Tag: paul ryan

Rep. Ryan’s Budget Avoids Cuts to Military Spending

For all the boldness of Rep. Paul Ryan’s proposal to reduce projected federal expenditures by $6 trillion, an initiative that I support, the Pentagon’s budget emerges essentially unscathed in Ryan’s plan. This is a mistake on both fiscal and strategic grounds. Significant cuts in military spending must be on the table as the nation struggles to close its fiscal gap without saddling individuals and businesses with burdensome taxes and future generations with debt. Such cuts will also force a reappraisal of our military’s roles and missions that is long overdue.

The Pentagon’s base budget has nearly doubled during the past decade. Throw in the costs of the wars in Iraq and Afghanistan, plus nuclear weapons spending in the Department of Energy, and a smattering of other programs, and the total amount that Americans spend annually on our military exceeds $700 billion. These costs might come down slightly as the wars in Iraq and Afghanistan are drawn to a close – as they should be – but according to the Obama administration’s own projections, the U.S. government will still spend nearly $6.5 trillion on the military over the next decade. Surely Rep. Ryan could have found a way to cut…something from this amount?

Defense is an undisputed core function of government – any government – and spending for that purpose should not be treated on an equal basis with the many other dubious roles and missions that the U.S. federal government now performs. But please note the emphasis. The U.S. Department of Defense should be focused on that purpose: defending the United States. But by acting as the world’s de facto policeman, we have essentially twisted the concept of “the common defence” to include the defense of the whole world, including billions of people who are not parties to our unique social contract.

The rest of the world is more than content to free ride on Uncle Sam’s largesse. Absolved of their core obligation to provide for the defense of their own citizens, the governments in other countries have been busy expanding the social welfare state and growing the public sector. The true burdens fall on U.S. taxpayers who spend two and a half times more on national security programs than do the French or the British, five times more than citizens living in other NATO countries, and seven and a half times more than the average Japanese. Meanwhile, our troops and their families are struggling to cover the many commitments that their civilian leaders have unwisely incurred. And yet the defenders of the status quo – those who prefer that Americans pay these costs and bear these burdens – cry for more. More money and more missions.

Fiscal hawks such as Ryan are not serious if they cannot see massive waste and inefficiency in the Pentagon. Robert Gates’ ballyhooed reforms barely scratch the surface of the problem. Mismanagement of major weapons programs is rampant; cost overruns are the norm. A meaningful cap on future defense expenditures will force the Pentagon to seriously confront these inefficiencies, and might also precipitate some useful competition between the services on who is best positioned to keep the country safe and secure.

If Washington is serious about cutting spending, and if the Pentagon’s budget is included in the search for savings, then we need to adopt a different strategy, one that would husband our resources, focus the military on a few core missions, call on other countries to take responsibility for their own defense, and share the burdens of policing the global commons. A serious proposal for reining in runaway Pentagon spending would have precipitated such a strategic shift. By giving the Pentagon a free pass, Rep. Ryan practically ensures that such a discussion never sees the light of day.

Cross-posted at The National Interest.

Federal Spending: Ryan vs. Obama

House Budget Committee Chairman, Paul Ryan, introduced his budget resolution for fiscal 2012 and beyond today entitled “The Path to Prosperity.” The plan would cut some spending programs, reduce top income tax rates, and reform Medicare and Medicaid. The following two charts compare spending levels under Chairman Ryan’s plan and President Obama’s recent budget (as scored by the Congressional Budget Office).

Figure 1 shows that spending rises more slowly over the next decade under Ryan’s plan than Obama’s plan. But spending rises substantially under both plans—between 2012 and 2021, spending rises 34 percent under Ryan and 55 percent under Obama.

