Rep. Paul Ryan delivered a speech today outlining the serious fiscal issues facing our country, and the choices before us. We can either choose the Democrats’ path of shared scarcity, or Ryan and some of his fellow Republicans’ path of renewed prosperity. He recognized that his party shares in the blame on how we got to this point, but he’s looking forward.
The complete transcript is here, but here are some of the key quotes:
Despite talk of a recovery, the economy is badly underperforming. Growth last quarter came in at just 1.8 percent. We’re not even creating enough jobs to employ new workers entering the job market, let alone the six million workers who lost their jobs during the recession.
The rising cost of living is becoming a serious problem for many Americans. The Fed’s aggressive expansion of the money supply is clearly contributing to major increases in the cost of food and energy.
An even bigger threat comes from the rapidly growing cost of health care, a problem made worse by the health care law enacted last year.
Most troubling of all, the unsustainable trajectory of government spending is accelerating the nation toward a ruinous debt crisis.
This trajectory is catastrophic. By the end of the decade, we will be spending 20 percent of our tax revenue simply paying interest on the debt – and that’s according to optimistic projections. If ratings agencies such as S&P move from downgrading our outlook to downgrading our credit, then interest rates will rise even higher, and debt service will cost trillions more.
This course is not sustainable. That isn’t an opinion; it’s a mathematical certainty. If we continue down our current path, we are walking right into the most preventable crisis in our nation’s history.
So the question is, how do we avoid it?
The answer is simple. We have to make responsible choices today, so that our children don’t have to make painful choices tomorrow.
The budget passed by the House last month takes credible steps to controlling health care costs. It aims to do two things: to put our budget on a path to balance, and to put our economy on a path to prosperity.
I am here today to stress the point that these goals go hand in hand. Stable government finances are essential to a growing economy, and economic growth is essential to balancing the budget.
The name of our budget is The Path to Prosperity.
See, right now, we’re finally having a debate in Washington about how to address our fiscal problems. But we’re still not having the debate we need to have.
To an alarming degree, the budget debate has degenerated into a game of green-eyeshade arithmetic, with many in Washington – including the President – demanding that we trade ephemeral spending restraints for large, permanent tax increases.
This sets up a debate in which we are really just arguing over who to hurt and how best to manage the decline of our nation. It is a framework that accepts ever-higher taxes and bureaucratically rationed health care as givens.
I call it the “shared scarcity” mentality. The missing ingredient is economic growth.
Shared scarcity represents a deeply pessimistic vision for the future of this country – one in which we all pay more and we all get less. I believe it would leave us with a nation that is less prosperous and less free.
To begin with, chasing ever-higher spending with ever-higher tax rates will decrease the number of makers in society and increase the number of takers. Able-bodied Americans will be discouraged from working and lulled into lives of complacency and dependency.
Worse – when it becomes obvious that taxing the rich doesn’t generate nearly enough revenue to cover Washington’s empty promises – austerity will be the only course left. A debt-fueled economic crisis will force massive tax increases on everyone and indiscriminate cuts on current beneficiaries – without giving them time to prepare or adjust. And, given the expansive growth of government, many of these critical decisions will fall to bureaucrats we didn’t elect.
Shared scarcity impedes economic growth, results in harsh austerity, and ends with lost freedom.
We know what that something else must be, because we know what has always made growth possible in America. We need to answer that call for new economic leadership by getting back to the four foundations of economic growth:
First, we have to stop spending money we don’t have, and ultimately that means getting health care costs under control.
Second, we have to restore common sense to the regulatory environment, so that regulations are fair, transparent, and do not inflict undue uncertainty on America’s employers.
Third, we have to keep taxes low and end the year-by-year approach to tax rates, so that job creators have incentives to invest in America; and
Fourth, we have to refocus the Federal Reserve on price stability, instead of using monetary stimulus to bail out Washington’s failures, because businesses and families need sound money.
Let me deal with each in order.
The first foundation, real spending discipline: it’s pretty simple. You can’t get real, sustainable growth by continuing to pile on the debt. More debt means more uncertainty, and more uncertainty means fewer jobs.
