Retirement and Social Security Reform
Ryan Rides To The Rescue With Realistic Budget
Investor's Business Daily
April 6, 2011
By Ernest S. Christian and Gary A. Robbins
It's jump ball on the federal budget - and America's
future is up for grabs.
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
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
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.
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 $10 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
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.
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
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.