Peter Schiff:

So what was the Ryan Budget's radical departure from the status quo that has caused such uproar? If enacted today, the Ryan budget would so drastically upend the fiscal picture that the U.S. federal budget would come into balance in just... wait for it.... 27 years! This is because the Ryan budget doesn't actually cut anything. At no point in Ryan's decades long budget timeline does he ever suggest that the government spend less than it had the year before. He doesn't touch a penny in current Social Security or Medicare outlays, nor in the bloated defense budget. His apocalypse inducing departure comes from trying to limit the rate of increase in federal spending to "just" 3.1% annually. This is below the 4.3% rate of increase that is currently baked into the budget, and farther below what we would likely see if Obama's priorities were adopted.

Because there are no actual cuts in his budget, Ryan hopes that fiscal balance can be restored by 2040 only because he assumes that we achieve returns to the annual economic growth that are equal to levels averaged for much of the last century. In other words, he sees slow growth of the last four years as the aberration, not the new normal. As with all other government projections, this is on the extreme optimistic end of the spectrum. In truth, there is nothing on the horizon that should make anyone think these growth figures will be achieved. America's crushing debt, burdensome regulations, political paralysis, and nagging demographic problems bode poorly for the return to trend line growth anytime soon. More likely, based on the speed to which republicans will shrink from popular backlash, is that the "cuts" that Ryan proposes will be abandoned as soon as they prove to be politically unpopular.



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