The rating agency S&P just downgraded the outlook on U.S. debt from “stable” to “negative.” That sends a signal to job creators. If S&P is telling them that America is a bad investment, they’re not going to expand and create jobs in America – not at the rate we need them to.
Mounting debt also threatens our poorest and most vulnerable citizens, because those who depend most on government would be hit hardest by a fiscal crisis. We have to repair our safety net programs so that they are there for those who need them most. This starts by building on the successful, bipartisan welfare reforms of the mid-1990s.
Our reforms save the social safety net by giving more power to governors to create strong, flexible programs that better serve the needs of their populations. Most important, they make these programs solvent.
We’ve advanced legislation to revisit the flawed Dodd-Frank law, which actually intensifies the problem of too-big-to-fail by giving large, interconnected financial institutions advantages that small firms do not enjoy.
But most important, we propose to repeal the new health care law and its burdensome maze of new regulations. It’s bad enough that the law imposes an unconstitutional mandate on every American; it also imposes new regulations on businesses, which are stifling job creation.
Let me share with you a figure that serves as a devastating indictment of the new health care law: So far, over 1,000 businesses and organizations have been granted waivers from the law’s onerous mandates. These waivers may prevent job losses now, but they do not guarantee relief in the future, nor do they help those firms that lack the connections to lobby for waivers.
This is no way to create jobs in America. True, bipartisan health care reform starts by repealing this partisan law.
The third foundation recognizes that we cannot get our economy back on track if Washington tries to tax its way out of this mess.
The economics profession has been really clear about this – higher marginal tax rates create a drag on economic growth.
As the University of Chicago’s John Cochrane recently wrote: “No country ever solved a debt problem by raising tax rates. Countries that solved debt problems grew, so that reasonable tax rates times much higher income produced lots of tax revenue. Countries that did not grow inflated or defaulted.”
Higher taxes are not the answer.
Finally, the fourth foundation calls for rules-based monetary policy to protect working families and seniors from the threat of high inflation.
The Fed’s recent departures from rules-based monetary policy have increased economic uncertainty and endangered the central bank’s independence.
A simpler, fairer tax code is needed for the individual side, too. Individuals, families, and employers spend over six billion hours and over $160 billion per year figuring out how to pay their taxes. It’s time to clear out the tangle of credits and deductions and lower tax rates to promote growth.
The House-passed budget does that by making the tax code simpler… flatter… fairer… more globally competitive… and less burdensome for working families and small businesses.
By contrast, the President says he wants to eliminate deductions, but he also wants to raise rates. That includes raising the top rate to 44.8 percent. That would amount to a $1.5 trillion tax increase on families and job creators.
The President says that only the richest people in America would be affected by his plan… Class warfare may be clever politics, but it is terrible economics. Redistributing wealth never creates more of it.
Further, the math is clear – the government cannot close its enormous fiscal gap simply by taxing the rich. This gap grows by trillions of dollars each year, representing tens of trillions in unfunded promises to future generations that the government has no plan to keep.
There’s a civic side to this as well. Sowing social unrest and class envy makes America weaker, not stronger. Playing one group against another only distracts us from the true sources of inequity in this country – corporate welfare that enriches the powerful, and empty promises that betray the powerless.
Those committed to the mindset of “shared scarcity” are telling future generations, sorry, you’re just going to have to make do with less. Your taxes will go up, because Washington can’t get government spending down.
That’s the real class warfare that threatens us – a class of governing elites picking winners and losers, and determining our destinies for us.
We face a choice between two futures. We can continue to go down the path toward shared scarcity, or we can choose the path of renewed prosperity.
The question before us is simple: Which path will our generation choose? …
Okay, that was a bit more than a few short quotes, but I liked the speech. You should read the whole thing, and share it. This was an important speech that was overshadowed by Donald Trump bowing out of the presidential primary and Newt Gingrich’s attack on Ryan’s plan.
Every Republican should read this and start making the case to the American people. This isn’t about hurting seniors, today’s retirees won’t even be effected. Anyone who says otherwise is lying.
Update: Memeorandum now has a thread and linked.