Ryan’s Budget Op-Ed, And Why We’re Doomed Despite His Best Intentions

Last night Paul Ryan, who really badly needed to be Vice President at this point, put out an Op-Ed at the Wall Street Journal summarizing his budget plan which will make its debut this morning.

It seems a thoughtful, moderate, sensible program – which is highly unlikely to ever balance the federal budget. And it has absolutely zero chance of passage in any recognizable form.

We’re doomed.

The assumptions of Ryan’s plan are mostly valid, but the major one is highly unlikely to pan out…

House Republicans have a plan to change course. On Tuesday, we’re introducing a budget that balances in 10 years—without raising taxes. How do we do it? We stop spending money the government doesn’t have. Historically, Americans have paid a little less than one-fifth of their income in taxes to the federal government each year. But the government has spent more.

So our budget matches spending with income. Under our proposal, the government spends no more than it collects in revenue—or 19.1% of gross domestic product each year. As a result, we’ll spend $4.6 trillion less over the next decade.

Our opponents will shout austerity, but let’s put this in perspective. On the current path, we’ll spend $46 trillion over the next 10 years. Under our proposal, we’ll spend $41 trillion. On the current path, spending will increase by 5% each year. Under our proposal, it will increase by 3.4%. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy.

No.

The economy growing at a 3.4 percent annual clip over the course of a decade is something which hasn’t happened for a very long time. Certainly more than a century.

Could a return to pro-growth economic policies produce a 3.4 percent 10-year figure? Sure, it’s possible. Growth at something like that rate has happened before.

But planning for that level of growth and attempting to balance the budget on the basis of it happening?

Sorry. Ryan’s budget doesn’t balance in 10 years. It may never balance. His forecast might be the most realistic you’re going to get out of anybody in Washington, and he’s to be commended for at least trying to get close to a balanced budget, but it’s still fuzzy math.

And that’s disappointing. Because if the GOP is going to propose a federal budget they’re going to be villified for by the President and his stooges both on Capitol Hill and in the media, they ought to at least be able to say it balances without lying about it.

Not that Obama, the Democrats on the Hill or the media have a solution. Sen. Patty Murray, who is Ryan’s Democrat counterpart for the Democrats’ Senate majority – and whose position is an indication of just how sincere the Democrats are about fiscal sanity (nobody who’s serious about accomplishing a job would send Patty Murray to do it) – hasn’t released her budget but has already admitted it will raise taxes without even coming close to balancing, ever.

We’re also doomed because the good ideas Ryan’s budget does contain won’t become law without a new cast of characters in Washington.

We must take action now. Our budget will expand opportunity in major areas like energy. It will protect and strengthen key priorities like Medicare. It will encourage social mobility by retooling welfare. It will fix the broken tax code to create jobs and increase wages.

First, energy. America has the world’s largest natural-gas, oil and coal reserves—enough natural gas to meet the country’s needs for 90 years. Yet the administration is buying up land to prevent further development. Our budget opens these lands to development, so families will have affordable energy. It approves the Keystone XL pipeline, which will create 20,000 direct jobs—and 118,000 indirect jobs. Our budget puts the country on the path to North American energy independence.

Second, health care. Our budget repeals the president’s health-care law and replaces it with patient-centered reforms. It also protects and strengthens Medicare. I want Medicare to be there for my kids—just as it’s there for my mom today. But Medicare is going broke. Under our proposal, those in or near retirement will see no changes, and future beneficiaries will inherit a program they can count on. Starting in 2024, we’ll offer eligible seniors a range of insurance plans from which they can choose—including traditional Medicare—and help them pay the premiums.

The other side will demagogue this issue. But remember: Anyone who attacks our Medicare proposal without offering a credible alternative is complicit in the program’s demise.

Third, welfare reform. After the welfare reforms of 1996, child poverty fell by double digits. This budget extends those reforms to other federal aid programs. It gives states flexibility so they can tailor programs like Medicaid and food stamps to their people’s needs. It encourages states to get people off the welfare rolls and onto payrolls. We shouldn’t measure success by how much we spend. We should measure it by how many people we help. Those who protect the status quo must answer to the 46 million Americans living in poverty.

Fourth, tax reform. The current tax code is a Rubik’s cube that Americans spend six billion hours—and $160 billion—each year trying to solve. The U.S. corporate tax is the highest in the industrialized world. So our budget paves the way for comprehensive tax reform. It calls for Congress to simplify the code by closing loopholes and consolidating tax rates. Our goal is to have just two brackets: 10% and 25%. House Ways and Means Chairman Dave Camp has committed to pass a specific bill this year.

It’s possible the energy policy contemplated in the Ryan budget could get to passage, though Obama’s enviro-loon friends will fight tooth and nail to stop every single project to develop American domestic energy.

The rest? Pie in the sky. There will be no repeal of Obamacare, no reform of welfare programs or entitlements while Obama and Harry Reid occupy their current positions and no tax reform of the kind Ryan seeks. Obama wants the elimination of deductions and loopholes, most specifically the charitable deduction since it’s of a piece with his efforts to hollow out the space between the individual and the government, but he isn’t interested in lowering rates – he proved that during the fiscal cliff negotiations.

So Ryan’s budget will pass the House, and then it will die. The Senate might actually pass a budget authored by Murray, though that’s unlikely – after four years the Senate no longer knows how to pass a budget and Murray isn’t capable of presenting anything defensible. But the Democrats certainly won’t pass Ryan’s budget.

And we’ll be right back to continuing resolutions and trillion dollar deficits.

Which means doom.

Hopefully, we’re wrong about this. Hopefully we’re underestimating the Senate.

But Ryan’s budget is almost a middle-ground position. For something that has no chance of passing it should be far more aggressive – as in, a 10 percent cut in real dollars this year, and a budget freeze until balance is achieved. That would get us to balance well inside a 10-year window, and it would be no less demonized by the Democrats. At least Ryan would get his money’s worth.

As is, he’s offering a plan which might be a decent compromise. Should the Democrats in the Senate pass a budget, it will contain virtually no cuts and massive tax increases. It won’t be a serious document at all. And the middle ground between a compromise plan and an unserious waste of paper is what? A semi-serious, half-baked piece of fiction?

In other words, doom. We’re doomed.



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