Ryan Budget a Small, Timid Step in the Right Direction

By: April 06, 2012

Last month Republican Congressman Paul Ryan, Chairman of the Budget Committee, unveiled a proposed budget for FY 2013 and beyond that actually cuts spending. Given the hue and cry that followed from the White House and Democrats in Congress, it would be easy to conclude that Ryan has proposed drastic cuts. He hasn’t. His plan is a small, timid step to reverse decades of unconstrained spending by pandering politicians of both parties.

A comparison of President Obama’s proposed budget to Ryan’s proposed budget for the next five years, from FY 2013 to FY 2017 shows that while Obama’s current plan continues his pattern of financially reckless extremism, Ryan’s modest cuts do very little to bring the federal government’s expenditures into the kind of balance consistent with our “fiscal constitution.”

In FY 2011 the federal government spent $3.6 trillion, exactly 24% of the $15 trillion of GDP created in the United States during the same twelve months. That’s a record peacetime high, the result of three years under an Obama Administration characterized by financially reckless extremism  and a  Democrat-controlled Senate who, for 1000 days, has deliberately violated one of their core duties by not passing a federal budget.

To put the scale of Obama’s profligacy in perspective, consider this: During his three years in office, the amount he’s increased spending—(the current 24% of GDP is an additional 4% of GDP higher than the 20% of GDP the federal government spent in George W. Bush’s last year) equals the average annual federal peacetime budget during the 142 years between 1789 and 1931 when politicians lived by our “fiscal constitution.”

When I speak of the “fiscal constitution” I mean the universal agreement among politicians and the populace that during peacetime, the federal government could only make expenditures for which a corresponding tax revenue can be identified. Our Founding Fathers unanimously felt that the federal budget should be treated in the same way as the family budget. Current consumption should be paid for by current tax revenue, and never by incurring debt. Debt should only be used to finance defense expenditures during times of war

Under President Obama’s budget, spending in FY 2012 will increase to $3.8 trillion, while Congressman Ryan proposes to hold spending at $3.6 trillion. Under Obama, spending in FY 2013 will remain at $3.8 trillion, but rises to $4.5 trillion in FY 2017, the first quarter of which will be his last year in office. Ryan proposes to cut spending to $3.4 trillion in FY 2013, but increases it to $3.8 trillion in FY 2017.

Under both plans, we continue to experience annual spending deficits. Under Obama the annual deficits, even under the rosiest scenarios for economic growth, hover around $1 trillion annually. Under Ryan’s plan annual deficits drop to a “mere” $300 billion by FY 2017.

As I argue in my new book, Covenant of Liberty: The Ideological Origins of the Tea Party Movement, we face a stark choice as a country. We must either drastically cut our spending in half from the current level of 24% of GDP to 12% of GDP, or we will certainly increase spending to 36% of GDP—putting us in the same category as European countries like Greece.

That’s a level consistent with 142 years of our “fiscal constitution” tradition, and breaks down as follows: 4% for the “normal” operations of the federal government, 6% for defense, and 2% to service and reduce the national debt.

How do the Obama and Ryan budgets stack up according to this standard?

Assuming a 3% annual increase in GDP, under Obama’s budget, federal government as a percentage of GDP increases to 25% in FY 2017. Under Ryan’s plan, it decreases to 21% in FY 2017. That’s not an insignificant improvement, but it still higher than George W. Bush’s FY 2008 budget, which put federal spending at 20% of GDP.

The Washington Post called Ryan’s plan “bold but risky,” but in my view, there’s little boldness in a plan that increases federal spending as a percentage of GDP beyond George W. Bush’s last year. While President Obama’s plan puts us on a path to become an economic basket case like Greece within a decade, the Ryan plan merely delays the day of reckoning by a few years.

Michael Patrick Leahy is the co-founder of Top Conservatives on Twitter and ElectionDayTeaParty.com. His new book, Covenant of Liberty: The Ideological Origins of the Tea Party Movement, was recently published by Broadside Books. He can be reached on Twitter at @michaelpleahy.

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