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  • Paul Ryan's Budget is Good for America

    When considering Representative Paul Ryan’s (R–WI) budget plan, it goes without saying that if one disagrees with Ryan’s vision, then of course he or she won’t like his plan, regardless of whether it fixes our budget problems.

    It is important, then, to consider his vision: Is smaller government a worthy goal?

    In the words of Dennis Prager, “the bigger the government, the smaller the individual.” Government depends on its citizens for revenue in order to provide services. The more government grows, the more revenue it must generate and the less workers are paid. But not only that, the more government grows and provides, the less individuals are needed to provide. Consequently, as government grows, not only is there less personal freedom and fewer resources available, but people become less needed as they depend on the state.

    As one example, men are increasingly less needed to provide for families when there are ever-larger welfare programs provided by the state to take care of women and children. Would anyone argue that the incentive to rely on a man is unaffected when program after program is produced by government to provide instead?

    And, if there’s any doubt about government providing too many programs, consider these findings from a recent Government Accountability Office report. The federal government currently operates:

    • 80 economic development programs across four agencies,
    • 100 separate programs run by five Department of Transportation agencies,
    • 56 programs run by 20 different agencies dedicated to provide financial literacy,
    • 18 domestic food assistance programs,
    • 20 programs for the homeless, and
    • 47 programs for job training and employment.

    And the list goes on.

    Certainly a social safety net is desirable, but with so many duplicative programs providing welfare in all areas of life, if not now, at what point are these programs encouraging the very dependency they’re designed to combat?

    That’s why the bigger the government becomes, the smaller the citizen becomes.

    However, the left generally supports big government, though few will say so. Indeed, even now, few on the left think that government is too big, just as few are able to identify a program that should be eliminated.

    Consequently, instead of defending big government, the left has mainly attacked Ryan’s plan on grounds of social justice and efficacy, framing the debate in terms of those who care about others (liberals) and those who don’t (conservatives). Hence common accusations amount to calling the Ryan plan a ludicrous, cowardly, cruel joke.

    First, in response to the fact that Ryan’s plan cuts $5.8 trillion from our current spending projections, the left claims that these cuts won’t affect the wealthy. “But for working families, whose living standards have stagnated in recent decades, Ryan’s plan seems designed to make it harder for them to help their children have a better life.”

    But the truth is just the opposite. Ryan’s plan is designed precisely to make it easier for our children and future generations. As our current deficits and debt stand, we are strapping our kids and grandkids with a worse standard of living and a bleaker future, as they’ll be stuck with the tab we’re amassing. While we go on spending binges, they’ll be crushed with confiscatory tax rates—after all, as of right now, every man, woman, and child is $200,000 in the hole to the U.S. government (when including unfunded liabilities).

    Ryan’s plan, however, tries to reverse that, cutting over half a trillion dollars per year from federal spending. Cutting at this pace would put us on a path to balance the budget.

    So, the question really is: Do we have a responsibility to repay what we’ve spent, or do we continue spending now and stick our children with the bill?

    Second, and most significant, regarding Ryan’s reform ideas for Medicare and Medicaid, the left claims that “the plan would deprive many and probably most seniors of adequate health care.”

    This is false. Under Ryan’s plan, to deal with Medicare, starting in 2022, people would be given vouchers worth what Medicare will then cost, allowing people to shop for their own insurance plan (approved by the government, of course). In future years, government assistance will be linked to the rise in prices of consumer goods and services—the consumer price index (CPI). Nowhere would benefits be slashed. Nowhere would Medicare spending even be cut. Rather, come 2022, tying government assistance to the CPI will slow the rate of increase in Medicare spending by government.

    As for Medicaid, Ryan would turn the program over to the states, allowing them to dictate how the program would run most effectively. Like Ryan’s reform for Medicare, no Medicaid spending would be cut.

    The left’s accusation, then, is based on the assumption that more consumer choice won’t work in the health care market to bring down costs. (Government currently spends approximately 50 cents out of every dollar spent on health care.) Yet in every market where consumer choice exists, it creates more competition, and ultimately prices come down. Donald Berwick, the administrator of the Centers for Medicare and Medicaid Services, points this out: “Improving quality while reducing costs is a strategy that’s had major success in other fields. Computers, cars, TVs and telephones today do more than they ever have, and the cost of these products has consistently dropped.”

    In fact, Cato economist Dan Mitchell adds:

    Defenders of the status quo argue that the market for healthcare somehow is different than the market for things such as computers. But here’s a chart showing that relative prices are falling in one of the few areas of the healthcare system where consumers spend their own money.

    And I’ve previously noted that the same thing applies with abortion, where prices have been remarkably stable for decades. Regardless of one’s views on the procedure, it does show that costs don’t rise when people spend their own money.

