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Right Turn
Posted at 09:45 AM ET, 07/12/2011

Once again, Paul Ryan takes on Obama

Rep. Paul Ryan (R-Wis.) again and again has proved himself to be the most effective proponent of conservative economic principles.

Last night he sent around to budget committee colleagues a memo, a copy of which was obtained by Right Turn, setting forth some key facts and arguments. His central point is that “balance” doesn’t require tax hikes. As he puts it, “The House already passed a budget that puts us on the path to balance, and will vote next week on a Balanced Budget Amendment. To get to fiscal balance, the two critical elements required: spending restraint and economic growth. Tax hikes adversely undercut both of these key ingredients.”

The memo then provides some much needed context for the arguments on the debt ceiling:

A “Balanced Plan”?
l During the past two years Democrats enacted huge tax increases (see today’s Wall Street Journal editorial, “Taxes Upon Taxes”), which were accompanied by unprecedented increases in spending, deficits, and debt.
l While insisting on additional tax increases, the Obama Administration opposed revisiting the huge spending increases in the new health care law or implementing fundamental entitlement reform that would get spending on these programs under control.
l The last time there was a bipartisan budget agreement, it balanced the budget by cutting spending and cutting taxes. The 1997 bipartisan budget agreement between President Clinton and a Republican Congress balanced the budget by bringing spending down to 18.2% of gross domestic product.
Taxes and Revenues (Americans are not under-taxed)
l Expiration of 2001/2003 Tax Relief. Taxes will rise by $3.5 trillion if the 2001/2003 tax relief, the AMT patch, and the estate tax compromise expire at the end of 2012 as scheduled under current law.
l Health Care Law’s Tax Increases. The health care bill adds another $813 billion in taxes over 10 years. In addition to these taxes, other legislation has increased taxes (the SCHIP extension law included tax increases of $75 billion).
l Tax Engineering. The Obama Administration wants to extend the one-year temporary payroll tax cut (total cost of $112 billion), while increasing taxes on small businesses.
l Tax Increases and the Top Rate. As a result, these tax increases push the effective top rate from 35% today to 44.8%.
l Current Tax Burden. Under current law (before expiration of 2001/2003 tax relief and implementation of the new health care taxes), the top 1% of income taxpayers (over $380,000 in annual income) already pay 38% of income taxes. The bottom half of income taxpayers pay 3% of income taxes.
l Revenues Growing Without Tax Increases. Despite a weak economy and the temporary reduction in Social Security taxes, according to CBO, revenues grew by 8.5% through the first 9 months of this year and expect revenues in 2011 will be $75 billion to $85 billion higher than they estimated in March.
l Republican Budget & Revenues. Under the House Republican budget, which extended tax relief and repealed tax increases in the new health care law, revenues still grow by nearly $2 trillion over the next 10 years.
l President’s Budget & Tax Increases. The President’s budget increases taxes by $1.2 trillion.

Democrats and the left punditocracy often argue that “all” President Obama wants is to go back to the Clinton tax rate. If only. And if we are to take Sen. Kent Conrad (D-N.D.) seriously, Senate Democrats want a $2 trillion tax increase.

Ryan makes the case that the problem is spending and the ensuing debt, neither of which Obama is willing to seriously address:

Spending is the Problem
l 24% Increase in Base Spending. Non-defense discretionary spending grew by 24% for the first two years of the Obama Administration, adding $734 billion in spending over the next 10 years.
l Health Care Law Spending Increases. The new health care law included $1.4 trillion increase in spending, including expanding eligibility in Medicaid by one-third and creating a brand new health care entitlement.
l Stimulus. CBO currently puts the stimulus bill’s cost at $821 billion.
l Record Total Spending. The Federal government will spend $3.6 trillion this year, 24% of gross domestic product (GDP) and the highest burden on the economy since World War II. Spending has historically averaged a little over 20% of GDP.
l President’s Budget & Spending. According to CBO, the President’s budget never spends below 23% of GDP and by the end of the decade is right back at 24% of GDP.
l Republican Budget. The House Republican Budget would cut $6.2 trillion in spending from the President’s budget.
Deficits and Debt
l $1 Trillion Deficits. The deficit is on track to exceed $1 trillion this year, the third year in a row that deficits have exceeded $1 trillion.
l President’s Budget & “Framework.” According to CBO, under the President’s budget, annual deficits never fall below $700 billion and end the decade exceeding $1 trillion. When asked about the President’s April 13th new budget framework, Director Elmendorf testified, “We don’t estimate speeches.”
l Debt Explosion. Since President Obama took office, the total debt has grown from $10.6 trillion to $14.3 trillion, nearly a $4 trillion increase. This year total debt will exceed the size of the economy.
l Republican Budget. The Republican budget reduces the deficit by $4.4 trillion, puts the budget on a path to balance, and begins to reduce debt held by the public as a burden on the economy by 2014.

The president in public wants to operate on platitudes and generalities. Work together. A balanced approach. Eat your peas. The White House is avoiding specifics for a reason: The facts reinforce the public’s sense that the real issue is that we are spending too much. Republicans would do well to speak in specifics and to emphasize that real “balance” means spending at a slower rate (you’d think Ryan’s plan would actually halt the upward climb in spending; it merely restrains it a bit more than Obama’s) and keeping the size of the public sector in check so the private sector can grow and create jobs.

Once again we see that Ryan is the most effective spokesman and advocate for Republicans, in part because he is thoroughly versed in the details. Imagine if he were to debate Obama. In the fall of 2012. On national TV. With the presidency at stake. Is there any doubt who would come off better?

Robinson: Blame GOP for debt deadlock

Editorial: Mr. Obama gets it right on the debt

vanden Heuvel: We need a bargain on jobs, not cuts

Right Turn: McConnell comes up with debt-disapproval plan

By  |  09:45 AM ET, 07/12/2011

Categories:  2012 campaign, Budget

 
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