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With seemingly every day bringing more bad news from Europe, many are beginning to ask how much longer the United States has before our welfare state follows the European model into bankruptcy. The bad news is: It may already have.
This year, the fourth straight year that we borrowed more than $1 trillion to support the U.S. government, our budget deficit will top $1.3 trillion, 8.7 percent of our GDP. If you think that sounds bad, it’s because it is. In fact, only two European countries, Greece and Ireland, have larger budget deficits as a percentage of GDP. Things are only slightly better when you look at the size of our national debt, which now exceeds $15.3 trillion, 102 percent of GDP. Just four European countries have larger national debts than we do — Greece and Ireland again, plus Portugal and Italy. That means the U.S. government is actually less fiscally responsible than countries like France, Belgium, or Spain.And as bad as things are right now, we are on an even worse course for the future. If one adds the unfunded liabilities of Social Security and Medicare to our official national debt, we really owe $72 trillion, by the Obama administration’s projections for future Medicare savings under Obamacare, and as much as $137 trillion if you use more realistic projections. Under the best-case scenario, then, this amounts to more than 480 percent of GDP. And, under more realistic projections, we owe an astounding 911 percent of GDP. Meanwhile, counting both official debt and unfunded pension and health-care liabilities, the most indebted nation in Europe is Greece, which owes 875 percent of GDP. That’s right, the United States potentially owes more than Greece. France, the second most insolvent nation in Europe, owes just 549 percent of GDP. Even under the most optimistic scenario, we owe more than such fiscal basket cases as Ireland, Italy, Portugal, and Spain. So far we have been able to avoid the consequences of our profligate ways because the very public turmoil in Europe has helped prop us up as the world’s safe haven for foreign investment. Compared to the euro’s problems, the dollar looks pretty safe. This means that others are still willing to lend us money at absurdly low rates. But that won’t last forever. In fact, already seven European countries, including Germany and Sweden, have better credit ratings than the U.S. Perhaps we can take some solace in the fact that our welfare state is not yet as big as Europe’s. But the key word here is “yet.” Today, our federal government spends more than 24 percent of GDP. Throw in state and local spending, and government at all levels consumes over 43 percent of everything produced in this country over the course of a year. As bad as that is, it’s still less than Europe, where the average of government spending at all levels is slightly more than 50 percent of GDP. But the Congressional Budget Office projects that federal-government spending in this country is currently on a path to exceed 42 percent of GDP by 2050. Government spending at all levels will exceed 59 percent of GDP. And CBO assumes state and local spending will decline in the future, which seems unlikely. By way of comparison, today, Ireland is the only country in Europe with a bigger government than the U.S.’s will be in 2050. That’s right, one can look at countries like France and Greece, or even Denmark and Sweden, and realize that we will eventually have bigger governments than those quintessential welfare states have today. At that point does the United States cease being the United States as we have known it? At the very least, can our economy survive such a crushing burden of government spending, and its attendant level of taxes and debt? Given this looming disaster, President Obama has just submitted a budget that explicitly rejects “austerity,” avoids any reform of Medicare or Social Security, and adds some $7 trillion to the national debt over the next ten years. And Republicans? They are busy debating the pros and cons of birth control. What is wrong with this picture? — Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution. |
Showing posts with label US Debt Crisis. Show all posts
Showing posts with label US Debt Crisis. Show all posts
Tuesday, May 1, 2012
Debt Crisis Focus: We're Already Europe
Saturday, October 15, 2011
Where We Are Right Now - US Government Debt Obligations
There can be a debate about whether we have a revenue problem or a spending problem?
This is the state we are currently in.
This will open your eyes as to what kind of trouble America is in.
Quick and simple analysis. One of the best I have seen.
Kinda puts it all into perspective.
