Trying to determine the actual level of savings in budget proposals can be confusing, as there is no single agreed-upon set of baseline assumptions to follow. Both Congressman Ryan (R-WI) and Senator Murray (D-WA) use their own baselines from which to measure savings, which differ in a couple ways from current law or CRFB Realistic. While these differences do not change the actual numbers that their budgets arrive that, they can change the level of total savings and the relative balance between spending cuts and revenue increases that are claimed.
Congressman Ryan's baseline is similar to CBO's current law baseline, which assumes many expiring measures will be allowed to end, including the "doc fix" next year and the 2009 expansions of refundable credits in 2017, and the sequester will not be canceled. But Ryan would also assume that war spending and Hurricane Sandy relief are drawn down as planned rather than maintained at the same inflation-adjusted level in perpetuity, and he would not count these changes as savings.
Senator Murray's baseline is more similar to the CRFB Realistic baseline. Both baselines assume that the sequester is waived, the "doc fix" is permanently extended without offsets, refundable credit expansions are extended, tax extenders are allowed to expire as scheduled, and Hurricane Sandy relief would be drawn down as planned rather than maintained at inflation-adjusted levels. Where Murray's budget differs from CRFB Realistic is that Murray assumes an even faster war drawdown and eliminates funding entirely for those accounts after 2015, instead of keeping a small amount of funding. The budget does not count this drawdown at all for savings, instead putting it in the baseline.
The table below shows the savings from each budget under the four different baselines as we understand them using the numbers available.
|Ryan and Murray Budgets Compared to Different Baselines (2014-2023, billions)|
|Current Law||CRFB Realistic||House Budget Baseline||Senate Budget Baseline|
|War and Sandy Drawdowns||$931||$1,230||$47||$346||$0||$299||-$299||$0|
|Health Care Law||$1,837||$0||$1,837||$0||$1,837||$0||$1,837||$0|
Source: HBC, SBC, CBO, CRFB calculations
In the end, where a budget leaves the debt-to-GDP ratio might be more important than total savings, which can easily be manipulated by different assumptions. We have set $2.4 trillion compared to CRFB Realistic as a target for deficit reduction, as that would put debt on a clear, downward path but the trajectory rather than the total is more important. A sustainable budget would have debt growing slower than the economy over the longer-term, and that is what people should look for in these budgets.