House Republicans have begun the roll out their new budget, which, like their previous budgets, aims to reduce the national debt and tackle entitlement reform. House Budget Committee Chairman Paul Ryan (R-WI) previewed his budget plan this weekend on Fox News Sunday and this morning in the Wall Street Journal:
America’s national debt is over $16 trillion. Yet Washington can’t figure out how to cut $85 billion—or just 2% of the federal budget—without resorting to arbitrary, across-the-board cuts. Clearly, the budget process is broken. In four of the past five years, the president has missed his budget deadline. Senate Democrats haven’t passed a budget in over 1,400 days. By refusing to tackle the drivers of the nation’s debt—or simply to write a budget—Washington lurches from crisis to crisis.
House Republicans have a plan to change course. On Tuesday, we’re introducing a budget that balances in 10 years—without raising taxes. How do we do it? We stop spending money the government doesn’t have. Historically, Americans have paid a little less than one-fifth of their income in taxes to the federal government each year. But the government has spent more.
So our budget matches spending with income. Under our proposal, the government spends no more than it collects in revenue—or 19.1% of gross domestic product each year. As a result, we’ll spend $4.6 trillion less over the next decade.
Our opponents will shout austerity, but let’s put this in perspective. On the current path, we’ll spend $46 trillion over the next 10 years. Under our proposal, we’ll spend $41 trillion. On the current path, spending will increase by 5% each year. Under our proposal, it will increase by 3.4%. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy.
Ryan’s budget would make the Keystone XL pipeline a reality, bypassing President Barack Obama, who has previously killed the northern part of the project and could do so once again, despite overwhelming support from Americans. This project, as Ryan notes, will create 20,000 direct and 118,000 indirect jobs, providing a much-needed boost to our economy.
The budget would also repeal ObamaCare and enact Medicare reform, similar to proposed reforms in the previous House Republican budget. Ryan writes, “I want Medicare to be there for my kids—just as it’s there for my mom today.”
“But Medicare is going broke. Under our proposal, those in or near retirement will see no changes, and future beneficiaries will inherit a program they can count on,” Ryan adds. “Starting in 2024, we’ll offer eligible seniors a range of insurance plans from which they can choose—including traditional Medicare—and help them pay the premiums.”
Politico ran a story this morning noting that Ryan’s budget is particularly tough on healthcare programs, which account for 70% of spending cuts. Why are House Republicans focusing so much on these programs and entitlements? Because they’re the biggest drivers of deficits over the next 10 years.
Not to keep harping on this point, but the Congressional Budget Office recently noted that the “aging of the population, increasing health care costs, and a significant expansion of eligibility for federal subsidies for health insurance will substantially boost spending for Social Security and for major health care programs relative to the size of the economy.”
Because of this, deficits are expected to rise by $9.49 trillion over the next 10 years and the national debt held by the public — that excludes intragovernmental holdings — would exceed $19.9 trillion (or 87% of gross domestic product) by 2023. If Congress fails to take action, the CBO says we may risk a fiscal crisis and the Treasury would be unable to borrow at affordable rates.
It doesn’t take rocket science to figure out that the the programs that are driving the debt will eventually have to be reformed in order to preserve them.