    So it’s appropriate to ask skeptics: Given that, in the few areas of health care where prices haven’t risen even though markets exist, why wouldn’t market forces bring prices down in the rest of the health care system?

    Even if one disagrees with everything in it, Ryan’s plan is serious for the simple reason that it is a plan. So far, it’s the only one our federal officials from either party have presented. It’s fair to criticize it, but whoever does so should explain why we’re better off with bigger government and why bringing more market forces to health care would fail to bring down costs.

    Posted in Economics [slideshow_deploy]

    17 Responses to Paul Ryan's Budget is Good for America

    1. West Texan says:

      Five out of six of your bullet points are clearly domestic services which belong entirely at the state and local levels of government. The sixth item is pretty much states' business as well. Ryan's plan is a fine start but doesn't go far enough addressing the unconstitutionality of SS and Medicare. Again states' sovereign territory. Not only does Obamacare need to be repealed, but so does LBJ's Medicare, FDR's Social Security and Woodrow's 16th and 17th amendments. Federal government must be returned to its proper role of national defense, foreign affairs and interstate commerce mediation. As I said, Ryan's fiscal recommendations is a necessary first step at best. But the social progressives cluttered stairwell is steep requiring bold and committed negotiation over demagogic obstacles. .

    2. George Colgrove, VA says:

      Yup, it is the best we have. But we can do better – much better!

      As the VT Tea Party says:

      VT Tea Party saying: “We want people to do it now – not later.”

      - Frank – Benson, VT on Rush Limbaugh’s show

      Yes, there are cuts of roughly $500 billion, but increases elsewhere nullifies these savings to a point where the actual net savings are in the ball park of $200 billion for this year. Then for next year, we start all over again – promises aside. We have been here before with similar promises and similar projections and somehow we ended up with $14.3 trillion in debt. I want results now – today.

      We will not be placated again. The federal government cannot be trusted no matter who is in charge.

      As long as we do not go deeper in debt this year and have a balanced budget next year, I will be happy.

    3. Lawrence Wade says:

      Paul Ryan sounds as good as we can hope to get for starters. Glad to see it. Now for the rest of our Party.

    4. Kevin H, college par says:

      "As one example, men are increasingly less needed to provide for families when there are ever-larger welfare programs provided by the state to take care of women and children. Would anyone argue that the incentive to rely on a man is unaffected when program after program is produced by government to provide instead?"

      Figures that conservatives what to take us back decades, if not centuries, to a time when women were forced to depend on men. Maybe the Ryan budget should take away their right to vote as well, no?

    5. A OCallaghan says:

      Paul Ryan's proposals were made to bring more cash to the big fat cats who fund the Heritage Foundation at the expense of middle income people

    6. Phil, Waxhaw, NC says:

      Kevin, Women can do whatever they want. Thy are just as free as you and I to work and stand on their own two feet. Unfortunately, government has made them dependent on social programs which you and I have to pay for.

      They need to do away with all susistance prgrams to corporations, farmers and everyone else. You don't see the Amish running to the govenrment for help do you? No, they help one anotheras dothe seminites of Tennessee and many other small communities across America.

      Maybe you should pick up a copy of Atlas Shruggs and get a better understanding of mankind.

    7. George Colgrove, VA says:

      West Texan,

      I agree full heartedly with your comments. Ryan's proposal is more of he same – just repackaged with key phrases to placate the masses. We should be looking at these budget proposals one year at a time. We are currently suffering from poor use of CBO projections that supported the trillion dollar annual deficits. Go to http://www.usgovernmentspending.com/ to get a rich analysis produced by a conservative regarding federal spending. The liberals thought that with the egregious deficit spending that the economy would take off. Their GDP and tax revenue projections were out of this world with annual increases larger than the total increase we have experienced in the last six years. From these justifications, we accepted the long-term outlook to our peril. We now have a virtually unpayable national debt of $14.3 trillion.

      Ryan also looks to the same CBO, who again is providing projection data that paints a rosy image. The CBO, like all other federal departments is employed by overpaid federal workers who will do what is necessary to keep their lucrative compensation packages going. Ryan's idea is to use tax cuts to spur the economy, all the while essentially maintaining current federal spending – he is just shifting the dollars around.

      The difference with today’s economy compared with Reagan’s and Kennedy's economies is that not only is the federal government overspending at break neck speeds, so are a lot of lower to middle income families. In addition, the lion's share of lower to middle-income families is not paying taxes as we speak. On top of that, the new redistributive nature of the IRS is actually pumping money to these folks.

      I fear lowering taxes will just lower revenue and thereby increase the 2012 annual deficit. Raising taxes will simply kill the already devastated economy. The families, who do pay taxes, will see only a marginal increase in their take-home pay which will likely go to paying off debt – I know that is where my tax savings will go. Without people going out to buy products or services, there will not be a big push to hire new people, by corporations who will get tax breaks. If I were a company, I would pocket the proceeds in preparation of the next draconian hit by the federal workforce.

