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Paul Ryan: ‘Saving the American Idea: Rejecting Fear, Envy and the Politics of Division’

10:12 AM, Oct 26, 2011 • By DANIEL HALPER
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The President’s political math is a muddled mix of false accusations and false choices. The actual math is apolitical, and it’s clear: By the time my kids are my age, the non-partisan Congressional Budget Office projects that the size of government will be double what it is today.

Government health care programs alone will have grown to consume 45 percent of federal spending. The primary driver of this increase is runaway inflation in health care costs, which are rising at 2 to 3 times the rate of GDP.

It’s impossible to keep funding health care expenditures at this rate. Even President Obama has said, quote, “If you look at the numbers, Medicare in particular will run out of money, and we will not be able to sustain that program no matter how much taxes go up.”

So the real debate is about how best to control these unsustainable costs. And if I could sum up that disagreement in a couple of sentences, I would say this: Our plan is to empower patients. Their plan is to empower bureaucrats.

The Republican plan gives individuals the power to put market pressure on providers and make them compete.

The President’s plan is to give 15 unelected bureaucrats in Washington the power to cut Medicare in ways that, according to Medicare’s own chief actuary, would simply drive providers out of business. This would result in harsh disruptions and denied care for seniors.

Pain like this simply can’t be sustained. So when it comes to out-of-control spending on entitlements, the President’s math simply doesn’t add up.

And his math is no better on the tax side. Let’s say we took all the income from those the President calls “rich” – those making $250,000 or more. A 100 percent tax rate on their total annual income would only fund the government for six months. Just six months!

What about some of the other tax hikes the President likes to talk about? Under the President’s policies, deficits are set to rise by a whopping $9.5 trillion over the next 10 years.

  • Letting the top two tax rates expire would equal roughly 8 percent of that planned deficit increase.
  • Eliminating tax subsidies for oil and gas companies would only equal 0.5 percent of the President’s planned deficits.
  • And what about corporate jet owners? That provision would reduce those deficits by just 0.03 percent.

Look, I’m all for closing tax loopholes – but you can’t close our nation’s deficits by chasing ever-higher spending with politically motivated tax hikes here and there. Instead, tax reform must broaden the base and lower rates.

This policy approach, which has attracted strong bipartisan support, would bolster our fiscal health by increasing competitiveness and encouraging more investment and job creation.

Lately, the President has been fond of taking Ronald Reagan quotes out of context, in an effort to persuade Republicans that Reagan would have agreed with the idea of using fear and envy to push a partisan agenda of permanently higher taxes.

Every time he does this, I can picture Reagan shaking his head: “There you go again.”

Obama quotes Reagan as saying that bus drivers shouldn’t pay a higher effective tax rate than millionaires. Well, that’s a no-brainer. Nobody disagrees with that.

But it is simply disingenuous to use this quote as evidence that Reagan would have supported the tax increases that Obama wants Congress to pass.

Reagan was attempting to build support for the landmark 1986 tax reform, a revenue-neutral law that reformed the tax code by lowering tax rates while broadening the tax base.

Reagan’s point – which President Obama clearly missed – was not that we should raise tax rates to chase out-of-control spending in Washington.

His point was that we should get rid of loopholes that are exploited by the few, so that we could lower everyone’s tax rates and help the economy grow.

The House-passed budget includes this kind of tax reform, which many agree would provide an immediate boost to the economy. Our budget proposed getting rid of scores of loopholes, lowering the hurdles for job creation and economic growth, and making our tax code fair, simple, and competitive.

In his address to Congress last month, the President said he agrees in principle with this kind of reform, especially when it comes to the uncompetitive way we tax our businesses.

This made Republicans think, well, we might have an opportunity here for the kind of genuine consensus-building that the President talked about as a candidate.

Yet he chose not to pursue this kind of tax reform. Instead, he sent us a partisan bill filled with the same stimulus proposals that failed two years ago, only this time he also asked for permanent tax hikes to go with them.

He’s also failed to work with us on another area where one would think we could find common ground: ending the lavish subsidies and government benefits that go to those who are already successful.

The House-passed budget was full of proposals to get rid of corporate welfare and crony capitalism.

  • Why are tax dollars being wasted on bankrupt, politically-connected solar energy firms?
  • Why is Washington wasting your money on entrenched agribusiness?
  • Why have we extended an endless supply of taxpayer credit to Fannie Mae and Freddie Mac, instead of demanding that their government guarantee be wound down and their taxpayer subsidies ended?

Rather than raising taxes and making it more difficult for Americans to become wealthy, let’s lower the amount of government spending the wealthy now receive.

The President likes to use Warren Buffett and his secretary as an example of why we should raise taxes on the rich.

Well, Warren Buffett gets the same health and retirement benefits from the government as his secretary.

But our proposals to modestly income-adjust Social Security and Medicare benefits have been met with sheer demagoguery by leading members of the President’s party.

The politics of division have always struck me as odd: the eagerness to take more, combined with the refusal to subsidize less.

Instead of working with us on these common-sense reforms, the President is barnstorming swing states, pushing a divisive message that pits one group of Americans against another on the basis of class.

