There are no quick exits from our current debt hole...but there are sound exits. The RSC plan gives us a logical, reasonable, attainable pathway to a full recovery in just a few years.
Last week, Congressman Jim Jordan (R-OH) and Tom Price (R-GA) introduced the Republican Study Committee (RSC) FY2011 budget. This is a welcome fiscal blueprint that would restore fiscal discipline to the nation and avert a Grecian formula meltdown. It also does an excellent job of drawing a sharp distinction between a conservative fiscal plan and the liberal proposal presented by President Obama’s budget. Comparing President Obama’s own budget projections to the RSC’s tells the story of two very different futures for the United States. While the focus is primarily spending and revenue targets, there are sound policy recommendations in the RSC blueprint. One budget sees a nation sinking deeper and deeper into debt while another envisions a significant reduction in spending growth and a return to balanced budgets within the decade.
The numbers paint a striking picture:
Obama: The 2019 deficit is projected to reach $908 billion, and in 2020 would climb to more than $1 trillion. Over ten years the Obama budget runs $8.5 trillion in deficits.
RSC: Balances the budget within ten years and achieves surpluses in 2019 and 2020. Over ten years the RSC budget runs $2.5 trillion in deficits.
DIFFERENCE: In a ten year window the RSC budget will run $6 trillion fewer deficits than the Obama budget.
Obama: The President’s budget will send debt held by the public to $18.6 trillion in 2020, up $11 trillion from the 2009 level of $7.5 trillion.
RSC: Debt held by the public under the RSC plan will reach $12.9 trillion in 2020.
DIFFERENCE: In 2020, the RSC budget projects debt held by the public $5.6 trillion under the President’s projection.
Obama: Under the President’s plan discretionary spending is held relatively constant at approximately the FY2010 levels of $1.4 trillion. Over ten years the Obama budget expects to spend $13.6 trillion.
RSC: Returns discretionary spending to FY2008 levels and freezes it until 2019. By 2016 discretionary spending levels will dip back below $1 trillion for the first time since 2005. The RSC accomplishes this goal by limiting spending and adopting sound policies including:
- Repealing the Davis-Bacon Act, a law that forces the federal government to pay above market wages for federally funded construction. This reform could save $11.4 billion in 2010.
- Eliminating Intercity and High Speed Rail Grants, saving $1.6 billion annually.
- Enacting an earmark moratorium, saving approximately $15.9 billion per year.
DIFFERENCE: Over ten years the RSC budget will spend $3.2 trillion less in discretionary spending than under the President’s budget.
James Carafano adds one major (and legitimate, I think) beef:
I'd be perfectly happy to reign in spending on everything but the defense budget. Carafano is right that this is one of the few things explicitly stated by the Constitution as a responsibility of the federal government, and our technology and military advantage has allowed us to stare down or defeat every regime we've faced for decades. It should not be withered. Along with that, I'd also add some extra provisions for veterans...after all, it doesn't matter how good your hardware is if you don't have the honorable and brave people to use it, and their service should be remembered and appreciated long after they're out of active duty status.
Unfortunately, the RSC budget also gets a critical component of the budget wrong. It misses the mark on Washington’s #1 job; its Constitutional responsibility to provide for the common defense. At the heart of the RSC budget is a commitment to bring federal discretionary spending, of which defense is a component, back to FY 2008 levels. It implies that the defense portion of that broader category of spending will essentially be at the levels recommended by the Obama Administration by end of the decade. Thus, the RSC budget carries essentially the same risks for national security as the Obama budget. Our military desperately needs to recapitalize after years of fighting the Long War.
The Defense Department also needs to reign in runaway spending on manpower programs and improve the efficiency of its business and buying operations. But even with those savings, however, the Pentagon is going to need a higher top line to help keep us safe, free, and prosperous in the future.
Otherwise, we will be sending our men and women into harm’s way without the tools they need to protect us.
But back to the core of the post - the two budgets. Remember, much of our economy runs on simple perception - it's not so much what's going on that counts as what people think about what's going on. Even putting us on this road will have a dramatic effect on consumer confidence, levels of spending, and foreign confidence, all of which will have an aggregate positive effect, too.
Other aspects of the RSC plan that are noted differences from Barack Obama's plan:
Obama: Spending on Medicare, Medicaid, and Social Security alone will reach $2.6 trillion by 2020. Bear in mind just five years ago, in 2005, total outlays were $2.5 trillion. This includes the wars in Afghanistan and Iraq and all domestic spending. While the Obama budget does note that his fiscal commission will examine the long-term fiscal outlook, it does nothing to restrain entitlement spending this year and the recently passed health package makes things even worse.
RSC: Under the RSC budget spending on these three programs still increases, but at a slower rate. Though Social Security spending remains untouched, Medicare would grow at a rate equivalent to economic growth, and Medicaid would increase with inflation. The budget would also repeal the Troubled Asset Relief Program (TARP), which could save taxpayers up to $36 billion, and completely repeals the government takeover of health care (the Patient Protection and Affordable Care Act, and the Health Care and Education Reconciliation Act). ...
DIFFERENCE: Over ten years the RSC budget spends approximately $3 trillion dollars less on the major entitlements than the Obama budget.
It can be done, but only with the right economic philosophy and the will to enact it. Will it be easy? No. But the path that Barack Obama and the radical leftist Democrats have set for this country is a guarantee of self-destruction. Why would we do that when we have a way out just sitting there in front of us?
Obama: As Heritage budget expert Brian Riedl outlined in his backgrounder, the Obama budget would, “raise taxes on all Americans by nearly $3 trillion, and raise taxes for 3.2 million small businesses and upper-income taxpayers by an average of $300,000 over the next decade.”
RSC: The RSC budget makes all the 2001 and 2003 tax relief, and the Alternative Minimum Tax “patch” permanent. In addition, the budget would fix the Congressional Budget Office baseline to assume current policy and put revenue and spending on equal footing. Under current CBO rules, tax hikes are assumed and must be “paid for” to simply continue the status quo.
DIFFERENCE: The RSC budget would extend tax relief for all American families and businesses by $1.7 trillion in the first five years, and keep taxes around their historical levels.
There's my two cents.
Obama's racked up debt three times faster than Bush