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  • Lunch With Heritage: Online Chat on the Obama and Paul Ryan (R-WI) Budgets

    With his speech Wednesday, President Obama unveiled his plans for the FY 2012 budget that is loaded with more spending and tax increases. A few weeks ago, Rep. Paul Ryan (R-WI) unveiled his Path to Prosperity that was loaded spending cuts and real tax reform. Join us right now. We are joined by Heritage’s Director of the Roe Center for Economic Policy Studies Alison Fraser. She will take your questions on both budget proposals.

    Lunch with Heritage feat. Alison Fraser

    Posted in Economics [slideshow_deploy]

    9 Responses to Lunch With Heritage: Online Chat on the Obama and Paul Ryan (R-WI) Budgets

    1. George Colgrove VA says:

      Now, I want to believe Paul Ryan has this countries future at heart, but I am failing to see where Ryan’s Budget is any different than the current Obama 2012 budget.

      I have given up hope the 2011 budget will be fixed. We will go deeper into debt by $1.6 trillion or more. The corrupt congress will abide by the threats of the corrupt department of Treasury and will comply to increase the debt ceiling by conning the people once again that they will cut even more from the budget. We will have a National debt of $15.5 trillion or more by COB Sept 30, 2011 (close of FY11).

      Overall 2011 spending, after all is said and done, will be cut by just under $500 million dollars after increasing defense spending and some entitlements. This is like a pisshole on Mount Everest! These increases wiped out the cost cuts totaling $38 billion. Therefore, this year we just rearranged the chairs on the Titanic. We robbed Peter to give to Paul – that is all. All pet projects are paid for in full (maybe even more) and all congress members will have their pockets properly greased for all their efforts. Kudos to corruption and greed in the federal government! We the people will take the hit – again.

      Setting the sites on 2012, Ryan seems to be doing the following:

      - Overall 2012 budget only goes down by $200 billion and will sustain a deficit of just under a trillion dollars. This means that by COB FY12, based on government projected numbers, the national debt will be just under $17 trillion without considering the addition of unpaid interest.

      - Ryan is suggesting we pay only $256 billion (an increase of $15 billion over the current FY12 budget) on what will likely be over $500 billion in interest charges – this shows business as usual.

      - Ryan’s budget does seem to be reducing “Security” costs by $58 billion. However, I am lumping “Law enforcement components of the federal government and DoD numbers together as total “security” budgets (for FY12 that would be $859 billion and Ryan has $801 billion). I am not sure if Ryan is taking out administrative costs of these two departments in his summaries or what components he is considering “Security.” This may explain his higher than expected “Non-Security” costs. I think we need to get back to basic titles. The term “security” is vague and not fully transparent. In obfuscations, Obama and the DoD began using that term.

      - Mandatory spending or “entitlements” include Veteran’s spending (6%); Social Security (33%); Medicare (aid) (35%); welfare (19%) and federal employee benefits (6%). Ryan’s budget seems to be decreasing these costs by $335 billion. One thing that excites me is that he is talking about privatizing Medicare. This program will benefit greatly by being administered by a private sector professional workforce who are paid reasonable rates, who are more efficient and have far better customer service. It will eliminate thousands of costly federal positions. This model should be used for the administration of Medicaid and Social Security and many other federal positions throughout as well. These programs would only need half the workforce in the private sector and people would be compensated (both pay and benefits) half of what federal workers are currently compensated, thus reducing the administrative costs by 75%.

      What confuses me about Ryan’s budget is that he says he is returning “non-security”, non-mandatory or also known as discretionary spending to 2008 levels. This is what I know; in 2008, we spent $102 billion on education; $78 billion on transportation; $21 billion on general government and finally $99 billion on “other” government spending or $300 billion. In 2012, the plan was to spend $121 billion on education; $105 billion on transportation; $33 billion on general government and finally $142 billion on “other” government spending or $400 billion. Ryan’s “Non-Security” spending is $482 billion. Therefore, in this area, I think there are some numbers that do not add up. But keep in mind, returning discretionary spending to 2008 only reduces the current FY12 budget by only $100 billion. We need to decrease that budget by $1.1 trillion as that is the estimated deficit.

      The current FY2012 budget was supposed to be $3.73 trillion. Ryan’s budget is slated to be $3.53 trillion – before congressional negotiations – mind you. Meaning his budget as is, is not much different than Obama’s. There is no kudos’s here! In addition, the federal government is assuming that they will have tax revenue of $2.62 trillion. The sad thing is the feds assumed they would get $2.58 trillion in revenue for 2011. Based on receipts thus far, I do not believe they will be much higher than $2 trillion, meaning that we are already $500 billion further in the hole due to bad projections (but we still have 6 months to go).

