Ryan's plan will work!
Posted 04/05/2011 06:39 PM ET
America's Fiscal Future: Paul Ryan's budget plan dramatically slows spending growth, gets entitlements under control and begins the arduous task of easing the nation's crippling debt load. So what's not to like?
As Congress argues over a measly $33 billion in cuts to the 2011 budget to keep the government from shutting down, the plan by House Budget Chairman Ryan for 2012 and beyond not only reverses the Democrats' profligacy but returns the U.S. to a path of fiscal responsibility.
The plan trims $6.2 trillion from President Obama's budget (see chart), driving outlays back below 20% of GDP, their historic average, and well below the 25% in Obama's budget.
As for the squealing of the Democrats over vicious "cuts," spending actually grows from 2011 to 2021 under Ryan's plan by $1.12 trillion — an increase of 31%, or 3.1% a year. So those who say government is being "slashed" are being disingenuous.
In contrast, since Democrats took over Congress in 2006, spending has risen $1.2 trillion, or 44%. That amounts to a yearly gain of 9% that has pushed us to the brink of insolvency.
One thing that Ryan does slash is the deficit — by $4.4 trillion over 10 years. That's $4.4 trillion less for our children and grandchildren to repay. More importantly, debt peaks at a projected 74.5% of GDP in 2013, then recedes to 67.5% by 2021 — vs. 87.4% under Obama's budget.
This is accomplished mainly by reforming entitlement and welfare spending in ways that lower costs while giving people more choices.
Ryan starts by overturning ObamaCare, saving hundreds of billions of dollars in higher taxes. Then, for the first time ever, he proposes serious reforms for Medicare, the greatest danger to America's fiscal health.
Instead of government paying providers directly and deciding what their services are worth, new retirees would receive "premium support" to help them buy insurance on the open market — similar to the much-envied plan that Congress itself has now.
Ryan also reforms the welfare system, giving block grants to states for both Medicaid and food stamps. This gets the federal government out of the business of micromanaging Americans' choices and puts states in charge, as it should be.
None of this, of course, works without a healthy economy. To that end, following President Reagan's notably successful lead, Ryan proposes a bold tax reform — one that reduces the top corporate and individual tax rates from 36% and 39.6%, respectively, to 25%, and gets rid of many of what Ryan calls "deductions and loopholes" that make our tax code hideously complex and costly.
This is a great plan. And it's one that Americans, weary of the Big Government meddling of recent years, are ready to embrace. The only question is: Can Democrats muster the political wisdom and courage to support something from the opposition that would work?