Paul Ryan, a Republican, represents Wisconsin's first congressional district and serves as chairman of the House Budget Committee, writes an op-ed in the Wall street Journal explaining the GOP Path to Prosperity.
"Our budget cuts $6.2 trillion in spending from the president's budget over the next 10 years and puts the nation on track to pay off our national debt."--- Paul Ryan, Wall Street Journal April 5, 2011
Congress is currently embroiled in a funding fight over how much to spend on less than one-fifth of the federal budget for the next six months. Whether we cut $33 billion or $61 billion—that is, whether we shave 2% or 4% off of this year's deficit—is important. It's a sign that the election did in fact change the debate in Washington from how much we should spend to how much spending we should cut.
But this morning the new House Republican majority will introduce a budget that moves the debate from billions in spending cuts to trillions. America is facing a defining moment. The threat posed by our monumental debt will damage our country in profound ways, unless we act.
During the last few months, the GOP controlled House of Representatives has been in a public battle with the Democratically controlled Senate and Democratically controlled White House over spending cuts, with the GOP pushing for more and more spending cuts and the Democrats holding on to every bit of government spending they can.
Below I am going to show two visuals. One from Business Insider from February 2011 showing an income statement for the United States and the other provided by Ryan in his WSJ op-ed.
According to the pie chart above the U.S. brought in $2.2 trillion and spent $3.5 trillion.
58 percent of those expenses are from entitlement programs. 20 percent from Social Security, 22 percent from Medicare and Federal Medicaid and 16 percent from Unemployment Insurance and other entitlements.
Those numbers were taken directly from The White House Office of Budget Management.
Anyone who lives on a budget or deals with money in any way should understand that level of spending vs revenue is not sustainable.
The graph Paul released in his WSJ piece shows what will happen if something drastic isn't done.
The GOP Path to Prosperity leaves nothing off the table, addresses entitlements in a way that no one has dared to address them in decades for fear of public backlash because while voters continue to harp on Washington for their continual overspending and enlargement of government, voters also cringe at the thought of specific targeted entitlements and the change needed to stop this free-fall into debt America is on.
The major components in Paul's proposal are Reduce spending, Welfare reform, Health and retirement security, Budget enforcement and Tax reform.
This budget proposes to bring spending on domestic government agencies to below 2008 levels, and it freezes this category of spending for five years. The savings proposals are numerous, and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates's plan to target inefficiencies at the Pentagon.
This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job—it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work.
As we strengthen and improve welfare programs for those who need them, we eliminate welfare for those who don't. Our budget targets corporate welfare, starting by ending the conservatorship of Fannie Mae and Freddie Mac that is costing taxpayers hundreds of billions of dollars. It gets rid of the permanent Wall Street bailout authority that Congress created last year. And it rolls back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation and exploration.
Health and Retirement Security:
This budget's reforms will protect health and retirement security. This starts with saving Medicare. The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way.
Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.
In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America's seniors.
We must also reform Social Security to prevent severe cuts to future benefits. This budget forces policy makers to work together to enact common-sense reforms. The goal of this proposal is to save Social Security for current retirees and strengthen it for future generations by building upon ideas offered by the president's bipartisan fiscal commission.
This budget recognizes that it is not enough to change how much government spends. We must also change how government spends. It proposes budget-process reforms—including real, enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.
This budget would focus on growth by reforming the nation's outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all.
A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage's analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.
From the Heritage Foundation's The Foundry:
House Budget Committee Chairman Paul Ryan’s (R–WI) budget proposal, for the first time in recent memory, sets our nation on a different and better path. It tackles the massive spending excesses of the recent past and the entitlement crisis that is beginning to command our fiscal future. It rejects the politics of government dependence, massively higher taxes and the inevitability of national decline. No budget in decades has had the potential for so fundamentally improving the nation’s prosperity and restoring its vast promise. This is a monumental budget proposal for monumental times, and it opens a serious and necessary conversation about the future of our nation and its great legacy of freedom, opportunity, and self-government.
But in the end, let’s remember where we are and what Chairman Ryan has accomplished. Last year, neither the House nor the Senate passed a required budget resolution. This year, President Obama proposed a budget that more than doubles the national debt. In the first budget of the new Congress, Chairman Ryan has forged a serious path to fix our nation’s fiscal and economic crisis. The House, the Senate, and the President must now do their part so that we may reclaim our nation’s future.
You will hear a lot of talk, Conservatives hailing this plan, Democrats criticizing it, politicians pushing their own political agenda and pundits pushing their own ideology.
Click the links at the top of this post, read it, do the math and decide for yourself if we can sustain the path we are on and if the answer is no, then determine for yourself if you believe this proposal addresses the concerns you have as individuals.