How the US Election Will Be Framed

http://keithhennessey.com/2012/08/11/campaign-ryan-budget/

Micro vs. macro framing – The Obama campaign and its allies will focus on micro-issues, telling horror stories of cuts to specific popular government programs. This dovetails with their constituency-based messaging so far.  The Romney-Ryan campaign should try to zoom out and highlight (1) the macro effects of the unsustainable current/Obama spending path and (2) the irresponsibility of President Obama’s refusal to propose a long-term fiscal solution and his legislative party’s refusal to pass a budget. Team Obama will highlight the pain the Ryan budget would cause to targeted constituencies. Team Romney-Ryan needs to explain that the Obama budget and a failure to govern would lead to economic disaster for everyone.

Bogus spending cut numbers – Every “cut program X by Y%” quote about the Ryan budget will be relative to an unsustainable spending path. The irresponsible part isn’t the proposed spending cut, it’s the promise to keep spending growth going without specifying how you’ll pay for it. If President Obama were proposing tax increases to match his future spending growth, then this would be a fair attack.  But he is not.

Don’t forget the facts.  In March I compared the deficit and debt effects of President Obama’s budget proposal with Chairman Ryan’s in both the short and long run. Here are the conclusions from those posts.

Short run comparison (10 years)

• In the short run the Ryan budget proposes lower deficits and less debt than President Obama’s budget.
• Under the Ryan budget debt would peak at 77.6% of the economy in 2014. Under the President’s budget, debt would peak at 80.4% of the economy in that same year.
• The Ryan budget would cause debt to steadily decline to 62.3% of GDP by the end of the decade.  Under the Obama budget debt would flatten out by 2018 and end the decade at 76.3% of GDP, 14 percentage points higher than under the Ryan budget.
• At the end of 10 years, debt would be declining relative to the economy under the Ryan budget, while it would be flat under the President’s budget.
• For comparison the pre-crisis (1960-2007) average debt/GDP was 36.3%.

Long run comparison

• Chairman Ryan proposes stable deficits of a bit over 1% of GDP, below the historic average deficit, followed by a gradual path to balance and eventually to surplus.
• President Obama’s budget would result in deficits that are always greater than the historic average, and that would cause debt/GDP to increase again beginning about 10 years from now.
• President Obama’s proposed deficit path is unsustainable. Our economy can tolerate high and even very high deficits for a short time. High and steadily rising deficits like those in the President’s budget cannot be sustained. Something in the economy will break.
• Chairman Ryan’s plan would result in debt/GDP steadily declining over time. It would take decades to return to a pre-crisis average.
• President Obama’s plan would result in debt/GDP stabilizing by the end of this decade, then growing steadily and forever thereafter. At some point, and no one knows when, that growing debt becomes unsustainable.  If we’re lucky the resulting economic decline is gradual. If not, we have a financial crisis.

http://keithhennessey.com/2012/08/11/campaign-ryan-budget/