The "Path to Prosperity Budget" is actually quite moderate

By Robert Maynard

As most are aware of by now, Paul Ryan has introduced a budget proposal entitled "The Path to Prosperity Budget." This proposal has been demonized by the left and deemed to be "unfair" by the Obama Administration. The argument is that the proposal is too radical and goes too far in cutting the budget. I would like to make the opposite case. There is a good argument to be made that, given the fact our total national debt is now at $15,578,846,265,361.84, the proposal does not go far enough. At a time when we have a federal debt approaching $16 trillion, with a total gross domestic product of just over $15 trillion, a radical solution is in order. We now are at the point where our total national federal debt surpasses our total annual income. That does not even factor in unfunded liabilities. When compared to the magnitude of the challenge we face, the Ryan budget is actually quite moderate. It only appears to be radical because almost everyone else in Washington D.C. is "whistling past the graveyard." This case is made quite well in a Cato Institute piece by Chris Edwards entitled "Paul Ryan's Spending Plan." Here some of the supposedly radical plan's highlights:

• Total federal outlays would fall from $3,624 billion this year to $3,530 billion next year. Those figures are $24 billion less than under President Obama's budget this year and $187 billion next year.
  
  
• Of the $187 billion savings compared to Obama next year, $38 billion would come from discretionary programs, $146 billion from so-called entitlements, and $3 billion from interest costs.
  
  
• Ryan's proposed spending in 2022 of $4,888 billion would be a modest 13 percent less than Obama's proposed spending that year. That's a useful statistic to remember when you read the inevitable stories about how Ryan would slash, burn, and pillage the government safety net.
  
  
• Indeed, Ryan's proposed increase in federal spending from $3,624 billion this year to $4,888 by 2022 represents fairly robust annual average growth of three percent.
  
  
• As a share of GDP, the Ryan budget would trim outlays from 23.4 percent this year to 19.8 percent by 2022. That reduction would simply get spending back to around the normal historical level. And note that spending would still be higher than the 18.2 percent achieved in the last two years under President Clinton.
  

Compare that with Edwards' own plan put forward a year ago. Here is the essence of his proposal:

Policymakers should implement an emergency plan of cuts to defense, domestic, and entitlement programs. This essay proposes spending cuts of more than $1 trillion annually by 2021, which would balance the budget without resorting to damaging tax increases. Federal spending would be reduced to 18.0 percent of gross domestic product by 2021 under the plan, which compares to President Obama's projected spending that year of 24.2 percent of GDP.

Keep in mind that even this more radical proposal only brings the budget into balance by 2021. That means another nine years of adding to an already enormous debt. That is nine years before we can even think about beginning to actually start paying the debt off. Yet this is a proposal that is even more "radical" than the much maligned Ryan proposal. Folks, we are going to be in serious trouble if we do not wake up. In 2009 Time Business section ran an article entitled "Will the U.S. Sell Assets As the British Government Did?." Perhaps a combination of adopting Mr. Edwards's budget proposal and the suggestions in this article might start to get us out of the hole we have dug. At the very least, we should pass the Ryan budget. Alas, given what passes for political leadership in Washington D.C., I am not holding my breath.

© Robert Maynard