CBO: Ryan Budget Plan Shrinks Debt, But Only Because Seniors Spend More on Health Care

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This post has been updated.

Here's the good news and the bad news about House Budget Chairman Paul Ryan's (R-Wis.) new budget plan, from the Congressional Budget Office's preliminary analysis: Under Ryan's plan, the national debt would shrink over 40 years, but people (or insurers) would have to spend a lot more on health care.

First, debt held by the public (including foreign debt) would shrink to one sixth of its current size, relative to GDP, by 2050:

Under the extended-baseline scenario [meaning the law as currently written], debt held by the public is projected to rise from about 62 percent of GDP in 2010 to about 90 percent of GDP in 2050. Under the alternative fiscal scenario [meaning a scenario the CBO sees as likely], the ratio of debt to GDP is projected to rise to more than 300 percent in 2050 ... Under the proposal, the ratio of debt to GDP would be significantly smaller over the long term--falling to 48 percent in 2040 and 10 percent in 2050.

That's after the debt actually rises, above its projected levels under current law, during the first 10 years of Ryan's plan. Under current law, the CBO projects the debt to balloon to 67 percent of GDP by 2022; under Ryan's plan, the CBO expects it to rise to 70 percent.*

But the private share of health-care spending would nearly double by 2030:

Screen shot 2011-04-06 at 12.32.10 PM.pngThe CBO's analysis is by no means a final word: Ryan has not yet turned his proposal into a bill, and this analysis simply looks at the broad strokes he laid out Tuesday.



*This paragraph was added to indicate the nearer-term impact Ryan's plan would have on the debt, as taxes are decreased before spending is also decreased as significantly

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Chris Good is a political reporter for ABC News. He was previously an associate editor at The Atlantic and a reporter for The Hill.

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