� U.S. Tax revenue: $2,170,000,000,000
� Fed budget: $3,820,000,000,000
� New debt: $1,650,000,000,000
� National debt: $14,271,000,000,000
� Recent budget cut: $38,500,000,000
………………………………………………………………………………
Now, remove 8 zeros and pretend it’s a household budget.
� Annual family income: $21,700
� Money the family spent: $38,200
� New debt on credit: $16,500
� Outstanding balance o f credit: $142,710
� Total budget cuts: $385
Would you still agree to spending more? Will you vote for people who think you should spend more?
This is the state we are currently in.
This will open your eyes as to what kind of trouble America is in.
Quick and simple analysis. One of the best I have seen.
Kinda puts it all into perspective.
� U.S. Tax revenue: $2,170,000,000,000
� Fed budget: $3,820,000,000,000
� New debt: $1,650,000,000,000
� National debt: $14,271,000,000,000
� Recent budget cut: $38,500,000,000
………………………………………………………………………………
Now, remove 8 zeros and pretend it’s a household budget.
� Annual family income: $21,700
� Money the family spent: $38,200
� New debt on credit: $16,500
� Outstanding balance o f credit: $142,710
� Total budget cuts: $385
Would you still agree to spending more? Will you vote for people who think you should spend more?
Tuesday, October 4, 2011
A Penny Saved – will balance the budget
Dear Concerned American,
One penny out of every dollar. That’s all that needs to be cut from our bloated federal government each year for the next seven years to balance the budget.
Sounds too good to be true, doesn’t it? I know. That’s what I thought when I first heard about the Penny Plan.
But believe me, its true.
The only reason it is so unbelievable is because the Washington DC establishment politicians and their accessories in the mainstream media use what I like to call “Washington fuzzy math.”
Let me explain: If you or I didn’t do anything to our spending over the next 10 years, we’d still be spending the same amount in 10 years. That’s just basic common sense.
But we all know Washington doesn’t have any common sense.
If nothing happens in Washington spending over the next ten years will AUTOMATICALLY GO UP TRILLIONS OF DOLLARS, and we will add at least 7 trillion more dollars to our national debt.
But I have a plan to stop that. And best of all, its so simple a Washington politician or journalist could even understand it.
To balance our budget, all we need to do is freeze federal spending today, then cut one percent of the budget each year for the next 7 years.
One penny out of every dollar. That’s all.
But the impact would be huge. You see, it would balance the budget because it is a series of small, but REAL cuts.
Not cuts off some fictional, bloated Congressional baseline. No more gimmicks. No more Washington fuzzy math that assumes every wasteful program must grow every year.
This plan can succeed. It has been gaining more and more attention as our debt problems worse.
Outlets like Fox News, Sean Hannity and Newsmax have written about it.
But the mainstream media and Congress would prefer this sensible plan to balance out budgets simply go away.
That’s where you come in.
To make this plan a reality – to finally balance our budget – I’ll need your immediate help.
That’s why I’m asking you to send a Penny Petition to Washington TODAY. You can click here to sign the Petition.
The Penny plain is being hailed by both conservatives and honest liberal alike as “simple and creative.” I can’t take credit for coming up with the idea – it was originally introduced by Congressman Connie Mack in the House.
But I am sure going to do all I can to move his idea forward.
As someone who came from the Tea Party movement to first be elected to the U.S. Senate in 2010, I think I have a good idea about what has people so mad at the Washington DC establishment.
They spend too much. They refuse to get serious about our debt. And they try to keep simple, clear, common sense plans like the Penny Plan under wraps.
You and I have to take them on, right here, right now.
So I hope you’ll support the Penny Plan Petition, and project of my RAND PAC leadership PAC. This drive will help focus NATIONWIDE attention on the Penny Plan at this crucial time in our fight against out of control debt and spending.
Before I’m done today though, let me tell you a few more important facts about the Penny Plan:* The Penny Plan allows Congress each year to decide which one percent to cut unless they fail to act. Then, one percent of EVERY program is cut, automatically, by law. No exceptions, no waivers, no escape clause.
