A Budget We Can Believe In
There are now two ten-year budget plans being offered in Washington. One budget dumps a staggering $9.6 trillion in new debt onto the American people; the other borrows $3.6 trillion less. One budget creates $63,000 in debt per household; the other creates $23,000 less. One budget raises taxes by $1.4 trillion; the other avoids all tax increases and even simplifies the tax code. One budget does nothing to address the unsustainable costs of Social Security and Medicaid; the other begins to reform these programs. One budget permanently raises federal spending to over 22% of GDP; the other lowers it to pre-recession levels.
When President Barack Obama unveiled his budget he told the American people: “We need to be honest with ourselves about what costs are being racked up, because that’s how we’ll come to grips with the hard choices that lie ahead. And there are some hard choices that lie ahead.” But then his budget went on to avoid all of those hard choices, instead moving to borrow and spend at historic levels.
Yesterday, House Budget Committee ranking member Paul Ryan (R-WI) offered a clear alternative that does make hard choices. Heritage analyst Brian Riedl details what Ryan’s budget does:
Freezes non-defense, non-veterans discretionary spending at its current level for five years.
Reforms entitlement programs like Medicare and Medicaid, which are currently growing 8 percent annually.
Takes back stimulus spending that would be spent in 2010 and beyond, when the recession is expected to be over.
Places a moratorium on earmarks until the system can be cleaned up.
The most ambitious part of Ryan’s budget is the effort to contain the $43 trillion, 75-year unfunded liability in Social Security and Medicare. Specifically, it would slowly transition Medicare into a premium support program for individuals who are currently below age 55. This would provide seniors with a health plan similar to the one that Members of Congress and federal employees currently enjoy—one based on consumer choice and competition. The alternative budget would also allow future adjustments to Social Security benefits for upper-income seniors.
The alternative budget would also go a long way to restoring American competitiveness by making the 2001 and 2003 tax cuts permanent, lowering the corporate tax rate from 35% to 25%, and simplifying the tax code by allowing individuals the choice of opting into a system with a 10% marginal tax rate on all incomes below $100,000 and 25% rate on incomes above $100,000. Even with all these changes, the alternative budget would bring in revenues averaging just below 18% of GDP, which is near the historical average.
The contrast the two budgets create could not be starker. President Obama’s plan saddles Americans with historic tax increases, runaway spending and a doubling of the national debt. Ryan’s alternative reins in spending, simplifies taxes and lessens the debt burden on American families. Which vision makes more sense?
5 comments:
I have heard this alternative plan has actual numbers in it!! It also relies on the Republican solution to everything-tax cuts. And it also would basically "privatize" medicare(gee, let's do that with Social Security also-Wall St. can handle it!)under the guise of the "premium support" plan. Fortunately, this plan is dead on arrival, the Dems will get their plan one way or another, either on a straight vote or through "reconciliation"(no filibuster allowed).
Give one example in the history of the world where raising taxes and deficit spending has fixed any economy anywhere.
Reagan reversed himself in '82 and '83 and raised taxes in order to pay for his increased defense spending, which, as any true believer knows, was responsible for eventually bringing the Russians to their knees.
So, was this tax increase worth it-to put the final nail in the coffin of the Soviet machine? Of course, he still did leave deficits at the end of his term which Bushed #1 was forced to try and clean up by abandoning his "no new taxes" pledge. Which paved the way for your favorite, "the man from Hope", who actually did raise taxes once again, balanced the budget, thereby handing Bushed #2 a 1.2 trillion surplus, and had the best economy and job creation Presidency in the last 50 years! But, I guess, the worst financial collapse in our country's history does not warrant allowing the top income tax bracket to snap back to 39% from 35% in 2010-some of those making over 250k/yr. may be forced to sell a yacht or two!
You are correct. Reagan did raise taxes a couple of times - gasoline and the bottom rate. Historians differ as to whether either of those were even necessary. However, by cutting corporate rates he jumpstarted the economy by encouraging investment and risk taking which in turn created jobs which increased government revenue. Bush #1 says increasing taxes was the worst mistake he made in office, both politically and fiscally. One interesting thought I read was deficit spending is not bad if it leads to profits. In other words, if you borrow $1 to make $10, then it's a good thing. So sometimes when deficit spending goes up, so does revenue and profitability. I can relate it somewhat to Clinton and Bush. I'm trying to relate this to the Obama budget, but I'm afraid it's like comparing apples and oranges.
As long as there are no term limits, there will be huge deficits.
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