This just won’t work in America. Class is not a fixed designation in this country. We are an upwardly mobile society with a lot of movement between income groups.

The Treasury Department’s latest study on income mobility in America found that during the ten-year period starting in 1996, roughly half of the taxpayers who started in the bottom 20 percent had moved up to a higher income group by 2005.

Meanwhile, half of all taxpayers ended up in a different income group at the end of ten years. Many moved up, and some moved down, but economic growth resulted in rising incomes for most people over this period.

Another recent survey of over 500 successful entrepreneurs found that 93 percent came from middle-class or lower-class backgrounds. The majority were the first in their families to launch a business.

Their stories are the American story: Millions of immigrants fled from the closed societies of the Old World to the security of equal rights in this land of upward mobility.

Telling Americans they are stuck in their current station in life, that they are victims of circumstances beyond their control, and that government’s role is to help them cope with it – well, that’s not who we are. That’s not what we do.

Our Founding Fathers rejected this mentality. In societies marked by class structure, an elite class made up of rich and powerful patrons supplies the needs of a large client underclass that toils, but cannot own. The unfairness of closed societies is the kindling for class warfare, where the interests of “capital” and “labor” are perpetually in conflict. What one class wins, the other loses.

The legacy of this tradition can still be seen in Europe today: Top-heavy welfare states have replaced the traditional aristocracies, and masses of the long-term unemployed are locked into the new lower class.

The United States was destined to break out of this bleak history. Our future would not be staked on traditional class structures, but on civic solidarity. Gone would be the struggle of class against class.

Instead, Americans would work, compete, and co-operate in an open market, climb the ladder of opportunity, and keep the fruits of their efforts.

Self-government and the rule of law would secure our equal, God-given rights. Our political and economic systems – rooted in freedom and responsibility – would reward, and thus cultivate, traditional virtues.

Given that the President’s policies have moved us closer to the European model, I suppose we shouldn’t be surprised that his class-based rhetoric has followed suit.

We shouldn’t be surprised... but we have every right to be disappointed. Instead of appealing to the hope and optimism that were hallmarks of his first campaign, he has launched his second campaign by preying on the emotions of fear, envy, and resentment.

This has the potential to be just as damaging as his misguided policies. Sowing social unrest and class resentment makes America weaker, not stronger. Pitting one group against another only distracts us from the true sources of inequity in this country – corporate welfare that enriches the powerful, and empty promises that betray the powerless.

Ironically, equality of outcome is a form of inequality – one that is based on political influence and bureaucratic favoritism.

That's the real class warfare that threatens us: A class of bureaucrats and connected crony capitalists trying to rise above the rest of us, call the shots, rig the rules, and preserve their place atop society. And their gains will come at the expense of working Americans, entrepreneurs, and that small businesswoman who has the gall to take on the corporate chieftain.

It’s disappointing that this President’s actions have exacerbated this form of class warfare in so many ways:

  • While the EPA is busy punishing commercially competitive sources of energy, a class of bureaucrats at the Department of Energy has been acting like the world’s worst venture capital fund, spending recklessly on politically favored alternatives.
  • While the unemployment rate remains stuck above 9 percent, a class of bureaucrats at the National Labor Relations Board is threatening hundreds of jobs by suing an American employer for politically motivated reasons.
  • And while millions of Americans are left wondering whether their employers will drop their health insurance because of the new health care law, a class of bureaucrats at HHS has handed out over 1,400 waivers to those firms and unions with the political connections to lobby for them.

These actions starkly highlight the difference between the two parties that lies at the heart of the matter: Whether we are a nation that still believes in equality of opportunity, or whether we are moving away from that, and towards an insistence on equality of outcome.

If you believe in the former, you follow the American Idea that justice is done when we level the playing field at the starting line, and rewards are proportionate to merit and effort.

If you believe in the latter kind of equality, you think most differences in wealth and rewards are matters of luck or exploitation, and that few really deserve what they have.

That’s the moral basis of class warfare – a false morality that confuses fairness with redistribution, and promotes class envy instead of social mobility.

I’d like to introduce President Obama to the Ronald Reagan he isn’t so eager to quote – the man who said, “Since when do we in America believe that our society is made up of two diametrically opposed classes – one rich, one poor – both in a permanent state of conflict and neither able to get ahead except at the expense of the other? Since when do we in America accept this alien and discredited theory of social and class warfare? Since when do we in America endorse the politics of envy and division?”

President Reagan was absolutely right. Instead of policies that make it harder for Americans to rise, let’s lower the hurdles to upward mobility.

That’s what the American Idea is all about. You know, in the midst of all the joys and sorrows of our everyday lives, I think we sometimes forget why America was considered such an exceptional nation at its Founding, and why it remains so.

To me, the results of the Founders’ exceptional vision can be summed up in a single sentence: Throughout human history, the American Idea has done more to help the poor than any other economic system ever designed.

Americans, guided by our ideals, have sacrificed everything to combat tyranny and brutal dictators; we’ve expanded opportunity, opened markets, and inspired others to resist oppression; we’ve exported innovation and imagination; and we’ve welcomed immigrants seeking a fresh start.

Here in America – unlike most places on earth – all citizens have the right to rise.

Thank you.

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