* The Penny Plan limits spending to 18% of GDP after the 7 years. That number is important because it is the historic revenues levels of the last 40 years. That means the Penny Plan will ensure our budget STAYS balanced.
* The Penny Plan turns the liberals arguments inside out. It is easy to explain – how can anyone possibly be against balancing our budget if all it means is we cut ONE PENNY out of every dollar each year?
So please, join us in our PENNY PETITION DRIVE today. Agree to sign yours and have it sent on your behalf to Congress today.
And if possible, agree to support this vital program by sending a contribution to RANDPAC today, so we may contact millions of Americans to rally candidates and elected officials to this cause.
It is my goal to help RANDPAC make the PENNY PETITION something every single candidate for federal office MUST sign.
But to do that, I’ll need the overwhelming support of Americans like you.
So please, click HERE to support the Penny Plan today.
In Liberty.
Rand Paul MD
U.S. SenatorPS: The Penny Plan is so simple, even Washington politicians should be able to understand it! One percent cuts in spending each year for 7 years to balance the budget. That’s all.
Does anyone believe we can’t find ONE PERCENT a year to cut?
We can, and we must. So please, give your support to RANDPAC and the PENNY PLAN PETITION today!
Saturday, May 14, 2011
Cutting Expenses
The President ordered the cabinet to cut $100 million from the $3.5 trillion federal budget.
I’m so impressed by this sacrifice that I have decided to do the same thing
with my personal budget. I spend about $2000 a month on groceries, household
expenses, medicine, utilities, etc, but it’s time to get out the budget
cutting axe, go through my expenses, and cut back.
I’m going to cut my spending at exactly the same ratio, 1/35,000 of my total
budget. After doing the math, it looks like instead of spending $2000 a
month; I’m going to have to cut that number by six cents. Yes, I’m going to
have to get by with $1999.94, but that’s what sacrifice is all about. I’ll
just have to do without some things, that are, frankly, luxuries.
(Did the president actually think no one would do the math? Please send this
to everyone on your list so people understand what a load of crap this is —as if they didn’t already know)
John Q. Taxpayer
I’m so impressed by this sacrifice that I have decided to do the same thing
with my personal budget. I spend about $2000 a month on groceries, household
expenses, medicine, utilities, etc, but it’s time to get out the budget
cutting axe, go through my expenses, and cut back.
I’m going to cut my spending at exactly the same ratio, 1/35,000 of my total
budget. After doing the math, it looks like instead of spending $2000 a
month; I’m going to have to cut that number by six cents. Yes, I’m going to
have to get by with $1999.94, but that’s what sacrifice is all about. I’ll
just have to do without some things, that are, frankly, luxuries.
(Did the president actually think no one would do the math? Please send this
to everyone on your list so people understand what a load of crap this is —as if they didn’t already know)
John Q. Taxpayer
Thursday, April 21, 2011
Paul Ryan Responds
Two months ago, the president introduced an unserious budget that locks in Washington’s spending spree, adds $13 trillion to the debt over the next decade, and accelerates our nation toward a fiscal crisis. His budget imposes $1.5 trillion in tax increases on job creators and American families, stifling the private-sector job creation that we urgently need. His budget commits seniors to bureaucratically rationed health care, burdens families with ever-higher taxes, and consigns our children and grandchildren to a diminished future.
Two weeks ago, House Republicans advanced their Fiscal Year 2012 budget resolution – The Path to Prosperity. The House Republican budget spurs economic growth and job creation, strengthens the social safety net for those in need, fulfills the mission of health and retirement security for all Americans, and lifts our crushing burden of debt. The Path to Prosperity prevents the president’s tax increases and instead focuses on the root cause of our debt problem: wasteful Washington spending. The House Republicans’ budget reduces government spending by $6.2 trillion over the next decade, and puts the budget on a path to balance in the years ahead.
