The Buzz

GOP uses magic asterisk to claim balance for federal budget

In a tweet Wednesday afternoon, U.S. Rep. Kevin Yoder of Kansas said the House Budget resolution provides for a balanced federal budget “in less than ten years”:

It is true the White House budget never achieves balance. Neither does the House budget, though — without some very tricky math.

The House Budget proposal, as released by the committee, shows outlays of $5.079 trillion in 2025 and revenues of $5.029 trillion that year. When outlays exceed revenues, as is the case here, the budget is not balanced, by definition — it’s $50 billion in the red in 2025.

The House budget solves this problem by assuming a “macroeconomic impact” from its own proposal. In 2025, the House assumes a combination of spending reductions and revenue increases worth $83 billion, a number that somehow makes the deficit disappear.

David Stockman, President Ronald Reagan’s budget director, once called this kind of math a “magic asterisk.”

Republicans say the Congressional Budget Office has endorsed the asterisk. The CBO study of the House budget says the document balances in 2024 — after substantial spending cuts — but it also says projecting the budget is “highly uncertain.”

And: “(T)he macroeconomic effects of the paths specified … could differ from the estimates reported here because of the particular policies chosen to achieve those budgetary outcomes.”

The asterisks are back.

U.S. Rep. Ken Buck, a Republican from Colorado, was succinct. “I don’t know anyone who believes we’re going to balance the budget in 10 years,” he told the New York Times. “It’s all hooey.”

The House budget, to be voted on Wednesday, also calls for a $1 trillion reduction in Medicare and Medicaid spending over ten years, $2 trillion in savings from repealing Obamacare, and $1 trillion in other unspecified spending cuts over the same period.

Yet it assumes no changes in projected revenue over the same ten-year time frame — zero.

Repealing Obamacare would cost the government $1 trillion in revenues embedded in that law. The House budget keeps the money but doesn’t say where it will come from.

Finally, the budget calls for the publicly-held federal debt to reach $13.838 trillion in the next fiscal year. In 2025, the public debt would be $15.235 trillion.

Voters can decide if such a budget is truly balanced.