Congressman Ryan sounds the alarm – again
Ryan, who is one of the few people in Congress with the profile in courage to tell the truth about our annual deficits and mounting debt they create, and actually craft a solution, told the Eau Claire Leader Telegram that the United States government, now more than $15 trillion in debt, likely is five years or less away from the same financial crisis that has engulfed Europe.
The congressman’s latest warning is based on conversations with economists who fear the impact of skyrocketing health care costs in Medicare and other programs. “Everybody knows the country is about to go over the cliff,” warned Ryan, chairman of the House Budget Committee. “We’re going to have a European situation on our hands in a few short years.”
Ryan has been down this road before. In 2011, he produced a budget, based on his “Roadmap to America’s Future,” which is designed to achieve a balanced budget and eventually pay down the debt – primarily by making some sensible, and still relatively painless, changes to entitlement programs.
Medicare, the program that’s in the most trouble, now carries an estimated $37 trillion – trillion, not billion – in unfunded liabilities and is expected to go broke by 2021, according to the Congressional Budget Office. With a large baby boom generation just beginning to retire, those unfunded liabilities are not going to shrink all by themselves.
Under Ryan’s Roadmap, Medicare would be income-tested so that the wealthiest people among us, who obviously can afford to buy their own health insurance coverage, even in old age, would not get the full complement of benefits now promised. In deference to those approaching retirement, the plan changes nothing for people ages 55 and older.
Even with a European debt crisis, particularly in Greece and Italy, creating economic havoc abroad, the reaction was dismayingly predictable. Ryan’s budget program was adopted last spring by the Republican-controlled House of Representatives, but the message appeared to get lost in a dopey political advertisement showing a Ryan-like character pushing a wheelchair-bound grandmother over a cliff.
If Ryan played by those rhetorical rules, he’d show President Obama pushing a wheelchair-bound child over the cliff because that’s basically what we’re doing to the future. Based on Ryan’s comments, the not-too-distant future.
Budget balancing one-two punch
We need to get back to a combination of tax generation and spending discipline that, for a brief, glorious period in the 1990s, balanced the federal budget. That was when a technology-driven economic boom produced boatloads of revenue to the government, and a bipartisan balance of power (moderate Democrat in the White House, Republican-controlled Congress) restrained spending enough to bring the budget into balance.
We had that political balance of power for six of the eight years of the Clinton presidency, when federal spending rose only 12%. Unfortunately, when Republicans took control of the White House and Congress during the George W. Bush administration, spending rose 64%, proving once again that the GOP only really cares about spending restraint when a Democrat is elected president.
President Obama, in an attempt to revive a weak economy, has subsequently put the Bush spending pace on steroids, and so here we are – $15 trillion in debt with no end in sight. In 10 years, President Obama’s own estimates project a $26 trillion national debt, but only a $20 trillion gross domestic product, a debt-to-GDP ratio of 128%. That’s about where Greece was when the euro hit the fan.
There was one recent glimmer of hope that a bipartisan solution is possible. Ryan’s approach to entitlement reform has been modified in collaboration with U.S. Sen. Ron Wyden, an Oregon Democrat. Despite Mr. Ryan’s optimism about an emerging bipartisan consensus, I remain skeptical because I’m not convinced there is enough common sense in the nation’s capital to figure out that putting a stop to subsidizing the wealthy through corporate welfare and crony capitalism and by income-testing entitlements is preferable to raising tax rates on job creators and other producers.
That’s disappointing but hardly surprising. Today’s political class is a tattered grab bag of pandering economic illiterates with no vision and very little solutions-oriented vigor. Even with a Greek debt tragedy unfolding right before our very eyes, they won’t act to head off something similar here.
This is how a great country declines over time.
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