The Path to Prosperity has reshaped the budget debate – giving the American people an honest assessment of our fiscal challenges and delivering real solutions that restore the promise of our exceptional nation. In the wake of criticism that House Republicans were leading where his budget had failed, the president followed with a speech intended to show that he shared our concerns about the nation’s most urgent fiscal challenges. Unfortunately, instead of delivering solutions, the president delivered a partisan campaign speech, heavy on overheated rhetoric and light on ideas. Where the president did offer ideas, it was more of the same: huge tax increases and a plan for Medicare that builds on last year’s government takeover of health care and involves restricting seniors’ access to care.
As I noted last week, the president’s speech was excessively partisan, dramatically inaccurate, andhopelessly inadequate to the task of averting a fiscal crisis.
Let’s examine further the factual missteps and egregious errors in the president’s speech.
Discretionary Spending
CLAIM: “A 70% cut to clean energy. A 25% cut in education. A 30% cut in transportation. Cuts in college Pell Grants that will grow to more than $1,000 per year. That’s what they’re proposing.”
REALITY: The House Republican budget simply returns non-defense discretionary spending to below 2008 levels. What the president is inadvertently admitting is that he and his party’s leaders in Congress have increased spending by these breathtaking amounts. Americans elected a new Republican majority in 2010 in part because they were appalled at this lack of spending discipline. The House Republican budget simply adheres to our mandate to stop the Democrats’ unchecked spending spree.
CLAIM: “These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget…These are the kind of cuts that tell us we can’t afford the America we believe in.”
REALITY: Incorrect. By returning spending to below 2008 levels, they are the kind of cuts that tell us we cannot afford the Democrats’ unsustainable spending spree. The president has every right to defend his spending record, but implying that common-sense spending restraint is un-American crossed the line.
Medicare
CLAIM: “[The House Republican budget is] a vision that says America can’t afford to keep the promise we’ve made to care for our seniors.”
REALITY: The president’s commitment to the status quo will end Medicare, period. According to the non-partisan CBO, Medicare will go bankrupt in nine short years. The president announced in his speech that he would rely on strict limitations on how much care seniors could receive in order to achieve savings. Contrary to the president’s opinion, CBO does not believe this would result in lower costs. Current seniors would receive less care through Medicare against a backdrop of relentlessly rising health care costs.
This stands in sharp contrast to the House Republican Budget, which gives seniors the tools to fight back against rising costs by empowering them in a personalized Medicare program, giving future generations the same kinds of health care choices members of Congress now enjoy.
CLAIM: “It says that ten years from now, if you’re a 65 year old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today.”
REALITY: This is a false comparison based on a false reality. As mentioned above, the CBO reports that Medicare’s trust fund will become insolvent in nine years unless we act. This would necessitate harsh restrictions on seniors’ access to care – the kind of restrictions that the president himself alluded to later in his speech. The president is taking CBO numbers out of context and omitting the CBO’s clear warnings about Medicare’s impending bankruptcy.
That’s why comparing a Republican plan that saves Medicare to an unsustainable status quo means comparing a real solution with a false reality.The Medicare program as it exists today cannot exist in the future.The real choice is this: Do we act now to protect the program for current seniors while building a strengthened Medicare for future generations? Or do we restrict access to care for currentand future seniors, as the president has proposed, while ignoring our crushing burden of debt until it becomes a fiscal crisis?
CLAIM: “It says instead of guaranteed health care, you will get a voucher.”
REALITY: The changes in the House Republican budget will not affect those in and near retirement in any way. When younger workers become eligible for Medicare, they will be able to choose the kind of plan that best suits their needs from a list of Medicare plans that are guaranteed to offer coverage to all beneficiaries regardless of pre-existing conditions. Medicare would then provide a payment to subsidize the cost of the plan. This is not a voucher – it is a payment that flows through to whatever plan recipients choose.
CLAIM: “And if that voucher isn’t worth enough to buy insurance, tough luck – you’re on your own.”
