Ryan proposes a budget that will balance in 10 years. Will it work?
Paul Ryan finds himself in the national spotlight again today, as he unveils the House GOP budget.
As Andrew Stiles notes, the document will not only affect Ryan’s 2016 presidential prospects, it will also lay out a blueprint for the conservative alternative to Obamanomics.
Unlike past efforts, this year’s GOP budget will reach balance within a ten-year period (without raising taxes), a long-sought goal of conservatives. "This budget will return the term 'balance’ from political slogan to actual fiscal concept," says Doug Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum.
However, as Ryan told reporters last week, "it doesn’t take enormous changes in our budget to get there." That is because it will incorporate recent deficit-reduction agreements, including the Budget Control Act of 2011, the automatic spending cuts under sequestration, and, perhaps most controversially, the $600 billion in tax increases negotiated to avert the fiscal cliff earlier this year.
This year’s budget will reduce spending by $4.6 trillion, which is roughly the same amount as last year’s effort. And it is hardly the drastic austerity program that Democrats are sure to accuse Republicans of promoting. Instead of increasing federal spending by 4.9 percent over the next decade on the current trajectory, Ryan will propose growing spending at the more modest rate of 3.4 percent. Instead of spending $46 trillion over the next ten years, Ryan will propose spending $41 trillion.
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%.