Correction: The original version of this story gave the incorrect title for the organization that analyzed the two budget plans. Bloomberg Goverment performed the analysis. The text has been corrected.
Jeremy Hobson: President Obama has launched a new campaign ad defending his record on Medicare. He's come under attack from the Romney campaign for taking hundreds of billions of dollars out of Medicare to pay for the Affordable Care Act. At the same time, of course, President Obama has attacked Romney's running mate Paul Ryan for his plans to cut Medicare.
But here's where it gets interesting: Bloomberg Government analyzed the two budget plans and found that ten years out, they look pretty similar.
Christopher Payne is a senior economic analyst at Bloomberg Government and he's with us now. Good morning.
Christopher Payne: Good morning.
Hobson: So, how could it be that the budget plans of Paul Ryan and President Obama would end up in really the same place in 10 years?
Payne: Well, Ryan has talked a lot about his long term vision for a smaller federal government. I think we all know in Medicare, he wants to introduce a voucher system, which will lower expenses in the long long term. But that’s not happening until 2020 and in fact, in the main areas of the budget: Defense, Medicare, Medicade, and Social Security, it’s only Medicade where there’s a really discernible difference in the next ten years.
That’s because of the Affordable Care Act that brings a lot of people into Medicade, in the other areas, they’re basically the same. In defense, they’re both looking at shrink spending as a percent of GDP quite significantly from about 4.5 percent in 2011 to around 3 percent in 2022.
Hobson: Well, what about when you drill into the specifics, they can’t be that similar?
Payne: Well, what I saw was not a lot of explanation for how we’re actually going to get to this end result. I want to talk specifically about this area of the budget called non-defense discretionary. That’s infrastructure, transportation, and education grants where both sides are saying ‘we are going to reduce spending from 4 percent in 2011 down to 2 percent of GDP in 2020.’
These areas of spending have always gone up in line with GDP growth for the past 40 years so there’s not a lot of explanation of how that’s going to happen and it’s really a major area of how both plans see bringing down spending.
Hobson: Christopher Payne, senior economics analyst at Bloomberg, thank you so much.
Payne: Thank you.