REALITY: Under the House Republican Budget, Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks, guaranteeing that Medicare will be there for those who need it most. Wealthy seniors will receive less assistance, and the Medicare benefit will grow every year, while using competition to lower costs and make health care for seniors more affordable.
CLAIM: “Put simply, it ends Medicare as we know it.”
REALITY: The president’s plan – a commitment to the status quo – condemns Medicare to a bankrupt future. The greatest threat to the health security of America’s seniors is the president’s plan to deeply and systematically ration Medicare.
Medicaid
CLAIM: “This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit.”
REALITY: Republicans have a vision for patient-centered health-care that requires the removal of the partisan roadblock to reform that the president and his party’s leaders enacted last year. Our budget repeals the government takeover of health care to make way for reforms that will make health insurance more affordable and accessible for Americans.
Contrary to the president’s false claims that the House Republicans’ Medicaid reform plan would leave millions without coverage, Medicaid spending grows every year under our budget. The Medicaid program is already failing those who need it most, because excessive federal mandates have made it so that the only way for states to control costs in the current system is to lower doctor reimbursement rates. This is why so many doctors refuse to see Medicaid patients. States need to be able to tailor their Medicaid programs to the needs of their unique populations. Our reforms help them create better programs. The president’s approach is just to throw more money at a broken system.
Taxes
CLAIM: “Worst of all, this is a vision that says even though America can’t afford to invest in education or clean energy; even though we can’t afford to care for seniors and poor children, we can somehow afford more than $1 trillion in new tax breaks for the wealthy.”
REALITY: The House Republican budget keeps revenue within its historical range of 18-19 percent of GDP. The president’s distortion is based on the fact that our budget prevents $1 trillion in tax increases. Many Democrats have claimed that our plan includes huge new tax cuts for the rich. This is completely false. Our plan calls for revenue-neutral tax reform along the lines of what the president’s Fiscal Commission proposed – lower rates with a broader base. The president appeared to have endorsed this idea in his speech, but he also called for higher rates. Despite this contradiction on tax policy, the president was clear in his intent to raise taxes again on job creators and American families.
Deficit reduction
CLAIM: “Today, I’m proposing a more balanced approach to achieve $4 trillion in deficit reduction over twelve years. It’s an approach that borrows from the recommendations of the bipartisan Fiscal Commission I appointed last year, and builds on the roughly $1 trillion in deficit reduction I already proposed in my 2012 budget. It’s an approach that puts every kind of spending on the table, but one that protects the middle-class, our promise to seniors, and our investments in the future.”
REALITY: The president’s plan lacks credibility. For one thing, is simply does not put “every kind of spending on the table” – the president ruled out changes to Social Security and exempted 90 percent of all federal spending from his debt-reduction as “failsafe.” For another, the president’s use of a 12-year budget window is bizarre – it is clearly contrived to make the president’s proposal appear to come close to matching the House Republicans’ proposal in terms of deficit reduction, when it actually falls a full trillion dollars short.
Conclusion
The president had an opportunity to reach across the aisle and work with Republicans by putting serious deficit-reduction ideas on the table. Instead, he decided to use this opportunity to kick off his 2012 campaign. It is no wonder that a few days after the president’s speech, rating agency Standard and Poor’s downgraded the U.S. debt outlook to negative, expressing skepticism about the president’s approach and implying that his stated position would make it harder, not easier, for the two parties to reach agreement on a serious plan before the 2012 election.
House Republicans will be here if the president changes his mind and decides that the next generation is more important than the next election. Until then, we will continue to lead.
-Congressman Paul Ryan
Two weeks ago, House Republicans advanced their Fiscal Year 2012 budget resolution – The Path to Prosperity. The House Republican budget spurs economic growth and job creation, strengthens the social safety net for those in need, fulfills the mission of health and retirement security for all Americans, and lifts our crushing burden of debt. The Path to Prosperity prevents the president’s tax increases and instead focuses on the root cause of our debt problem: wasteful Washington spending. The House Republicans’ budget reduces government spending by $6.2 trillion over the next decade, and puts the budget on a path to balance in the years ahead.
