Although often cast in numerical terms involving trillions of dollars, the real budget battle is about human dignity, freedom and progress. Can we preserve these and other bedrock characteristics of American civilization? Or will they and we be dragged down by mindless fiscal excesses in Washington?
The two most immediate protagonists in this historic budget drama are President Obama, the likely villain, and Paul Ryan, the Republican chairman of the House Budget Committee, the emerging hero.
Obama holds the modern record for the biggest debt and deficits in the shortest time and is sub rosa heading America toward the biggest tax hikes in history.
In opposition to Obama's road to ruin, Ryan has unveiled a high-minded "Path to Prosperity" by which America can escape the spend-debt-tax trap set by Obama before it's finally and fatally sprung.
Obama governs on a zero-sum basis, pitting Americans against each other, in the apparent belief that the only way for anyone to be better off is for government to make other people worse off.
The Republican budget is designed to make everyone better off. Cut taxes, cut spending, induce jobs and income growth, repeal ObamaCare, rescue Medicare, protect seniors and enable young Americans to create a new golden age of freedom and prosperity in the 21st century. And this is just for starters. Wait until 2013 for the best stuff.
Seniors Protected
The "win-win" Ryan-Rivlin proposal saves Medicare from financial collapse while at the same time allowing existing senior Americans (those now 55 and older) the option to continue with present Medicare.
Ryan's budget achieves $6 trillion of outlay savings — including $1 trillion in historic health care entitlement reform — but seniors are protected. Cynical Democrats may have hoped that with the debt crisis already at $14 trillion and Obama pushing it to $21 trillion, they could frighten fiscally responsible Republicans into cutting back on seniors — but Ryan deftly avoids the sucker punch.
Ryan also avoids the tax trap. Many people — including some well-meaning Republicans — have been lured into thinking that America's financial crises can be solved by combining spending cuts with big tax increases.
But dollar-for-dollar, tax increases do more harm to the private economy — and, therefore, to GDP growth and jobs — than they add to Treasury revenues for deficit reduction. This is the "dig the hole deeper" approach taken by Obama's Bowles-Simpson Commission. It won't work.
Ryan does the smart thing. He and Ways and Means Chairman Dave Camp plan big cuts in both individual and corporate tax rates.
Individual tax rates will be 10% and 25% — and the present exorbitantly high tax rates on corporations (their stock is in nearly everyone's retirement plan portfolio) will be reduced to 15% and 25%.
Even under CBO's old-fashioned static scoring method — which Democrats insist on — the Camp-Ryan tax reforms will induce economic growth. On a correct dynamic scoring basis as performed by the Heritage Foundation, the positive effects of tax reform on both the budget and the lives of millions of Americans are even bigger. Each year, roughly 1.3 million new jobs will be added. Household wealth will average $500 billion more over the 10-year period.
Fiscal Freeze
The Republican plan reduces outlays as a percentage of GDP from the current level of 24.1% to 19.9% in 2021. Tax rates are lower — but revenues as a percent of GDP increase from today's 14.8% to 18.2% in 2021. And by 2021, debt as a percent of GDP is 40% less than under Obama's budget.
The Republican "Path to Prosperity" is the kind of common-sense government downsizing that voters were calling for in the game-changing election last November, when they threw out so many big-spending Democrats and, had Obama himself been up for reelection, would probably have thrown him out as well.
Ryan's budget resolution freezes and reforms much government spending at or below 2008 levels, thereby saving $4 trillion. It cuts subsidies, corporate welfare, government waste and bloat — and whacks those notorious Washington swingers known as Fannie and Freddie, who helped cause the mortgage crisis.
It will be a struggle to plug the gigantic hole that Obama has blown in America's finances. But everyone who is called upon to give up a government subsidy or to pay more should look upon the temporary sacrifice as if they were putting money away in a savings account that will pay them dividends as America returns to prosperity.
Some conservative Republicans have been heard to criticize Ryan's budget plan because it does not completely eliminate the federal deficit within 10 years. Not a good objection. Cutting tax rates, getting the deficit and debt heading downward, and boosting economic growth is much more important than adherence to some arbitrary date.
Everyone who has America's best interest at heart — including a good many Democrats in both the House and the Senate — ought to stand up and cheer.
• Christian, an attorney, was a deputy assistant secretary of the Treasury in the Ford administration. Robbins, an economist, served at the Treasury Department in the Reagan administration.
House Budget Committee Chairman Paul Ryan will warn at AEI today that the country is at a “tipping point” in its debt crisis that threatens to “curtail free enterprise” and lead to a “gradual moral-political decline as dependency and passivity weaken the nation’s character.”
