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Morning Bell: Get on the Path to a Balanced Budget

Posted By David S. Addington On March 20, 2012 @ 9:42 am In Economics | Comments Disabled

Paul Ryan (R-WI), Chairman of the House Budget Committee, will release his budget blueprint today in what will surely be one of the most important policy developments in Washington this year. If as expected Senate Democrats fail yet again to advance a budget for the government, then the Ryan Budget and the President’s Budget released a few weeks ago will present the leading alternatives for how the federal government would dig out of its present fiscal mess. And if the Ryan budget is anything like last year’s effort, the differences couldn’t be clearer. The Heritage Foundation is reviewing Congressman Ryan’s latest budget proposal and will provide analysis in the hours and days ahead.

President Obama, of course, has talked a good game about fiscal discipline. He’s had his commissions. He’s made his big speeches. But according to his latest offering as scored by the Congressional Budget Office [1], the outrageous budget deficit of $1.3 trillion this year dips to a still-amazing $488 billion in a few years despite his enormous proposed tax hikes, and then begins to soar anew as the decade proceeds.

With the federal government racing toward 17 trillion dollars debt, and with 13 million Americans searching for work in a slow economy, conservatives have long ago lost patience with the tax and spend crowd that runs Washington. Heritage has set forth six objectives [2] that should guide development of the annual federal budget:  (1) a tighter budget, (2) a balanced budget, (3) fixes to entitlements, (4) no tax hikes, (5) job-creating, pro-growth tax reform, and (6) a strong national defense. Those conservative objectives lead to a stronger economy, less government, more jobs, and a safer America.

On the balanced budget objective, Heritage has said:

“The federal budget should balance in ten years, at a level well below one-fifth of the nation’s economy, and at all events much sooner than the budget would have balanced in the weaker budget formulas proposed  in previous years.”

Heritage seeks to abolish the income tax and many other taxes and instead adopting the job-creating, pro-growth New Flat Tax [3] in its comprehensive plan for  [4]Saving the American Dream [4]. The New Flat Tax, combined with the other elements in the Heritage plan, leads to a balanced annual federal budget in ten years — a permanently balanced budget, without hiking taxes, at a level lower than one-fifth of the nation’s annual economic output. Heritage has emphasized that the current federal budget should make substantial progress toward that objective:

“Congress should revise the tax code to establish strong economic incentives for job-creating saving and investment by abolishing a wide range of taxes and reducing the income tax structure to a single rate, or at most two.”

Earlier balanced budgets are better. The quickest way to a balanced budget is to cut spending, avoid tax increases and to overhaul the nation’s tax code so that it helps rather than hurts the economy. Shifting from the current job-killing, anti-growth complex tax system to a simpler, job-creating pro-growth tax system is crucial.  Such a system raises more revenue as the economy grows, but without raising tax rates on Americans.

The solution to federal government’s overspending and overborrowing does not lie in the arcane world of budget scoring rules and detailed, complex provisions of federal budget laws that only a few specialists understand. Congress must focus outside of Washington.

Congress must focus on what happens in the real economy, where Americans go to work every day, produce the goods and services others need, pay their taxes, and take what is left in their paychecks home to support themselves and their families.  In that economy, the flatter tax system focused on creating incentives for savings and investment will generate jobs, let people keep more of their paychecks rather than sending more to their government, and will help put America on the path to a balanced budget.

The dynamic effects of a flatter tax system yield a stronger economy with more jobs and better lives for Americans. The Budget Committee of the U.S. House of Representatives, which will shortly consider the annual federal budget, must begin moving America to a flatter tax system. The move to a flatter tax system, on the way to the New Flat Tax, will help grow our economy instead of our government. The Budget Committee should take that step, right now, toward a balanced budget.

Quick Hits:


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2012/03/20/morning-bell-get-on-the-path-to-a-balanced-budget/

URLs in this post:

[1] Congressional Budget Office: https://email.heritage.org/exchweb/bin/redir.asp?URL=http://www.cbo.gov/sites/default/files/cbofiles/attachments/03-16-APB1.pdf

[2] set forth six objectives: http://thf_media.s3.amazonaws.com/2012/pdf/ib3538.pdf

[3] job-creating, pro-growth New Flat Tax: https://thf_media.s3.amazonaws.com/2011/pdf/bg2631.pdf

[4] plan for : http://www.savingthedream.org/about-the-plan/plan-details/SavAmerDream.pdf

[5] Voters in the Land of Lincoln are heading to the polls today: http://www.foxnews.com/politics/2012/03/20/romney-looks-to-widen-delegate-lead-in-illinois-gop-primary/

[6] hitting a $3.87 per gallon average in March: http://abcnews.go.com/blogs/business/2012/03/highest-gas-price-recorded-for-march/

[7] Forty-six people were killed, and more than 200 were injured.: http://www.usatoday.com/news/world/iraq/story/2012-03-20/Iraq-Baghdad-bombings/53661706/1

[8] merciless killer who may be connected to two other attacks on soldiers in the area: http://online.wsj.com/article/SB10001424052702304636404577293022815956362.html?mod=WSJ_hp_LEFTTopStories

[9] Read the story on The Foundry.: http://blog.heritage.org/2012/03/19/production-of-oil-gas-and-coal-on-federal-lands-sinks-to-nine-year-low/

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