      Ryan's projections look great and can give one a warm and fuzzy feeling, but I have yet see this government produce anything that even comes close to accurate or truthful, regardless of the party. The GOP since 9/11 have proven themselves to be equally intent on spending as democrats, and both parties seem equally eager to lie to us in keeping that spending high.

      What I know right now are some basic facts:

      - from today to the end of the fiscal year we are overextended by $621 billion.

      - Ryan's FY2012 budget is overextended by $991 billion

      - The current federal FY2012 budget is overextended by $1.101 trillion

      - Ryan’s budget is only “saves” $110 billion

      - Both budgets assume an increase of about $400 billion in tax revenue.

      - Tax revenue was $2.16 trillion for 2010 and is likely going to be $2.2 trillion for 2011.

      - Ryan’s proposals and projected tax revenue include the following total federal spending:

      FY12: 3,529.0 — 2,627.5 (-901.5)

      FY13: 3,559.0 — 3,003.3 (-555.7)

      FY14: 3,586.0 — 3,332.6 (-253.4)

      FY15: 3,671.0 — 3,583.0 (-88)

      FY16: 3,858.0 — 3,819.1 (-38.9)

      In these five years, our debt will climb by $1.838 trillion IF EVERYTHING GOES AS PROJECTED!

      Unforeseen problems that could put us in a tailspin: A natural disaster, a fourth war, the national debt dropping to junk status, people and countries divesting in the US, incomes continuing to drop, housing starts continuing to drop, more companies abandoning America and so on.

      If the federal government does not get the additional “projected” $400 billion boost from us in FY2012 the national debt will climb by that amount. By accepting the Ryan pro-federal government pro-DC budget, what we will be saying to congress is OK, increase the national debt by $612 + $991 = $1.603 trillion. Moreover, if we are short of the tax collection, add that $400 billion and here we go, our national debt increase goes up to $2.003 trillion. Add the $200 billion in interest we are not paying this year and the likely $300 billion in unpaid interest next year, we will be adding $2.503 trillion to the $14.3 trillion national debt we have today – leaving us with a national debt of $16.8 trillion. If $14.3 trillion is dangerous, think about $16.8 trillion! By the way how much did DoTres Geithner want to increase the debt limit by? Hmmmmmm.

      Here is a real courageous proposal. Cut $621 billion from the current remaining FY2011 budget so we do not keep on diving deeper into debt. This will then be cut out of the FY2012 budget as well – and when amortized over the year will save $1.24 trillion. If we do come up short in revenue, then a consideration of a few more hundred billion will need to be cut. We will have a balanced budget by the end of FY2012! Let us get government spending within the collected revenue and start paying off the debt. We did it just 10 years ago! Soon I fear, all we will do at the federal level is just pay interest on a perpetual debt.

      We are at the end of the road, there is nowhere else to kick the can. Come on guys, let us start showing real guts on this. We need to plan on what we know, not put all of our hopes on projections created by people desperate to keep their overpaid federal jobs.

    8. Fairfax Ken says:

      The simplest and most direct method of stopping the overspending now is to not raise the debt limit. That would be a deFacto balanced budget. If the Feds can't borrow more they can't spend more.

    9. jweb says:

      Good for America…hhhmmmm

      Ron Paul put it the best, "I give him alot of credit…it's going in the right direction…which is always satisfactory, but it's not enough for me…"

      http://dailypaul.com/165141/dr-paul-on-morning-jo

      It's great that Ryan took a stand, but it still allows our great American bankruptcy. Let's be honest. We need to voice and protest at the Federal Reserve, rather than infighting and walking through Washington. Want to hold a genuine "Change America" rally? Go to the Fed locations. The link below is to a 30 minute animated feature that exposes the role of the Fed in the US in a very simple and entertaining manner. It's called The American Dream.

      http://www.youtube.com/watch?v=-AirhUmpNm0

      P.S. The Federal Reserve Act of 1913 expires at the end of 2012.

      Liberty or Death

    10. Tom Sullivan in FL says:

      This is easy. The House should:

      1. Pass monthly debt limit increases, setting monthly spending to exactly where Republicans want it. Take it or leave it, socialists.

      2. Pass a law giving debt interest payments first priority, to avoid default. The Senate can pass it, and the President sign it, or let default happen.

      3. Cut the deficit to zero in three years (not let it drag out for 10-20 years like Ryan does). This must include stopping all the borrowing from trust funds, a deceit used to hide about 25% in additional yearly borrowing, about $350 billion in FY 2010, and $388 b in 2009. Then require $200 billion debt per year be repaid.

      4. Defund the agencies and programs which are damaging our economy with $1.75 trillion in federal regulations every year. They could easily save Americans $1 trillion per year. Ex: Defund ethanol, liberating food prices.

