There are now two ten-year budget plans being offered in Washington. One budget dumps a staggering $9.6 trillion in new debt onto the American people; the other borrows $3.6 trillion less. One budget creates $63,000 in debt per household; the other creates $23,000 less. One budget raises taxes by $1.4 trillion; the other avoids all tax increases and even simplifies the tax code. One budget does nothing to address the unsustainable costs of Social Security and Medicaid; the other begins to reform these programs. One budget permanently raises federal spending to over 22% of GDP; the other lowers it to pre-recession levels.
When President Barack Obama unveiled his budget he told the American people: “We need to be honest with ourselves about what costs are being racked up, because that’s how we’ll come to grips with the hard choices that lie ahead. And there are some hard choices that lie ahead.” But then his budget went on to avoid all of those hard choices, instead moving to borrow and spend at historic levels. Yesterday, House Budget Committee ranking member Paul Ryan (R-WI) offered a clear alternative that does make hard choices. Heritage analyst Brian Riedl details what Ryan’s budget does:
- Freezes non-defense, non-veterans discretionary spending at its current level for five years.
- Reforms entitlement programs like Medicare and Medicaid, which are currently growing 8 percent annually.
- Takes back stimulus spending that would be spent in 2010 and beyond, when the recession is expected to be over.
- Places a moratorium on earmarks until the system can be cleaned up.
The most ambitious part of Ryan’s budget is the effort to contain the $43 trillion, 75-year unfunded liability in Social Security and Medicare. Specifically, it would slowly transition Medicare into a premium support program for individuals who are currently below age 55. This would provide seniors with a health plan similar to the one that Members of Congress and federal employees currently enjoy—one based on consumer choice and competition. The alternative budget would also allow future adjustments to Social Security benefits for upper-income seniors.
The alternative budget would also go a long way to restoring American competitiveness by making the 2001 and 2003 tax cuts permanent, lowering the corporate tax rate from 35% to 25%, and simplifying the tax code by allowing individuals the choice of opting into a system with a 10% marginal tax rate on all incomes below $100,000 and 25% rate on incomes above $100,000. Even with all these changes, the alternative budget would bring in revenues averaging just below 18% of GDP, which is near the historical average.
The contrast the two budgets create could not be starker. President Obama’s plan saddles Americans with historic tax increases, runaway spending, and a doubling of the national debt. Ryan’s alternative reins in spending, simplifies taxes, and lessens the debt burden on American families. Which vision do you believe in?
- North Korea has begun fueling a rocket for a ballistic missile launch, in what missile experts consider a definitive indication that the Communist state will launch it as early as this weekend.
- On a party line vote, the House approved a bill empowering the Treasury Department to stop payment on any compensation that Treasury deems “unreasonable or excessive.”
- The largest tobacco tax hike in American history is nearly three times as likely to affect low-income Americans as it is to affect high-income Americans.
- While 59% of all Americans disapprove of the Obama Administration’s General Motors and Chrysler bailout, 57% of Democrats approve.
- Iowa House of Representatives Speaker Pat Murphy (D) ordered Iowa State Patrol officers to remove more than 500 Iowans from a public hearing on a bill that would raise Iowans taxes by an estimated $595 million a year.