 percent of gross domestic product in 2024.

Goldwein said he can see how Ryan will secure extra savings, mostly by extending the cuts in last year’s budget and tinkering with some assumptions.

First, Ryan can assume in his baseline that war spending grows more slowly than the CBO does. That brings the deficit to $975 billion.

Ryan had $811 billion in cuts in 2023 in his last budget, so he only has a gap of $165 billion at this point, Goldwein noted.

That gap can be bridged by adopting President Obama’s assumption of zero war spending in the last year, and by showing increased savings from cutting healthcare and nutrition entitlements like food stamps, Medicare, Medicaid and ObamaCare. As the population grows and ages, any cuts to these programs will grow.

“Mathematically, I can see how he gets to where he needs to go,” agreed Gordon of The Concord Coalition.

Gordon noted that the CBO assumes that after the caps of the 2011 Budget Control Act end in 2021, discretionary spending will snap back to a growth phase. A freeze on spending would yield at least $80 billion, he said.

He said the CBO now projects higher interest rates over the coming decade. That means any cuts Ryan makes will yield extra savings by 2024.

Bill Hoagland, a former Senate staffer who is now with the Bipartisan Policy Center, said that to get extra help, Ryan could also make better economic assumptions than the CBO has used.

He said that Ryan has sent a strong signal that to bridge any remaining gap, he will focus on getting deeper savings from consolidating anti-poverty programs.

Goldwein predicted Ryan would be able to cajole members into passing the budget in the end even though many Republicans would never vote for many of the cuts if they were in binding legislation rather than a fantasy document.

Other analysts weren’t so sure.

“You can always put it on paper. The real issue is the question, does he have the votes?” Hoagland said.

–This report was updated at 6:40 a.m.