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A Difference that Can’t Be Split

The parties have to fight over the budget because the status quo is untenable.

Mar 18, 2013, Vol. 18, No. 26 • By JAY COST
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This week Paul Ryan’s House Budget Committee is set to release its fiscal year 2014 budget, which promises to balance Uncle Sam’s books in 10 years. Ryan’s offering will elicit lamentations from the usual quarters of the mainstream media: House Republicans have lurched sharply to the right, they have abandoned the pragmatic principles of their forebears, they are now totally unfit to govern.

Paul Ryan: The fiscal chickens have come home to roost.

Paul Ryan: The fiscal chickens have come home to roost.

NEWSCOM

This view of congressional Republicans is weirdly shorn of historical context, as if today’s liberals have forgotten everything conservatives did in the past that outraged liberals. For instance, the GOP tried, unsuccessfully, to push root-and-branch reform of Medicare in the early part of George W. Bush’s administration. Before that, the GOP attempted to modernize Medicare during the “Republican Revolution” of the mid-1990s, and also met with failure.

Yet the leftists do have a point. After those failed attempts, Republicans in Washington largely abandoned their reform endeavors. Similarly, when Lyndon Johnson pushed for Medicare in 1965, House Republicans, led by Gerald Ford, offered an alternative program, but when that failed to pass, they lined up to support the liberal plan. So why do conservatives persist today?

The answer the left prefers—that conservatives are suffering from some kind of mass hysteria—is self-serving, as it casts congressional liberals and President Obama as the only responsible agents in government. It is also absurd. In fact, Ryan and House Republicans persist in the effort to get control of the nation’s budget because they see a civic obligation to prevent disaster. 

Last month, the Congressional Budget Office released its revised baseline for spending, taxation, and deficits for the next decade. It is not pretty. The gross federal debt is expected to increase by nearly $10 trillion over 10 years, from $16 trillion today to roughly $26 trillion in 2023. 

Beyond the 10-year horizon, the fiscal picture only gets worse. Without major reforms, the government’s vast array of health entitlements—starting with Medicare, Medicaid, CHIP, and Obamacare—are set to grow from about 5 percent of gross domestic product today to 9 percent in 2033, 12 percent in 2053, and 15 percent in 2073. There is no way the nation can afford that bill, absent a shocking increase in taxation. What’s more, taxes would have to be raised again and again and again, as health entitlements are expected to grow faster than the economy. 

The consequences of such a debt load are dire. As the CBO wrote last month: 

 The nation’s net interest costs will be very high (after interest rates return to more normal levels) and rising. Higher costs for interest eventually will require the government to raise taxes, reduce benefits and services, or undertake some combination of those two actions.

National saving will be held down, leading to more borrowing from abroad and less domestic investment, which in turn will decrease income in the United States relative to what it would be otherwise.

Much has been written about the nation’s awful budgetary outlook, but one aspect that is often overlooked is the effect the country’s debt and deficit will have on the American political landscape. 

Right off the bat, the looming debt crisis explains why House Republicans persist with a policy solution that has not been politically popular in the past. Today’s House GOP believes it has no choice; the duties of responsible governing require a solution to this problem, even if such a
solution is unpopular. Hence, House Republicans propose major reforms year after year, despite the pummeling they take from Democrats and their friends in the media.

The fiscal situation also explains why Senate Democrats have failed to produce a budget in four years. Senate majority leader Harry Reid has a hyper-transactional approach to politics, always preferring to shield his members from tough votes, or sweeten the pot for them when he has no choice. On the budget, he faces a seemingly intractable problem: Should he force his caucus to sign on to a budget that projects expanding deficits from here to eternity, or a budget that imposes a mix of unpopular taxes and entitlement reforms? Reid has chosen to do neither: His Senate simply ignores its obligation to produce a budget.

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