US NATIONAL DEBT
The US is over $14 trillion in debt, the S&P recently downgraded our credit rating outlook from stable to negative, and our Congress continually refuses to pass a budget, but has consistently raised the debt ceiling in the past. We need to stop kicking this metaphorical can down the road because (sooner rather than later) China and everyone else to whom we owe money is going to own that can, and that road, and there will be nothing left to kick but ourselves. How can we possibly explain to our future generations the reason for leaving the United States of America in worse shape than which it was given to us?
Representative Paul Ryan wrote a budget proposal called "Path to Prosperity." It passed the House, but unfortunately, the Democratic-controlled Senate voted against it in May. Even though it did not get past Congress, at least he was the first one to step up and do the dirty work of making the hard decisions on concrete spending cuts and detailed entitlement reformation. His budget does so in order to save our entitlement programs, take a chunk out of our debt, and put us on the path for economic growth.
The current budget negotiations are getting nowhere and they will probably talk right up to the deadline. I do not know about you, but anything that I have ever left until the last minute has not worked out too well. In those circumstances, it ends up being a half-assed, lesser version of what it could have and should have been. Either way, no matter what finally gets passed by Congress, the economy and the national debt will still be some of the main issues in the 2012 elections. This is why I wanted to post about it. The details of Ryan's budget make an excellent proposal and the American economy needs something like it.
SPENDING CUTS
First, let's acknowledge that Ryan's budget actually has $35 trillion of new spending, it is just less new spending than Obama's $49 trillion. I think this just illustrates how ludicrous the spending is from the current administration and Congress.
Representative Ryan is essentially taking the spending back to what it was four years ago, before Representative Nancy Pelosi and the Democrats took over Congress in 2007 and before President Obama took over the White House in 2009. (Side note: this is not to say that the Bush administration is not at fault as well; he passed TARP and allowed the national debt to reach $9.5 trillion by the time Obama took office.) However, the current administration and Congress have already increased it to just over $14 trillion-- that is almost $5 trillion in just two years! (That is half of what it took the country over 200 years to reach.)
Opponents argue that it cuts x percentage of y group and another z percentage of x group. This is part of the demagoguery of this budget because those numbers are being referenced to either A: increases in spending that Obama wants but will not happen with this budget (so I guess now "not increasing" = "cutting") or B: the current spending level that only increased recently under the outrageous spending frenzy of the (not-so) stimulus plan.
ENTITLEMENT REFORMATION
Since the poorest individuals rely the most on the government, it goes without saying that they would be hit the hardest in the case of a fiscal crisis. This is why it is imperative to repair our entitlement programs before they run out of money! I will not get into Medicare reformation because I already dedicated an entire post to the reforms proposed in "Path to Prosperity." But let's not forget: no legislation or proposal can be serious about deficit reduction unless they address Medicare and health care costs.
As for Ryan's budget proposal on Medicaid, opponents state that it cuts benefits for the low-income individuals in this program. That is simply not true. This budget strengthens Medicaid by converting it into a block grant system-- the same thing the government did with welfare in the late 1990s. The initial allocation of federal funds would be exactly as much as the states receive for Medicaid today, and it would grow every year to account for inflation and population. The advantage to the block grant system is allowing states more flexibility to tailor their programs and benefits to fit the specific needs of their low-income populations. This makes sense: low-income individuals in Texas or Florida have different health risks and needs than those in Chicago or New York, based on geography, demographics, weather, etc. So, this change allows states to be more efficient and less wasteful with the Medicaid money that is given to them.
TAX CUTS
Along with spending cuts and entitlement reforms, the budget addresses many other things like regulatory reform and federal reserve changes. It does so in order to reduce crony capitalism and decrease economic uncertainty. And finally, another major aspect of Ryan's proposal are tax cuts. That probably goes without saying, however, I am going to say something (a lot actually) in a post-to-come!
