The American economy is built on the illusion of hope rather than the foundation of economic reason. Our immediate, desperate need to balance the current budget, reduce the total deficit, and embrace profitability as the single most important financial fundamental is something that transcends political parties and narrow ideological interests. We must hold Washington accountable to this goal in every election.
FreedomWorks provides a very telling graph demonstrating the country’s recent, belated move toward fiscal responsibility:
There are two caveats to be aware of in regard to this recent trend. The first is that the House’s budget has not passed and is therefore only a proposal at this point. Great harm can still be done by the more liberal Senate.
The second caveat is that liberals all across America are outraged at the House’s attempt to reign in the entitlements championed and consumed by Democrats. Expect resistance.
Who’s more credible when it comes to reducing the federal budget deficit, Barack Obama or Paul Ryan? It should be no surprise that Mr. Ryan’s proposed plan is more financially responsible, to the tune of $4T. Now that’s change we can believe in. Read all about it.
This is exactly what we’re talking about in the budget debate. If we have do choose, it should be an easy decision.
Now that the drummed-up budget controversy is over, here are my thoughts for the next one. There can’t be any sacred cows, period. I’ve been reading about the financial problems with Social Security and Medicare since I was 10 & bored enough to get past Humor in Uniform in Reader’s Digest. Now it’s time to pay the piper for 35 years of mismanagement, the inevitable result of allowing the government to take our money and put it into a politically managed investment portfolio rather than in a rational, market-based one. The bottom line is it’s time to save the country for our kids.
”Paul Krugman is actually the last of the Keynesian economists left in the world. Most of them are in shallow graves in North Korea and North Vietnam and out in the back of the Kremlin.” — Bill Whittle
Barack Obama’s supporters once said that a vote for him was a vote for putting grown-ups back in the White House. Financially speaking, that’s proven to be a falsehood. Luckily, Rep. Paul Ryan is in D.C. to take up his slack. Ryan’s new budget proposal should be hitting the House today. Here’s some of what Ryan had to say:
No one person or party is responsible for the looming crisis. Yet the facts are clear: Since President Obama took office, our problems have gotten worse. Major spending increases have failed to deliver promised jobs. The safety net for the poor is coming apart at the seams. Government health and retirement programs are growing at unsustainable rates. The new health-care law is a fiscal train wreck. And a complex, inefficient tax code is holding back American families and businesses.
Steve Moore has the details on Rep. Paul Ryan’s plan to cut spending.
The president’s recent budget proposal would accelerate America’s descent into a debt crisis. It doubles debt held by the public by the end of his first term and triples it by 2021. It imposes $1.5 trillion in new taxes, with spending that never falls below 23% of the economy. His budget permanently enlarges the size of government. It offers no reforms to save government health and retirement programs, and no leadership.
Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.
A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage’s analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.
Here are its major components:
• Reducing spending: This budget proposes to bring spending on domestic government agencies to below 2008 levels, and it freezes this category of spending for five years. The savings proposals are numerous, and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates’s plan to target inefficiencies at the Pentagon.
• Welfare reform: This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job—it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work.
As we strengthen and improve welfare programs for those who need them, we eliminate welfare for those who don’t. Our budget targets corporate welfare, starting by ending the conservatorship of Fannie Mae and Freddie Mac that is costing taxpayers hundreds of billions of dollars. It gets rid of the permanent Wall Street bailout authority that Congress created last year. And it rolls back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation and exploration.
• Health and retirement security: This budget’s reforms will protect health and retirement security. This starts with saving Medicare. The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way.
Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.
In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors.
We must also reform Social Security to prevent severe cuts to future benefits. This budget forces policy makers to work together to enact common-sense reforms. The goal of this proposal is to save Social Security for current retirees and strengthen it for future generations by building upon ideas offered by the president’s bipartisan fiscal commission.
• Budget enforcement: This budget recognizes that it is not enough to change how much government spends. We must also change how government spends. It proposes budget-process reforms—including real, enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.
• Tax reform: This budget would focus on growth by reforming the nation’s outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all.
This is America’s moment to advance a plan for prosperity. Our budget offers the nation a model of government that is guided by the timeless principles of the American idea: free-market democracy, open competition, a robust private sector bound by rules of honesty and fairness, a secure safety net, and equal opportunity for all under a limited constitutional government of popular consent.
We can reform government so that people don’t have to reorient their lives for less. We can grow our economy, promote opportunity, and encourage upward mobility. This budget is the new House majority’s answer to history’s call. It is now up to all of us to keep America exceptional.
Sounds like good sense to me. This man deserves our support and we need to get something very much like this plan to be passed. Get involved, write your representative, and let’s make them do what’s good for all of us, including our children and grandchildren!
The Spectator: “[Mitch] Daniels is seen as someone engaged with policy details who can go beyond trite Obama-bashing and deliver a critique of federal spending that isn’t limited to wisecracks about earmarks.
“Barack Obama campaigned on the theme of ‘Change you can believe in,’” he says. “I’d start with ‘Change that believes in you.’ You are a child of God who can make your own decisions.”
The Business Insider has a new series of charts describing the “bum deal” working Americans have gotten in the last few decades, including this one demonstrating the fallacious but de facto standard liberal meme, namely that Americans should earn roughly equal shares of the income pie:
An objective examination of this line of thinking reveals that nothing could be further from the truth.
