If you don’t know much about Wisconsin Rep. Paul Ryan, Chairman of the House Budget Committee in Washington, you may want to Google him. You will be hearing a lot from him and about him in the years to come.
Rep. Ryan is very much in the news today in the wake of the Republican budget he is introducing for the next budget year. Most of the news accounts bandied about in the media focus on the $6 trillion reduction in the federal budget proposed by President Obama that Ryan’s proposal would put in place over the next 10 years. The reduction is actually $4 trillion when compared to the current level of spending. (There is no current budget to compare the proposal to since the Democratic majority in Congress never passed a budget last year.) President Obama’s budget would take the current $14 trillion federal debt and increase it to over $20 trillion by the end of the decade, in contrast to the significant reduction in Ryan’s blue print.
To comprehend Paul Ryan’s proposal, one has to look at vision, not just numbers. Rep. Ryan understands that the spending problem has gotten so perverse that the revenue side of the equation can’t be solved by simply raising taxes. To prevent a total fiscal disaster, spending reductions must be accompanied by a return to substantial economic growth. He also takes the dangerous political leap of proposing true reform of entitlement programs—primarily Medicare and Medicaid. Ryan’s Medicaid proposal would block-grant the program back to the states and would allow them flexibility in designing programs that work for their states and end the budget-busting mandates from Washington that are exacerbated in the new health care law.
If addressing entitlements weren’t enough of a political hot potato, Ryan also tackles tax reform in his budget. His proposal is revenue neutral. It cuts the top rate to 25 percent for both individuals and businesses while at the same time slashing a bevy of tax exemptions, deductions, and credits that abound in the tax code. Each of those tax write-offs has a constituency, and most have a horde of K Street lobbyists protecting them. But this element of Ryan’s proposal is perhaps the most important in his recipe for bringing fiscal sanity back to the federal budget.
The eventual solution to the federal budget problems will rely heavily on two things: restraining entitlement spending and growing revenues without harming the economy by significant tax increases. If tax increases aren’t the main source of generating budget-balancing revenues, there are basically two other options: The federal government can use high levels of inflation to generate more revenues (a terrible solution) or it can use pro-growth policies to spur additional revenues from economic expansion. Ryan opts for the latter.
His budget proposal calls for the removal of restrictions on developing domestic sources of energy which would increase jobs, investments, and tax revenue in the U.S. At the same time, it ends expensive subsidies for energy sources, subsidies that distort the market and abet the increase in energy prices.
Ryan’s budget attacks crony capitalism, ends the infamous reign of Fannie Mae and Freddie Mac, and releases the entrepreneurial spirit of our nation’s small businesses and workers. It is a budget plan that echoes Ronald Reagan’s in 1981, not Jimmy Carter’s of 1980. When stacked up against President Obama’s budget proposal, the difference couldn’t be clearer. Obama’s drives us beyond the acceptable boundaries of sustainable debt while Ryan’s pulls us back from the brink. The choice is clear—and, hopefully, obvious.