America faces a choice between two economic futures.
In one, ever-rising levels of government spending overwhelm the Federal budget and the U.S. economy with crushing burdens of debt and higher taxes. It is a future in which America’s best century is the past century.
The second future is one in which the principles that created America’s freedom and prosperity are restored.
Currently, we are on a path of unsustainable spending, leading to an inferior standard of living for the next generation:
To fund our current budget, we must borrow half the money we are spending and nearly half the money we are borrowing is coming from foreign countries. America should not be humiliating itself, going to China and Japan shaking the tin cup for loans to avoid acting like the great and responsible country we always used to be.
In the final year of President Obama’s budget, we will spend nearly a trillion dollars a year, just on interest. That is more than we spent on defense, education, transportation, veterans, foreign aid, Iraqi reconstruction and the judiciary combined last year.
| Newt Gingrich on the Roadmap
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The well-intentioned and successful social insurance strategies of the past century – particularly Social Security, Medicare, and Medicaid–are headed toward financial collapse. The programs currently consume 40 percent of the entire federal budget
The baby boomer generation has begun retiring and we will go from 40 million retirees on Social Security and Medicare to 80 million retires in the next 17 years. And within the next five years, the flood of retirees onto entitlement programs will push their unfunded liabilities to $57 trillion, or $500,414 per U.S. household.
We cannot tax our way out of this problem.
I asked the non-partisan Congressional Budget Office (CBO) what our tax rates would have to be when my three children are my age, 40, in order to pay for the current federal government. That means adding no new programs, no new spending and no new debt. The answer is shocking.The lowest rate which is currently 10 percent would have to rise to 25 percent. The middle tax rate, which is 25 percent, would go to 63 percent. And the 35 percent tax bracket, which is the one that most small businesses pay, would have to be set at 88 percent. Our economy cannot survive at those rates.
As a father of three children ages 5 to 8, I wish I was exaggerating the situation.
The legacy of our country is that we leave the next generation a better country than we inherited. If we fail to act now, our spending and borrowing will severe this legacy.
To address our fiscal disaster, I wrote a plan, “A Roadmap for America’s Future” The plan will:
1. Ensure universal access to health insurance, fulfill the missions of Medicare, Medicaid, and Social Security, and make these programs permanently solvent.
2. Return Federal spending growth to sustainable levels and lift the debt burden looming over future generations.
3. Promote sustained economic and job growth and put the U.S. in a position to lead – not merely survive – in the international marketplace.
It is a real plan, with real numbers, and real legislation to implement it.
Tax reform – The new tax code would have just two rates: 10 percent on incomes up to $100,000 for joint filers and $50,000 for single filers; 25 percent on higher incomes. It offers generous standard deductions so that a middle-income family of four pays no taxes on the first $39,000 of its income. The corporate income tax, be replaced by an 8.5 percent business consumption tax. Consequently, companies would have an incentive to stay in the U.S and hire more employees.
Medicare reform – Unlike the Majority’s health care overhaul that cuts Medicare by nearly a half-trillion dollars to create a new entitlement, the Roadmap makes no change for people 55 and older. The Medicare reforms provide future beneficiaries (those currently under 55) with health coverage options just like the program enjoyed by Members of Congress. As persons younger than 55 became Medicare-eligible, they would receive payments averaging $11,000 a year, indexed to inflation and pegged to income, with low-income and less healthy people receiving more support.
Social Security reform – The Roadmapmakes no change for those 55 and older. It provides future retirees with the option to either stay in the traditional system or to enter a system of guaranteed personal accounts. Neither option is privatized. In the personal-accounts system, the accounts are owned by the individual, and managed by a government board — not a stockbroker or private investment firm. People choosing the reformed system select from a handful of low-risk, government-regulated options — just as Members of Congress and Federal employees do.
Health care reform - Universal access to affordable health care would be guaranteed by refundable tax credits for purchasing portablecoverage in any state. Prices for services and quality data would be disclosed to all consumers and patients.In the end, we are going to have to tackle our problems, or they’re going to tackle us.
There are few paths forward more destructive, more painful, and more irresponsible than the one advanced by those clinging to the unsustainable status quo. There is consensus that entitlement reform is urgently needed, and I welcome constructive criticism of my plan — a CBO-certified plan that actually solves the long-term fiscal crisis.
What is unaffordable and unacceptable, however, are political attacks unaccompanied by alternative plans. Those who would rather kick the can down the road are consigning the next generation of Americans to not only a broken social safety net, an inferior standard of living, and bankruptcy — but a future in which America’s best days are behind it.
Congressman Ryan is the Ranking Member of the House Budget Committee and is a senior member of the House Ways and Means Committee. He represents the 1st District of Wisconsin. Click here to read the full version of his Roadmap for America's Future
This piece first appeared as part of Victory NH's 60 Second Update Series