The Man Behind Paul Ryan's Budget Plan Got the Tax Cuts Wrong, Too

Ayn Rand fanboy and Wisconsin Rep. Paul Ryan (R) appears to have baffled the entire Beltway of blabbers into muttering monosyllabic loops of the words "brave" and "bold." Yes, the House Budget Committee Chairman released his plan, The Path to Prosperity, and it is a shocker... especially if you're not aware of the buzzword-laden 74-page document's intellectual history.
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To help get The Path on the road to widespread approval -- at least outside of the GOP-run House of Representatives, where Democrats opposed it during voting Friday -- Ryan sent a letter in February to one William Beach, the director of the Center for Data Analysis at the Heritage Foundation, a conservative think tank. On U.S. House of Representatives letterhead, Ryan implored, "The Committee on the Budget requests that The Heritage Foundation provide technical advice or assistance to the Committee for the use of all its Members with respect to budget proposals provided by the Committee." That included giving the committee "specific information on budget scoring" of such proposals, "together with such nonpartisan analysis, study and research as the Foundation may have that is relevant to such proposals."

Now, it's an open question as to whether the Foundation -- a rightwing gem funded by Koch Industries, Exxon Mobile and Altria nee Phillip Morris -- has such "nonpartisan" research. Their mission, after all, "is to formulate and promote conservative public policies," and generally that's the Grand Old Party.

No surprise, the Foundation approved of Ryan's "bold" and "brave" plan to cut taxes further for the wealthy (by a whopping 10 percent) and increase the burden on the rest of the populace. In turn, Ryan boasted in a recent Wall Street Journal op-ed:

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4 percent by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

Meanwhile, last three pages of Ryan's The Path: Fiscal Year 2012 Budget Resolution, published by the House Budget Committee are, in essence, this very analysis provided by the Heritage Foundation -- complete with a link to the Foundation's report.

The Heritage Foundation in general and Beach, in particular, do have a long record on this type of economic enthusiasm -- and as it turns out, those past nonpartisan analyses provide a clear measure by which we can assess the credibility of the latest round of tax-cut dependent growth projections.

Let us turn now to a paper published in March 2001 titled, How Faulty Official Figures Greatly Overstate the Cost of the Bush Tax Plan. In it, Beach along with his colleagues Daniel Mitchell and D. Wilson wrote, "Official estimates -- even from the Bush Administration -- greatly overstate the revenue 'cost' of President George W. Bush's tax reduction plan. The reason: Official 'bean-counters' typically assume that changing tax rates causes little or no change in work and investment."

They continue: "In reality, of course, quite the opposite is true.... Lower tax rates lead to a bigger tax base, which leads to some degree of revenue feedback, lowering the net cost of the tax rate reduction. When this reflow effect is applied to President Bush's $1.6 trillion tax plan, the actual net revenue cost is less than $1 trillion, or 53 percent of the official estimate."

Fact: The unpaid Bush tax cuts cost America $2.5 trillion during their first 10 years. A revenue loss of $2.11 trillion plus $379 billion in additional interest payments on the national debt, according to Citizens for Tax Justice.

That's $1.5 trillion more than the Heritage Foundation so boldly and (ahem) bravely claimed would be lost -- and also $900 billion more than the "bean counters" cautioned.

There were a couple of other predictions Beach and his team made that also fell flat when they touted the bill initially called the "Economic Growth and Tax Relief Reconciliation Act of 2001" (and, later, the Bush tax cuts).

In their report they claim: "The Heritage Foundation Center for Data Analysis (CDA) conducted a dynamic simulation of the proposals in the President's tax relief plan. The final results show that the Bush plan would significantly increase economic growth and family income while substantially reducing federal debt." 7E842ACDB926B0C456F6FD35A876419A.gif

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Tina Dupuy is a syndicated op-ed columnist at Cagle Cartoons.

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