Figure 2 compares Ryan’s and Obama’s proposed spending levels at the end of the 10-year budget window in 2021. The figure indicates where Ryan finds his budget savings. Going from the largest spending category to the smallest:

  • Ryan doesn’t provide specific Social Security cuts, instead proposing a budget mechanism to force Congress to take action on the program. It is disappointing that his plan doesn’t include common sense reforms such raising the retirement age.
  • Ryan finds modest Medicare savings in the short term, but the big savings occur beyond 10 years when his “premium support” reform is fully implemented. I would rather see Ryan’s Medicare reforms kick in sooner, which after all are designed to improve quality and efficiency in the health care system.
  • Ryan adopts Obama’s proposed defense (security) savings, but larger cuts are called for. After all, defense spending has doubled over the last decade, even excluding the costs of wars in Iraq and Afghanistan.
  • Ryan includes modest cuts to nonsecurity discretionary spending. Larger cuts are needed, including termination of entire agencies. See DownsizingGovernment.org.
  • Ryan makes substantial cuts to other entitlements, such as farm subsidies. Bravo!
  • Ryan would turn Medicaid and food stamps into block grants. That is an excellent direction for reform, and it would allow Congress to steadily reduce spending and ultimately devolve these programs to the states.
  • Ryan would repeal the costly 2010 health care law. Bravo!

To summarize, Ryan’s budget plan would make crucial reforms to federal health care programs, and it would limit the size of the federal government over the long term. However, his plan would be improved by adopting more cuts and eliminations of agencies in short term, such as those proposed by Senator Rand Paul.

Tuesday Links

  • Republicans have a big opportunity to undo Obamacare and reform Medicaid and Medicare all at once.
  • It’s a good thing, too, because we’re facing a big debt crisis and if we don’t change course, federal spending will crest 42% of GDP by 2050.
  • There’s also a big elephant in the room in an excessively complicated tax code.
  • One has to wonder if the Republicans intend to put the big sacred cow of defense spending on the table.
  • Unrelated to the budget, education choice proponents scored a big victory in the U.S. Supreme Court yesterday in ACSTO v. Winn, a decision that upheld education tax credits:

Paul Ryan and Political Discipline

Today POLITICO Arena asks:

Paul Ryan’s budget – hard-headed fiscal sanity or inhumane?

My response:

Either we discipline ourselves, painfully, or soon enough the Chinese and other lenders will do it for us, more painfully still, by refusing to loan to us any longer at currently low interest rates. And in that event, the debt service will be all consuming. Neither individuals nor nations can go down the road we’re on without paying the price.

Margaret Thatcher put it plainly: “The trouble with socialism” – let’s be honest, we’re socializing the costs of our appetites by imposing them on our children and grandchildren – ”is that eventually you run out of other people’s money.”

Inhumane? The inhumanity is among those demagogues who put us on this path, promising something for nothing year in and year out. Paul Ryan deserves our gratitude for biting the bullet at last. The ball is now in the court of the demagogues.

Congressman Ryan’s Budget Is a Big Step in the Right Direction

The chairman of the House Budget Committee, Rep. Paul Ryan of Wisconsin, will unveil his FY2012 budget tomorrow. Not all the details are public yet, but what we do know is very encouraging.

Ryan’s plan is a broad reform package, including limits on so-called discretionary spending, limits on excessive pay for federal bureaucrats, and steep reductions in corporate welfare.

But the two most exciting parts are entitlement reform and tax reform. Ryan’s proposals would simultaneously address the long-run threat of bloated government and put in place tax policies that will boost growth and improve competitiveness.

  1. The long-run fiscal threat to America is entitlement spending. Ryan’s plan will address this crisis by block-granting Medicaid to the states (repeating the success of the welfare reform legislation of the 1990s) and transforming Medicare for future retirees into a “premium-support” plan (similar to what was proposed as part of the bipartisan Domenici-Rivlin Debt Reduction Task Force).
  2. America’s tax system is a complicated disgrace that manages to both undermine growth and promote corruption. The answer is a simple and fair flat tax, and Ryan’s plan will take an important step in that direction with lower tax rates, less double taxation of saving and investment, and fewer distorting loopholes.

One potential criticism is that the plan reportedly will not balance the budget within 10 years, at least based on the antiquated and inaccurate scoring systems used by the Congressional Budget Office and Joint Committee on Taxation. While I would prefer more spending reductions, I’m not overly fixated on getting to balance with 10 years.

What matters most is “bending the cost curve” of government. Obama’s budget leaves government on auto-pilot and leaves America on a path to becoming a decrepit European-style welfare state. Ryan’s budget, by contrast, would shrink the burden of federal spending relative to the productive sector of the economy.

Along with other Cato colleagues, I’ll have more analysis of the plan when it is officially released.