There is no alternative to its long-term perspective and the squawkers know it.
Both the Left and the Right are grousing about House Budget Committee Chairman Paul Ryan’s 2013 budget. Both are factually wrong.
For conservatives, there are two amazing fundamentals in Ryan’s budget. First is how quickly it gets spending, deficits, and debt under manageable control. Emphasis on the word manageable, not completely solved.
Ryan’s budget actually cuts the total level of federal spending in nominal dollars for each of the first two years. Total federal spending actually declines from 2012 to 2013, and then declines again from 2013 to 2014. That would be the first and only time that has happened since the beginning of the Eisenhower Administration 60 years ago, when we were still climbing down from runaway wartime spending. Total federal spending under Ryan’s budget does not rise above the 2012 level until 2016. The total increase in federal spending over those four first years of Ryan’s budget is 1.8 percent. Those would be the four most tight-fisted years in federal spending growth since the Eisenhower Administration as well.
By 2015, after just three years under Ryan’s budget, federal spending would be nearly back to its long-term, historical average since World War II as a percent of GDP, at 20.1 percent, down from 24.3 percent today. That is a cut in federal spending of 4.2 percent of GDP in just 3 years. Even with Ryan’s proposed reductions in individual and corporate tax rates, federal revenues would be restored to their long-term postwar average as a percent of GDP as well. That would leave the deficit in 2015 at a quite manageable 1.7 percent of GDP, compared to roughly 9 percent on average under President Obama.
Balancing the Budget
Most amazingly, even under CBO’s static scoring, the federal deficit in actual nominal dollars would be reduced to $182 billion by 2017, the fifth year of the budget. That compares to $1,327 billion, or $1.327 trillion, today. So in just five years, even under CBO’s static scoring, the deficit is reduced by 86 percent. The deficit is less than 1 percent of GDP by that year, at 0.9 percent, where it stabilizes for 6 years to the end of the 10-year budget window.
Given the sharp income tax rate cuts in Ryan’s budget, with dynamic scoring the budget would probably be balanced by that fifth year, 2017. Club for Growth President Chris Chocola should pay Fiscal Associates the $10,000 that would be needed to do a real dynamic score of Ryan’s budget to find out. That would be a major contribution to public policy.
But even under CBO’s horse and buggy static scoring, Ryan’s budget does solve America’s debt crisis. Federal debt held by the public is reduced from 77 percent of GDP in 2013 to 62 percent by 2022, reducing it by a third from the nearly 100 percent it would be by then on our current course. That averts the crisis, assuring that the credit markets will not abandon us as they did in Greece.
Moreover, under Ryan’s budget, federal debt held by the public continues on a sharp decline from there, as the long-term effects of Ryan’s structural entitlement reforms phase in. Debt held by the public is reduced to 53 percent of GDP by 2030, 38 percent by 2040, and 10 percent by 2050. That means the national debt is all but paid off by 2050, and would be soon thereafter. In fact, under dynamic scoring it probably would be paid off by then.
By contrast, on our current course, under CBO’s Alternative Fiscal Scenario, that federal debt rockets to 128 percent of GDP by 2030 (so Ryan cuts that by more than half by then), 194 percent by 2040, and 320 percent by 2050, on its way to over 700 percent by 2080. That is a clear path to bankruptcy, which Ryan transforms into paying off the entire national debt soon after 2050.
You can’t discount these longer term projections as meaningless, for two reasons. First, that is how the crisis is defined, by projecting current debt trends long term. You can’t define the problem as long-term federal debt projections, and then disdain a long-term solution that transforms those long-term projections. Secondly, the solution is careful, long-term, structural entitlement reform that produces enormous changes over the long run. Under those careful Ryan entitlement reforms, no one gets hurt, contrary to the hysterics of the infantile left (which encompasses today’s Democrat party and its media allies). To discount the long-term effects of those careful structural reforms as too far into the future to take seriously is to deny the possibility and opportunity of such fundamental, structural long-term reforms that are politically viable, to embrace draconian, peremptory, entitlement cuts that would be validly subject to the hysterics of infants. That rejects a long-term solution that is viable, for a shorter term solution that is not viable and is never going to see the light of day.
Federal spending as a percent of GDP is reduced to 16 percent by 2050 under Ryan’s budget, one fifth lower than the long-term, historical, postwar average. That is not the promise of future spending cuts that will never happen. That is the long-term effect of the entitlement reforms that would be adopted today under Ryan’s budget. That is consequently a huge achievement that conservatives should embrace and fight for, not discount. Moreover, that 16 percent would actually be significantly lower under dynamic scoring, because the GDP will be so much bigger by 2050 under Ryan’s pro-growth tax reforms.
During the Bush Administration, the President and congressional Republicans did lose control of federal spending, letting it rise by one seventh as a percent of GDP. That reversed a very successful reduction in government spending by the Republican Congress before then, with federal spending declining by one seventh as a percent of GDP from 1994 to 2000, which was accomplished under Newt Gingrich’s leadership.
But President Obama is following the Bush apostasy by increasing federal spending as a percent of GDP in four years by one third more than President Bush did in eight years. In his 2013 budget, Obama proposes to increase federal spending by $2 trillion a year by 2022, $9 trillion more over the next 10 years as compared to this year’s level of spending over those 10 years.
President Obama’s budget actually proposes to spend $47 trillion over the next 10 years, actually increasing spending above the current CBO baseline, ridiculously heedless of America’s fiscal crisis. Ryan’s budget proposes to cut that by $6.8 trillion. By 2022, Ryan’s budget would be spending nearly a trillion dollars less per year than President Obama’s budget. That reflects the long-term fix in Ryan’s budget.
Here is the bottom line between the two budgets. Ryan returns federal spending to its long-term, historical, postwar average at 20 percent of GDP for the next 20 years. Under the budget proposed by President Obama and the Democrats, federal spending soars to 30 percent of GDP by 2027, 40 percent by 2040, 50 percent by 2060, and 80 percent by 2080. Actually, it is much higher than that, as GDP would collapse under that burden. Add in another 15 percent of GDP for state and local spending, and we are at full blown communism.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?