RA:
Facts and figures: Best budget ever | The Economist: PAUL RYAN has officially revealed the House Republicans' budget proposal, and we will have a detailed analysis of it up in short order. Reactions to the plan will vary (sharply, it's safe to say). But whatever your take on the policy proposals, it's worth approaching the rosy claims made on its behalf with extreme caution. Claims like:
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% 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.
That sounds unbelievably good, and for good reason—the figures in the Heritage analysis are simply outlandish. According to the study cited above, Mr Ryan's plan will bring the unemployment rate down to 6.4% next year, 4.0% in 2015, and 2.8% in 2021. When the Obama administration projected a 5.9% unemployment rate in 2015 falling to 5.3% by the end of the decade, the Congressional Budget Office chided it for excessive optimism. The Federal Reserve has been indicating that the long-run unemployment rate in America is likely to be between 5.0% and 6.0%, and their estimate has risen over the past year. During the heady economic days of the late 1990s, the unemployment rate never got down to 4%.
It's an assumption, in other words, that's unrealistic enough to be considered somewhat bizarre. Everyone puts a positive spin on their policy proposals. But fundamentally worthy policies shouldn't need to promise laughably overoptimistic outcomes to win support.
Republicans. They lie. All the time. About everything.
