Paul Ryan’s courageous budget is a challenge not only to Democrats to get our collapsing fiscal house in order but also to nervous Republicans.
In the first moments of reading House Budget Committee’s Fiscal Year 2013 Budget Resolution, entitled “The Path to Prosperity” (and subtitled “A Blueprint for American Renewal”), you realize that this is no business-as-usual document.
The first page of text is a “Statement of Constitutional and Legal Authority,” which states that Committee’s budget “is committed to the timeless principles enshrined in the U.S. Constitution — liberty, limited government, and equality under the rule of law” and that it “seeks to guide the nation’s policies by those principles, freeing it from the crushing burden of debt now threatening its future.”
The House Republican budget contrasts mightily, in approach and in the numbers, with President Obama’s recent budget, which could be entitled “The Path to Bankruptcy and Dependency,” and with the Democrat-controlled U.S. Senate’s budget which, as Rep. Ryan subtly reminds us, does not exist. But it also throws down a gauntlet to Republican presidential candidates, pressing them to emphasize pro-growth economic policies more clearly and more aggressively.
The focus on foundational principles is neither idle talk nor only of academic interest to Committee Chairman Paul Ryan (R-WI) whose “expression of…principles, vision, and philosophy of governing” is captured in the budget document. It is a philosophy and a budget that aim to put the U.S. back on track toward fiscal sanity and toward the uniquely American vision of limited government at limited cost. As Rep. Ryan’s introduction notes, “Effective government is impossible without limits. It is no surprise that trust in government has reached all-time lows as the size of government has reached all-time highs.”
Of course, this isn’t just about philosophy or approval rates. It is about a nation that should function and thrive, and a federal government that currently threatens our ability to do both. Paul Ryan again: “[W]hen taxation is carried to injurious excess to fund activities outside the proper sphere of government, it not only harms the general welfare, but also suppresses revenue itself. As Alexander Hamilton — whose fiscal plan brought national prosperity while eliminating America’s first federal debt — once observed, ‘the most productive system of finance will always be the least burdensome.’” Ryan’s words are as wise and compelling as those of our most financially astute Founding Father.
For contrast, consider the comment of Senate “We Don’t Have a” Budget Committee Chairman Kent Conrad (D-ND), who believes that the Ryan budget represents a “breach of faith that will make it more difficult to negotiate future agreements” — because Ryan plans to spend less than the budget caps agreed to in 2011. Who but a Democrat could confuse a spending ceiling with a spending floor? In response, Speaker of the House John Boehner (R-OH) responded on Twitter, noting the definition of “cap” as “an upper limit (as on expenditures).”
The Republican budget addresses specific “core areas,” including national defense, the free enterprise system, the social safety net, health and retirement programs, the tax code, and government spending (including the budget process).
Highlights of each area include:
• National Defense: Eliminates $55 billion in “indiscriminate” cuts to the defense budget currently slated to hit in January, 2013 while implementing targeted spending reductions, because “the nation has no higher priority than safeguarding the safety and liberty of its citizens from threats at home and abroad.”
• Free Enterprise: Ends corporate welfare, “stop[ping] Washington from picking winners and losers,” rolling back energy company subsidies, ending bailouts of financial institutions, and repealing Obamacare. Also implements a range of policies to increase domestic energy production, lower fuel costs, and create energy-related jobs while reducing dependence on foreign oil.
• Social Safety Net: Block grants Medicaid to the states, changing the welfare system so that it “does not entrap able-bodied citizens into lives of complacency and dependency.” Simplifies federal education and job-training programs to create accountability and minimize government-caused tuition inflation.
• Health and Retirement Programs: Adds a range of Medicare coverage options, including “traditional Medicare fee-for service,” creates competition between health plans, offers tort reform, and implements a premium-support model to keep the system from bankrupting the nation. Provides “increased assistance for lower-income beneficiaries and those with greater health risks” while not reducing benefits for anyone in or near retirement. Like the prior House budget, this plan makes no specific recommendations regarding Social Security, but “calls on the President and both chambers of Congress to ensure the solvency of this critical program.”
• Tax Code: Reforms the individual income tax code so there are just two tax brackets, 10 percent and 25 percent, “while clearing out the burdensome tangle of loopholes that distort economic activity.” Cuts the corporate tax rate from 35 percent to 25 percent while “shifting to a territorial system” so that U.S. corporate tax only applies to profits earned in the U.S. Repeals the Alternative Minimum Tax. Broadens the tax base and reduces federal spending to below 20 percent of GDP. Simplifies the tax code in order to reduce the cost of compliance, currently estimated at “over $160 billion per year, or 14 percent of all income tax receipts collected.”
• Government spending and budgeting: Implements enforceable spending caps, gives Congress more oversight over “wasteful Washington spending,” and increases spending transparency.
The comparison between the Ryan budget and President Obama’s recently proposed “Path toward Bankruptcy and Dependency” is stark. Including all the new taxes slated to hit Americans due to Obamacare and in the Obama budget plan, the top tax rate on income would increase from 35 percent to 44.8 percent, and that’s without a “millionaire’s surtax” proposed by Senate Democrats. The tax on dividends would more than triple from 15 percent to over 45 percent, and the tax on capital gains would jump from 15 percent to 23.8 percent.
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