Shared Scarcity versus Renewed Prosperity

by: Les Carpenter
Rational Nation USA
Birthplace of Independent Conservatism

Sen. Scott Brown has announced his intention to support Paul Ryan's budget plan. This comes as a surprise as Sen. Brown is a moderate to liberal republican from  Massachusetts, one of the nations most liberal states. I'm content to chalk it up to the Senator finally coming to his senses.

On to the real point of today's post. Rep. Paul Ryan, Chairman of the House Budget Committee delivered a speech to the Economic Club of Chicago highlighting the very real {and serious} fiscal issues facing America today. In a most compelling way Ryan drew the contrast between the progressives {democratic party} vision of shared scarcity and the vision of renewed prosperity shared by the more fiscally responsible conservatives.

Rep. Ryan's speech for the most part will be overlooked by the liberal government/media complex. His speech will be greatly maligned by the progressive/collectivist sites that populate the blogoshere.

Following are highlights of Ryan's speech.

I’ll come to the point. Despite talk of a recovery, the economy is badly underperforming. Growth last quarter came in at just 1.8 percent. We’re not even creating enough jobs to employ new workers entering the job market, let alone the six million workers who lost their jobs during the recession.

The rising cost of living is becoming a serious problem for many Americans. The Fed’s aggressive expansion of the money supply is clearly contributing to major increases in the cost of food and energy.

An even bigger threat comes from the rapidly growing cost of health care, a problem made worse by the health care law enacted last year.

Most troubling of all, the unsustainable trajectory of government spending is accelerating the nation toward a ruinous debt crisis.

This crisis has been decades in the making. Republican administrations, including the last one, have failed to control spending. Democratic administrations, including the present one, have not been honest about the cost of the tax burden required to fund their expansive vision of government. And Congresses controlled by both parties have failed to confront our growing entitlement crisis. There is plenty of blame to go around.

Years of ignoring the drivers of our debt have left our nation’s finances in dismal shape. In the coming years, our debt is projected to grow to more than three times the size of our entire economy.

This trajectory is catastrophic. By the end of the decade, we will be spending 20 percent of our tax revenue simply paying interest on the debt – and that’s according to optimistic projections. If ratings agencies such as S&P move from downgrading our outlook to downgrading our credit, then interest rates will rise even higher, and debt service will cost trillions more.

This course is not sustainable. That isn’t an opinion; it’s a mathematical certainty. If we continue down our current path, we are walking right into the most preventable crisis in our nation’s history.

So the question is, how do we avoid it?

The answer is simple. We have to make responsible choices today, so that our children don’t have to make painful choices tomorrow....

See, right now, we’re finally having a debate in Washington about how to address our fiscal problems. But we’re still not having the debate we need to have.

To an alarming degree, the budget debate has degenerated into a game of green-eyeshade arithmetic, with many in Washington – including the President – demanding that we trade ephemeral spending restraints for large, permanent tax increases.

This sets up a debate in which we are really just arguing over who to hurt and how best to manage the decline of our nation. It is a framework that accepts ever-higher taxes and bureaucratically rationed health care as givens.

I call it the “shared scarcity” mentality. The missing ingredient is economic growth.

Shared scarcity represents a deeply pessimistic vision for the future of this country – one in which we all pay more and we all get less. I believe it would leave us with a nation that is less prosperous and less free.

To begin with, chasing ever-higher spending with ever-higher tax rates will decrease the number of makers in society and increase the number of takers. Able-bodied Americans will be discouraged from working and lulled into lives of complacency and dependency.

Worse – when it becomes obvious that taxing the rich doesn’t generate nearly enough revenue to cover Washington’s empty promises – austerity will be the only course left. A debt-fueled economic crisis will force massive tax increases on everyone and indiscriminate cuts on current beneficiaries – without giving them time to prepare or adjust. And, given the expansive growth of government, many of these critical decisions will fall to bureaucrats we didn’t elect.

Shared scarcity impedes economic growth, results in harsh austerity, and ends with lost freedom....

First, we have to stop spending money we don’t have, and ultimately that means getting health care costs under control.

Second, we have to restore common sense to the regulatory environment, so that regulations are fair, transparent, and do not inflict undue uncertainty on America’s employers.

Third, we have to keep taxes low and end the year-by-year approach to tax rates, so that job creators have incentives to invest in America; and

Fourth, we have to refocus the Federal Reserve on price stability, instead of using monetary stimulus to bail out Washington’s failures, because businesses and families need sound money.

Let me deal with each in order.

The first foundation, real spending discipline: it’s pretty simple. You can’t get real, sustainable growth by continuing to pile on the debt. More debt means more uncertainty, and more uncertainty means fewer jobs.

The rating agency S&P just downgraded the outlook on U.S. debt from “stable” to “negative.” That sends a signal to job creators. If S&P is telling them that America is a bad investment, they’re not going to expand and create jobs in America – not at the rate we need them to.

Mounting debt also threatens our poorest and most vulnerable citizens, because those who depend most on government would be hit hardest by a fiscal crisis. We have to repair our safety net programs so that they are there for those who need them most. This starts by building on the successful, bipartisan welfare reforms of the mid-1990s.

Our reforms save the social safety net by giving more power to governors to create strong, flexible programs that better serve the needs of their populations. Most important, they make these programs solvent.

As we strengthen welfare for those who need it, we propose to end it for those who don’t. We end wasteful corporate welfare for those such as Fannie Mae and Freddie Mac, big agribusinesses, and others that have gotten a free ride from the taxpayer for too long.

All of these steps are necessary to getting spending under control. But they are not enough. We cannot avert a debt crisis unless we directly address the rising cost of health care.

Getting health care costs under control is critical, both for solving our fiscal mess and for promoting growth. One reason that many people aren’t getting raises is that rising health care costs are eating into their paychecks.

The second foundation addresses the growing scourge of crony capitalism, in which Washington bureaucrats abuse the regulatory process to pick winners and losers in the private economy.

The third foundation recognizes that we cannot get our economy back on track if Washington tries to tax its way out of this mess....

The economics profession has been really clear about this – higher marginal tax rates create a drag on economic growth....

Finally, the fourth foundation calls for rules-based monetary policy to protect working families and seniors from the threat of high inflation.

The foregoing excerpts from Rep. Ryan's speech are just important highlights. There is much more. It is worth taking the time to read the full text of the speech here. Rep. Ryan has put the issue of fiscal responsibility and sanity front and center. In doing so he has done the nation a great service. Now it is up to We the People to keep our elected representatives feet to the fire of fiscal responsibility and the opportunity it provides for our future as a nation.

Now if only Ryan had spent some time on reigning in the Military Industrial Complex.

Cross poted to Rational Nation

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1 comment:

  1. You beat me to this, I had the text of the speech in my Blackberry and was quite impressed.


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