Will Rep. Paul Ryan's (R-Wis.) budget help save the economy? The answer is a resounding yes, according to the bookish Republican's calculations. Using figures from conservative thinktank The Heritage Foundation, Ryan has forecast that unemployment would fall to 6.4 percent by the end of 2012 if his plan were adopted, and reach a 50-year low of 2.8 percent by 2021. Heritage later hedged, suggesting that an accurate projection for 2020 would be a 4.27 percent unemployment rate — comparable to the boom days of the late 1990s and early 2000s — but commentators still heaped scorn on the prediction. Is Ryan being overly optimistic?
Ryan's forecast is beyond dishonest: Ryan's projections aren't just unrealistic, says Matt Yglesias at ThinkProgress, they're "impossible." Whenever unemployment dips below 5 percent, the Fed raises interest rates to "prevent inflationary wage increases." In other words, it's not a fiscally desirable rate. Promising a "rapid drop" to 4 percent or lower proves Ryan's plan is built on "rank dishonesty."
"Paul Ryan's plan counts on reducing unemployment to below 'full employment' level - by magic!"
It's not the first time Heritage has got it wrong: These unemployment claims are "embarrassingly absurd," says Jay Bookman at the Atlanta Journal-Constitution. But what else do you expect from the Heritage Foundation? The think tank ran a similar projection on the Bush tax cuts back in 2001, predicting that they would cause the economy to "grow so quickly that by 2010, the entire federal debt would effectively be eliminated." Uh, how did that work out again?
"The Ryan budget plan, Part III: More trickle down"
Forget these details. Ryan's plan will be good for the economy: Ryan's budget numbers weren't simply conjured by Heritage, says Douglas Holtz-Eakin at the National Review. They were based on the "economic assumptions and baseline projections" of the non-partisan Congressional Budget Office. And while it's fine to "disagree with the particulars," even the CBO says that Ryan's budget would produce "beneficial impacts on economic growth." Isn't that what we should be focusing on?
"The Economics of the Ryan budget"
What we need are more details: Yes, Ryan's plan outlines a "desired fiscal destination," says Catherine Rampell at The New York Times, but it comes up short on how we get there. We should reform entitlement programs, cut tax loopholes and spending, and bring the unemployment rate down, he says. But how? This "plan for a plan" doesn't give details. "Their cure for cancer seems to be just, 'less cancer.'"
"Getting from A to B on deficit reduction"