      Extending upon the above, tax revenue is further expected to be $2.63 trillion for 2012. This is some news to consider for that number. The Federal Reserve reported recently that household incomes in America went down by an alarming 21% to 23%. 13% of all houses are unoccupied. We are at late ‘70’s – early 80’s unemployment levels and instead of looking forward to tax cuts as provided by Reagan, we are looking at tax hikes already implemented by Obama and the previous and current congress. Recovery is NOT around the corner as it was in the 80’s. To go beyond that, increasing tax rates on corporations and the wealthy will surely put more Americans out of work in the same way it did when FDR did the same thing in the 30’s.

      The CBO and OMB are using made up GDP numbers that show an acceleration of growth to justify higher tax revenues. The GDP has not budged in a few years and what they want us to believe is that with all the negative indicators, the GDP will climb magically by $800 billion between FY11 and FY12? I do not see it. Not only will Ryan’s debt reduction numbers be tainted by a $500 billion projected shortfall for FY11, I also suspect that he will face a $600 billion projected shortfall for FY12. Meaning, because of bad projections our National Debt will grow by $1.1 trillion beyond what the government numbers are projecting already, therefore shooting the National Debt up over $18 trillion by the end of FY12!

      Though I find Ryan’s work to be a first baby step to where we need to go, and his proposals do have some needed items (privatize Medicare), we need to go so much further. America is hurting at its core. Wealth is being sucked up by the federal government not only from the people today but also from Americans in decades to come. We cannot kick the can down the road. The longer we wait, the more "draconian" the solution will be. The fact is the federal government took a huge Keynesian risk over the last 10 years (and especially the last 4 years) and lost big – proving what Keynes said himself when asked about the long term effects of his ideas. His response was that he did not care, because he would long since be dead. Well the writing is on the wall in bold print. But I think the fall out of this disaster is already starting to fall, and every radioactive particle has the 2011 congress’s names written all over them.

      So to Ryan, good start, but get back to work for a rewrite. It is inconceivable how much further you must go to cure the ills facing this country. We need substantial fixes NOW! Kicking the can to next year will make your problem substantially worse. I may not be an economist, but as Rush Limbaugh says, I live in Literalville. I see what is and not what could be or should be. What IS, is not looking good. The time is NOW for courage and conviction. DC may not be willing to suffer the consequences of their actions since 9/11. But the rest of the country is willing to take this challenge and move forward in getting back on our feet. Do not let DC force the sun to set on this great land. Let us keep Washington’s optimism alive in seeing the sun always rising on America. And as Reagan said it, “America’s best days are ahead of it!”

      Take back the plan and get to work.

    2. James C. McGehee, Na says:

      What good does "Lunch with Heritage chat" do if members of Congress and the President don't hear it?

    3. joecool says:

      The only success I have seen with reducing ANY budget starts with across the board cuts. The minute we start down EITHER path, Ryan's or Obama's, the violins are out before the first word of debate. Let the debate begin AFTER the first round of cuts. How else can expenditures be matched with existing revenues? The theme of this debate has to be how to reduce the size of government, not how to cut spending.

    4. Pingback: Hiding Future Tax Hikes on Tax Day 2011 | The Foundry: Conservative Policy News.

    5. sam says:

      Rights talk is as malleable as cost benefit analysis

    6. Leon Lundquist, Dura says:

      Man! Oh! Man! George, I liked your digest. It troubles me that even yourself being quite thorough, have missed the Government Budget parts 'not on the table' those 800,000 Government workers at $100K per each! You can certainly see $800 Billion there! It does cost $250 Billion to run the IRS. HHS has the $100 Billion slush fund that Rep. Michele Bachmann wants to claw back! $550 Billion you can get from Defunding and Abolishing Obamacare (yeah, I know we lost that Vote in the Senate) but kudo's for Ryan anyhow! Suppose we reclaimed all that Big Oil money sent to the Middle East (Obama wants to send it to Brazil, like that really helps our Energy Independance!) Since it is true that the Government makes more money on Oil than the Oil Companies, if we got more Oil Domestically, that money would go back to the Treasury (without costing $2 Trillion to defend it!) Listen to Trump, he is right! So it is another $600 Billion that we don't send to the Chinese!

      Look at that! Budget Balanced! Ta! Da!

    7. Joan, New Mexico says:

      OK, Leon , you are on the right path but the gigantic waterfall we are about to go over in our tiny boats is the open ended unlimited entitlement which is Medicare. Ryan is correct.This needs to be addressed fast.Get the inept (and always inaccurate) economists at CMS out of it. (Like all Govt. employees they are in an occcupational self perpetuation mode).If you want real "cost control", let the patient have a discreet appropriate amount(means tested) of funding / support for basic care with other "SERVICES" self funded by the patient also on a means tested basis.

    8. edward causley sr says:

      Goverment quit spending our money.

    9. Pingback: Morning Bell: Hiding Future Tax Hikes on Tax Day 2011 « The perpetual view's Blog

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