The Path to Prosperity has reshaped the budget debate – giving the American people an honest assessment of our fiscal challenges and delivering real solutions that restore the promise of our exceptional nation. In the wake of criticism that House Republicans were leading where his budget had failed, the president followed with a speech intended to show that he shared our concerns about the nation’s most urgent fiscal challenges. Unfortunately, instead of delivering solutions, the president delivered a partisan campaign speech, heavy on overheated rhetoric and light on ideas. Where the president did offer ideas, it was more of the same: huge tax increases and a plan for Medicare that builds on last year’s government takeover of health care and involves restricting seniors’ access to care.
As I noted last week, the president’s speech was excessively partisan, dramatically inaccurate, andhopelessly inadequate to the task of averting a fiscal crisis.
Let’s examine further the factual missteps and egregious errors in the president’s speech.
Discretionary Spending
CLAIM: “A 70% cut to clean energy. A 25% cut in education. A 30% cut in transportation. Cuts in college Pell Grants that will grow to more than $1,000 per year. That’s what they’re proposing.”
REALITY: The House Republican budget simply returns non-defense discretionary spending to below 2008 levels. What the president is inadvertently admitting is that he and his party’s leaders in Congress have increased spending by these breathtaking amounts. Americans elected a new Republican majority in 2010 in part because they were appalled at this lack of spending discipline. The House Republican budget simply adheres to our mandate to stop the Democrats’ unchecked spending spree.
CLAIM: “These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget…These are the kind of cuts that tell us we can’t afford the America we believe in.”
REALITY: Incorrect. By returning spending to below 2008 levels, they are the kind of cuts that tell us we cannot afford the Democrats’ unsustainable spending spree. The president has every right to defend his spending record, but implying that common-sense spending restraint is un-American crossed the line.
Medicare
CLAIM: “[The House Republican budget is] a vision that says America can’t afford to keep the promise we’ve made to care for our seniors.”
REALITY: The president’s commitment to the status quo will end Medicare, period. According to the non-partisan CBO, Medicare will go bankrupt in nine short years. The president announced in his speech that he would rely on strict limitations on how much care seniors could receive in order to achieve savings. Contrary to the president’s opinion, CBO does not believe this would result in lower costs. Current seniors would receive less care through Medicare against a backdrop of relentlessly rising health care costs.
This stands in sharp contrast to the House Republican Budget, which gives seniors the tools to fight back against rising costs by empowering them in a personalized Medicare program, giving future generations the same kinds of health care choices members of Congress now enjoy.
CLAIM: “It says that ten years from now, if you’re a 65 year old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today.”
REALITY: This is a false comparison based on a false reality. As mentioned above, the CBO reports that Medicare’s trust fund will become insolvent in nine years unless we act. This would necessitate harsh restrictions on seniors’ access to care – the kind of restrictions that the president himself alluded to later in his speech. The president is taking CBO numbers out of context and omitting the CBO’s clear warnings about Medicare’s impending bankruptcy.
That’s why comparing a Republican plan that saves Medicare to an unsustainable status quo means comparing a real solution with a false reality.The Medicare program as it exists today cannot exist in the future.The real choice is this: Do we act now to protect the program for current seniors while building a strengthened Medicare for future generations? Or do we restrict access to care for currentand future seniors, as the president has proposed, while ignoring our crushing burden of debt until it becomes a fiscal crisis?
CLAIM: “It says instead of guaranteed health care, you will get a voucher.”