Consider the case of a burger-flipper at McDonalds. Let’s set the value of his work at 10 units. (No, it doesn’t matter what the unit is, the value is relative to other occupations, not absolute.)
Now consider the store manager. She could easily do the flipper’s job – probably has done it in the past, in fact – as well as any other job in the store. Indeed, her ability is probably better at each and every position in the store than the people who hold them. Her value is clearly greater than the flipper’s. Let’s estimate it as 25, or 2.5x the flipper’s. Debatable, but reasonable, I think, given my personal experience as the flipper.
Now, consider a highly-trained bio-chemist whose work in generating a sustainable, cost-effective algae-based energy source fundamentally alters the western world’s relationship with the OPEC nations. What’s his value relative to the McDonalds store manager? Infinite, in reality. Even if we set it at 100x, that gives the chemist an overall relative value of 2500.
In any rational system of employment and compensation, a person’s earnings should reflect their value relative to other workers. The ground-breaking bio-chemist in the scenario above should earn at least 500 times more than the burger-flipper because the value he provides to the world is infinitely greater.
In fact, income inequality is reflective of capability inequality. If one believes that income inequality should be removed from society, the proper way to do so is not to levy taxes, steal from those who produce wealth, and redistribute the booty to liberals’ constituents. The right approach would be to eliminate the capability gap. Unfortunately, this requires the participation of those at the bottom end of the economic scale, something that’s not been forthcoming.
On one level, this lack of interest in changing economic lanes is understandable because it’s not something that can be done immediately. Rather, improving capabilities requires sacrifices of time, money, leisure, and style. There’s nothing fun about buckling down to get an education; however, there’s no substitute either. Every person in America has the opportunity to get a quality education. Unfortunately, far too many squander their own chance at economic mobility (and do fatal damage to others’ at the same time) because they simply are unable to comprehend the value of what they are giving up.
For those who do, it’s obvious that income inequality equates to opportunity. Why would the bio-chemist spend years in school, honing his mind to levels unimaginable by the burger-flipper, in order to receive a salary identical to that of his value-inferior? He wouldn’t, of course, because there is no reason to work hard for success if victory brings no reward.
The fact that the United States has a wide distribution of incomes demonstrates that there is an opportunity for people who work hard to succeed far beyond the imaginations of most men and women.
This is as it should be, for it’s an American imperative to produce over-achievers at a higher rate than the rest of the world. That is, after all, the only way that we can continue to lead nations such as China and India whose larger populations give them an inherent competitive advantage.
If there is a problem with income inequality, it’s that possession of wealth can lead those who have it to game the system in order to keep accruing larger and larger piles of money without actually producing anything of value in return.
It goes without saying that criminal activities such as fraud, insider trading, tax evasion, and other abuses of the system should be actively discouraged, not because they cause income inequality but because they destroy the integrity of the system of opportunity Americans have as their birthright.
It is this system that matters, not the particular result at any point in time, and it is this system that post-modern liberalism, with its excessive emphasis on removing inequalities of every sort, attacks and undermines at every opportunity.
Far from criticizing the inequality of incomes in the U.S., we should celebrate them, for the gap indicates that the system of free enterprise envisioned by the Founding Fathers as the economic engine of this country is still firing on several cylinders, despite liberal policies that have markedly reduced the efficiency at which we are allowed to operate.
The ink barely dry on President Obama’s health care bill – and so-called victory over the American people – the president has a new set of victims to help: those unable to pay their home mortgages. His plan is a particularly abominable one straight from the playbook of Karl Marx. If President Obama has his way, lending institutions will be compelled to reduce mortgage payments to no more than 31% of their debtors’ income.
The problem of "underwater" borrowers has bedeviled earlier administration efforts to address the mortgage crisis as home prices plunged.
Officials said the new initiatives will take effect over the next six months and be funded out of $50 billion previously allocated for foreclosure relief in the emergency bailout program for the financial system. No new taxpayer funds will be needed, the officials said.
I’ve been upbraided by several people who say that it’s not this president’s fault that he has to take these sorts of steps, that it’s actually Ronald Reagan’s fault, or Bill Clinton’s, or, inevitably, George W. Bush’s failings as a president that lead to this moment in history.
There’s a grain of truth at the center of this argument but there’s no pearl of wisdom forming around it. Yes, President Obama inherited a difficult situation when he took office. But the fact that he’s done virtually everything wrong since taking the reigns can neither be excused without comment nor blamed on anyone else.
Only a few short months ago Democrats were railing against banks for failing to loan money. Now the president’s latest financial debacle is certain to hamper banks’ ability to offer new loans, keep capital locked up in vaults instead of flowing through the economy, and lengthen the economic valley we find ourselves in as a result.
It’s all well and good to try to help people, but I have to wonder if Democrats even bother to consider the consequences of their actions. In the aftermath of their policies they wring their hands and wonder why businesses fail to respond as they’d hoped. The answer is simple: The fear and uncertainty liberal politics creates is one of the major causes of corporate reticence to invest while they are in office. And now this.
Can you now blame banks for not wanting to lend money when the terms of the contracts they wrote no longer have any meaning?