We criticized Paul Ryan's roadmap for the budget. Here's his response.

US Rep. Paul Ryan' says he'd tweak his roadmap for the budget if it didn't maintain governement revenues at traditional levels.

By , Guest blogger

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    Rep. Paul Ryan (R) of Wisconsin (left), accompanied by Sen. Judd Gregg (R) of New Hampshire., discussed the federal deficit at a news conference in 2008. His new proposal would dramatically alter the structure of US taxes.
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Representative Paul Ryan (R-WI) has responded to the Tax Policy Center's analysis of the revenue portion of his Roadmap for America's Future. TPC found Ryan's major tax restructuring would likely raise significantly less revenue than he expected and would substantially lower taxes for high-earners. In his response, Ryan suggests he'd be willing to adjust his plan to hit his revenue target of 19 percent of Gross Domestic Product. Here is his response:

“I appreciate the Tax Policy Center’s effort to advance the debate on our need to get a grip on the explosion of spending and put the government on a sustainable path. Our nation’s fiscal crisis is the result of Washington’s unsustainable spending trajectory, not from a lack of sufficient revenue.

“The tax reforms proposed and the rates specified were designed to maintain approximately our historic levels of revenue as a share of GDP, based on consultation with the Treasury Department and tax experts. If needed, adjustments can be easily made to the specified rates to hit the revenue targets and maximize economic growth. While minor tweaks can be made, it is clear that we simply cannot chase our unsustainable growth in spending with ever-higher levels of taxes. The purpose of the Roadmap is to get spending in line with revenue – not the other way around.

“I look forward to continuing the dialogue with the Tax Policy Center and working with my colleagues in Congress to advance real solutions to our fiscal crisis.”

The following additional points should be considered when interpreting these results:

1) The Tax Policy Center’s revenue analysis of the Roadmap is not an “official” score of this plan. The Joint Committee on Taxation (JCT) is responsible for providing the official revenue score of legislation before Congress.

2) The Roadmap’s revenue baseline was constructed last year, using CBO’s long-term “alternative fiscal scenario.” This baseline incorporated an economic forecast from early 2009. Since that time, economic forecasts have generally been lowered, which would tend to cause lower-than-predicted revenues over the near term. The Tax Policy Center’s revenue analysis of the Roadmap uses an updated economic forecast from the one originally used to construct the Roadmap revenue baseline. The different economic assumptions in these baselines likely explain a portion of the lower revenue prediction.

3) The Tax Policy Center analysis covers a 10-year period, but the Roadmap is a long-term plan with spending and revenue projections covering 75 years. As such, the analysis is not consistent with the long-term horizon of the plan. Staff originally asked CBO to do a long-term analysis of both the tax and spending provisions in the Roadmap. However, CBO declined to do a revenue analysis of the tax plan, citing that it did not want to infringe on the traditional jurisdiction of the JCT. JCT, however, does not have the capability at this time to provide longer-term revenue estimates (i.e. beyond 10 years). Given these functional constraints for an official analysis, staff relied on its original work with the Treasury Department and other tax experts to formulate a reasonable expected path for long-term revenues given the tax policies in the Roadmap combined with the economic growth projections available at the time.

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