REALITY: The changes in the House Republican budget will not affect those in and near retirement in any way. When younger workers become eligible for Medicare, they will be able to choose the kind of plan that best suits their needs from a list of Medicare plans that are guaranteed to offer coverage to all beneficiaries regardless of pre-existing conditions. Medicare would then provide a payment to subsidize the cost of the plan. This is not a voucher – it is a payment that flows through to whatever plan recipients choose.
CLAIM: “And if that voucher isn’t worth enough to buy insurance, tough luck – you’re on your own.”
REALITY: Under the House Republican Budget, Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks, guaranteeing that Medicare will be there for those who need it most. Wealthy seniors will receive less assistance, and the Medicare benefit will grow every year, while using competition to lower costs and make health care for seniors more affordable.
CLAIM: “Put simply, it ends Medicare as we know it.”
REALITY: The president’s plan – a commitment to the status quo – condemns Medicare to a bankrupt future. The greatest threat to the health security of America’s seniors is the president’s plan to deeply and systematically ration Medicare.
Medicaid
CLAIM: “This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit.”
REALITY: Republicans have a vision for patient-centered health-care that requires the removal of the partisan roadblock to reform that the president and his party’s leaders enacted last year. Our budget repeals the government takeover of health care to make way for reforms that will make health insurance more affordable and accessible for Americans.
Contrary to the president’s false claims that the House Republicans’ Medicaid reform plan would leave millions without coverage, Medicaid spending grows every year under our budget. The Medicaid program is already failing those who need it most, because excessive federal mandates have made it so that the only way for states to control costs in the current system is to lower doctor reimbursement rates. This is why so many doctors refuse to see Medicaid patients. States need to be able to tailor their Medicaid programs to the needs of their unique populations. Our reforms help them create better programs. The president’s approach is just to throw more money at a broken system.
Taxes
CLAIM: “Worst of all, this is a vision that says even though America can’t afford to invest in education or clean energy; even though we can’t afford to care for seniors and poor children, we can somehow afford more than $1 trillion in new tax breaks for the wealthy.”
REALITY: The House Republican budget keeps revenue within its historical range of 18-19 percent of GDP. The president’s distortion is based on the fact that our budget prevents $1 trillion in tax increases. Many Democrats have claimed that our plan includes huge new tax cuts for the rich. This is completely false. Our plan calls for revenue-neutral tax reform along the lines of what the president’s Fiscal Commission proposed – lower rates with a broader base. The president appeared to have endorsed this idea in his speech, but he also called for higher rates. Despite this contradiction on tax policy, the president was clear in his intent to raise taxes again on job creators and American families.
Deficit reduction
CLAIM: “Today, I’m proposing a more balanced approach to achieve $4 trillion in deficit reduction over twelve years. It’s an approach that borrows from the recommendations of the bipartisan Fiscal Commission I appointed last year, and builds on the roughly $1 trillion in deficit reduction I already proposed in my 2012 budget. It’s an approach that puts every kind of spending on the table, but one that protects the middle-class, our promise to seniors, and our investments in the future.”
REALITY: The president’s plan lacks credibility. For one thing, is simply does not put “every kind of spending on the table” – the president ruled out changes to Social Security and exempted 90 percent of all federal spending from his debt-reduction as “failsafe.” For another, the president’s use of a 12-year budget window is bizarre – it is clearly contrived to make the president’s proposal appear to come close to matching the House Republicans’ proposal in terms of deficit reduction, when it actually falls a full trillion dollars short.
Conclusion
The president had an opportunity to reach across the aisle and work with Republicans by putting serious deficit-reduction ideas on the table. Instead, he decided to use this opportunity to kick off his 2012 campaign. It is no wonder that a few days after the president’s speech, rating agency Standard and Poor’s downgraded the U.S. debt outlook to negative, expressing skepticism about the president’s approach and implying that his stated position would make it harder, not easier, for the two parties to reach agreement on a serious plan before the 2012 election.
House Republicans will be here if the president changes his mind and decides that the next generation is more important than the next election. Until then, we will continue to lead.
-Congressman Paul Ryan
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