      5. Reform government to save hundreds of billions – Stop Medicare and Medicaid fraud, $100 billion yearly. Slash the duplication in federal programs, $200 billion yearly. Slash agencies we don't need, save $500 billion yearly.

      6. Means test all welfare and subsidies. Stop giving money to big corporations and millionaires.

      7. Institute a market system in medicine, requiring that patients pay something for every service. Force everyone to act like a smart shopper again. Give individuals and households the medical insurance tax credit, not corporations.

      8. Flatten the tax code to a dozen pages.

      • snydrhrry says:

        Except for #3, your suggestions seem to me as sound and doable. When a business of any kind (even government) is short of revenue, cuts in spending are necessary, unless bankruptcy is considered an option. Here in Michigan there have been cuts in spending at every level, townships on up to state, even under the previous Democrat governor and House. And increases in revenue are very hard to come by, and quite controversial, e.g. the proposal to tax pensions of retirees at about the $40,000 level and up. I hope the Congress will consider changes such as those you have presented.

    11. Pingback: Paul Ryan’s Budget is Good for America | Again?

    12. Mary J Pack, Ohio says:

      I firmly believe that Paul Ryan;s Budget is great. It has passed the House, but Harry Reid will not bring it up for a vote in the Senate. There Speaker Boehner needs to send the Budget Plan and defunding of Obamcare every week. This will show the American Voters that the House is doing their job.

    13. Kevin H, college par says:

      Phil,

      That's the problem with most hard core conservatives. They point to a piece of fiction – 'Atlast Shrugs' – and hold it up as if it is a non-fiction analyses. Really, a fictional work is supposed to teach us about mankind. I recommend reading non-fiction works based on facts and numbers and science, not fairy tales. Keep in mind, the author does not hold up to purity of values. Her real name is Alisa Rosenbaum, and she used Medicare and Social Security, because unfortunately, she could not afford thh costly treatments needed to battle lung cancer. Yet, so many act as if Alisa's words are gospel.

      And if women are working less and less and relying on government more now, why do we currently have the higest percentage of women working?

    14. Slick in Nebraska says:

      Hey Kevin – "why do we currently have the higest percentage of women working?"

      How about the fact that women actually still come out on the short end of the stick in the area of equal pay for equal work, and employers know that women will cost them less than men!!!!!

    15. Pingback: Paul Ryan’s Budget is Good for America | Suffolk County Liberty Report

    16. J. Baker, Cincinnati says:

      Paul Ryan’s Medicare Fix Unworkable!

      Wake up…Tea Party! You cannot parrot idealistic philosophies, which will not work in the real world. Do you wish to win; or, do you wish to preach the fundamentalist Christian view that all who are not properly baptized are lost forever. Did we not just pass through someone’s personal religious milestone when the earth failed to stop rotating at 6:00p on 21 May 11?

      Ryan’s Medicare fix requires a degree of integrity and honesty, by both legislators and industry, which have never existed. We do not have honest representative government; and, we do not have any in industry, who are devoted to anything other than their bottom line. Ryan’s Medicare fix is based on a ‘free market’. We do not have a ‘free market’; and, we never have.

      My great objection to his fix is that there is no provision for negotiating terms and pricing. Negotiation is fundamental to a free market. A single individual has no negotiating power; further, they can, and will have their insurance cancelled should they become ill, as has often happened in the past.

      When only one party has the upper hand with pricing, it is not a free market. When only one party has the upper hand with contract terms, it is not a free market.

      Ryan wants to send 65 year olds into the marketplace with a fixed sum of money, saying, “You are free to buy the insurance product you want”, now…get lost! This is gross abuse of a corpse!

      The reason Medicare exists, is that the insurance industry would not insure those who were ill. I personally paid $2,500 per month for health insurance for my wife and I, at age 60, many years ago. We seldom used the insurance. Do you want your parents and grandparents paying $5,000 per month to obtain a policy that will cover their catastrophic needs?

      There is not adequate competition within the insurance industry for such a program. Insurance companies are not allowed to sell their product in all states. Why not open our markets to qualified insurers worldwide? This is a free market!

      The Medicare Advantage program confines the member to local or regional medical suppliers who are affiliated with the policy being offered. They are limited as to the specialists they can see. Ending this program can save Medicare money.

      Medicare does not pay for medical services performed outside of the USA. You had better buy additional health insurance when on vacation in another country.

      Medicare Part D is a joke! You taxpayers pay for this program; and, we who use it pay a monthly fee, plus co-pay. Then, we are charged list price for the drugs, and some critical drugs are not covered! Negotiating the same prices for these drugs that are offered to the VA, all branches of the armed forces, DOD, and Defense Supply Center Philadelphia, could save Medicare much money.

      Negotiate! Negotiate! Negotiate!

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