The Wisconsin Republican detailed in today’s Wall Street Journal the magic numbers everyone has been waiting for: $6.2 trillion in cuts from President Obama’s budget over the next decade; $4.4 trillion in deficit reduction, as compared to Obama’s promised $1.1 trillion.
In his noontime AEI address, Ryan will argue that keeping the budget on the beaten path could “weaken our national identity in ways that may not be reversible.”
“This budget charts a new path,” Ryan will say. “It represents a new federal commitment, assuring this nation’s workers, investors and entrepreneurs that the new House majority recognizes the threat that unlimited government poses to the American way of life.”
Reining in the size and scope of government, he adds in prepared remarks, “should not be a partisan issue.”
Ryan will address four main aspects of “The Path to Prosperity” agenda: streamlining government to make it “more efficient, effective and responsible”; welfare reform to “build upon the success” of the bipartisan efforts during the 1990s; focusing on entitlement reform to save Medicare and require the president to submit a plan “for restoring balance” to Social Security; and tax reform that “starts not by asking what is the ‘right mix’ of tax increases and spending cuts to balance the budget, but by asking what is the purpose of government, and then raising only as much revenue as the government needs to fund the things it is supposed to be doing.”
The chairman, who references both Reagan and FDR in his speech, will introduce a tax reform plan that caps individual and corporate rates at 25 percent.
“Over time, additional brackets, credits and carve-outs have grown on the tax code like weeds,” Ryan’s prepared remarks state. “As with so many things, such as practicing the politics of optimism, we need to get back to the Reagan model – in this case, by implementing the policies of growth.”
He chides the current system as leaving America “on the brink of national bankruptcy” and exacerbating a debt crisis that could lead to “an unprecedented economic collapse.”
“The president, whose budget punted on the drivers of our debt, is not the first public official to have drifted down this perilous path,” Ryan will say, stressing that “both political parties have squandered the public’s trust.”
“The stakes in this debate are high … They transcend what fraction a government worker in Madison contributes to his benefits package. And they transcend what number between $33 billion and $61 billion we finally settle on as we try to repair this year’s broken budget process.”
The budget release comes a day after Obama announced his re-election campaign. Watch a livestream of Ryan’s address at noon here.
GOP Budget Proposal: 'Not a Penny' for Obamacare
Tuesday, April 05, 2011
By Terence P. Jeffrey
(CNSNews.com) - The fiscal 2012 budget proposal unveiled today by House Budget Chairman Paul Ryan (R.-Wis.) offers sweeping reforms in federal spending, including defunding and repealing the health-care law signed last year by President Barack Obama and converting the federal share of the Medicaid program into block grants to state governments.
The Republican proposal says one of its aims is “making sure that not a penny goes toward implementing the new [health care] law” enacted last year.
This includes repealing about $800 billion in new taxes that were built into the law.
The proposed Republican budget resolution lists as one of its “key objectives” that it “Repeals and defunds the President’s health care law, advancing instead common-sense solutions focused on lowering costs, expanding access and protecting the doctor-patient relationship.”
“There is no way for ‘experts’ in Washington to know more about the health care needs of individual Americans than those individuals and their doctors know,” says the proposal. “The new health-care law, rammed through Congress last year on a partisan vote, has taken the nation one step closer to this fully government-run system.
“The problems with this approach are already popping up all over the country,” says the proposal. “Health care costs continue to escalate relentlessly. The new law has aggravated the worst aspects of the U.S. health care system, without fixing what was broken. The country needs to move away from this centralized system, not towards it.
“This budget starts by repealing the costly new government-run health care law, saving roughly $725 billion over ten years by repealing the new exchange subsidies and making sure that not a penny goes toward implementing the new law,” says the resolution. “Then, this budget goes further with reforms that make government health-care programs more responsive to consumer choice.”
On the health-care tax front, the resolution says: “The health-care law enacted last year contained roughly $800 billion in new taxes and tax increases--the result of dozens of changes to tax law that added complexity and unfairness to the code.” The proposal calls for repealing all of these new taxes and tax increases as part of repealing the entirety of the Obamacare law.
One of the new health-care reforms proposed by the GOP budget is converting the federal share of Medicaid—the federal-state program that provides health insurance to low-income people—into block grants to state governments.
The proposal says the GOP budget aims to: ssecure the Medicaid benefit by converting the federal share of Medicaid spending into a block grant tailored to meet each state’s needs, indexed for inflation and population growth. This reform ends the misguided one-size-fits-all approach that has tied the hands of so many state governments. States will no longer be shackled by federally determined program requirements and enrollment criteria. Instead, they will have the freedom and flexibility to tailor a Medicaid program that fits the needs of their unique populations.”
The GOP budget proposal notes that, according to the Congressional Budget Office, federal Medicaid spending would increase by $627 billion over the next decade under Obamacare, which increases the number of people eligible for the program.
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