United Liberty

Marc Ambinder notes that when it comes to reducing the size of government, there’s fairly solid evidence that most Republicans in Congress aren’t walking the walk:

Paul Ryan is the Republican idea man of the hour. Karl Rove endorsed Ryan’s approach to budget reform on Glenn Beck, and whenever Republicans are asked about their preferred alternatives to the administration’s deficit reduction intentions, Ryan’s name and proposals are offered up. Hey, Republicans have ideas too. We don’t need health care reform to reduce the deficit — at least not yet.

So prominent Republicans  — particularly those running for president and those who aren’t elected officials — love Paul Ryan when it’s convenient. Why is it, then, that only twelve members of the conference were willing to attach their names to his bill — and none from the leadership? One reason is that Ryan is introducing it in his capacity as a member — not as the ranking member of the budget committee.

The other reason? Maybe they don’t want to be associated with what is a pretty far-ranging radical proposal:

The Treasury has released the 2009 Financial Report Of The U.S. Government, which is full of facts, charts and figures on the fiscal health of the country. Let me tell you, if you even have the slightest understand of basic economics, this report should trouble you.

I’ve pulled a couple of the charts to give you an idea of how screwed we really are. Let me be clear in saying that I am not blaming this on the current administration. They are, however, doing nothing to deal with the problem. In fact, they are doing what previous administrations have done…building on past fiscal irresponsibility with more fiscal irresponsibility.

This first graph shows that without major policy changes, debt as a percentage of gross domestic product (GDP) will exceed 200% in the next 35 years. It gets even worse as you can see below. Part of the reason is demonstrated in the next chart.

As you can see here (click to enlarge for better detail), interest on the national debt becomes more of a problem than entitlements, which is what many fiscal conservatives often talk about. This is a financial burden that cannot be solved by simply raising taxes, because with that economic growth is put at risk.

Over the last few decades, annual government spending as a percentage of GDP has been around 20%. However, In the next 20 years, spending as a percentage of GDP will hit 30% and it will just continue to grow.

Here is a look, thanks to Matt Welch over at Reason, at government spending over the long-term. The standard of government spending, until the last couple years, has been 20% of gross domestic product (GDP).

Thanks to booming entitlement spending, specifically in Medicare and Medicaid, the future does not look bright for taxpayers.

During the debate over health care, stimulus programs and generally more government spending, it’s easy to overlook the long-term economic issues. CNN Money highlights the fiscal issues presented by Medicare and Social Security, though not the long-term unfunded liabilities, and the cost of bailouts that are ticking time bombs for the country:

The first is the debt held by the public. That’s money owed to those who have bought U.S. Treasurys, most notably big bond mutual funds and foreign governments. Debt held by the public today is roughly $8 trillion and rising.

The second number is the money the federal government owes to government trust funds, such as those for Medicare and Social Security. The government has used revenue collected for those programs to cover other outlays. Currently, the debt to the trust funds is approaching $5 trillion.

The two combined is the total gross debt that’s accounted for. But deficit hawks also worry about what’s not on the books.
[…]
“Our budget doesn’t have Fannie Mae and Freddie Mac on it, even though it’s owned lock, stock and barrel by the American taxpayer,” said Rudolph Penner, a former director of the Congressional Budget Office (CBO) during a conference held by the Peterson-Pew Commission on Budget Reform.

Last year, the CBO did start to account for both companies as if they were federal agencies on the budget. But the White House Budget Office only includes some potential costs because the future of the two companies is still under consideration. Last week, a Republican congressman introduced a bill that would require the two agencies be put on the budget.

One clip that the media isn’t playing from the Health Care Summit is Rep. Paul Ryan’s comments on the fiscal issues facing the country in the long term, such as the trillions upon trillion of dollars in unfunded liabilities that face Medicare and Social Security.

It’s not that I agree with Ryan on Medicare, especially the “doc fix,” but he explains how the Obama Administration is hiding costs by double counting, which results in a much higher price tag for ObamaCare:

Economist Bruce Barlett is endorsing Rep. Paul Ryan’s proposal to curb the federal debt by, get this, cutting spending:

For a long time I have maintained that a significant tax increase will be necessary if we are to avoid the fate of Greece, which is in the midst of a fiscal meltdown. If the bankruptcy of a little country like that can cause world financial markets to tank, imagine what a potential U.S. bankruptcy would do to your 401(k).

Whenever I make this point people always complain that I haven’t considered the option of cutting spending. The reason I haven’t is that the magnitude of spending cuts that would be required to prevent the need for higher revenues would be politically impossible to achieve. We saw proof of this when Barack Obama proposed cutting Medicare spending by a small amount to fund health coverage for the uninsured, and the Republican Party’s official position was to oppose any cut for any reason. We saw more proof in how quickly Republican leaders distanced themselves from a detailed budget plan recently put forward by Rep. Paul Ryan of Wisconsin, ranking Republican on the House Budget Committee.

Ryan unveiled the latest version of his plan on Jan. 27 and, to his credit, even got the Congressional Budget Office to score it. According to the CBO, under the Ryan plan federal debt as a share of the gross domestic product (GDP) would rise from 61% this year to 100% in the year 2045 before falling to zero in 2080. Under the CBO’s baseline budget projection, debt would equal 270% of GDP in 2045 and 716% in 2080.

I know what you’re thinking: man that Pete is a positive guy. I like to describe myself as realistic, with a bit of fatalism throw in. Either way, I find it hard to look at the economic landscape and have any hope. It is especially dreadful when politicians have to get re-
elected, AND said politicians consult certain “economists”.

Economists have for years looked at what is happening in a society and sought to come up with solutions as to how an economic crisis can be “fixed”. The problem is, like in all fields, you have good economists, and you have the not so good (The latter seem to be the ones that always find their way onto the public payroll).

In extremely broad terms economists can be split into two categories:

If you are a student of American history your eyes should be opening as to which economist is most often chosen by our elected officials. The real question is “why”?

Well, why wouldn’t a politician pick economist #2?