Excerpts from Rep. Paul Ryan’s remarks Tuesday at the George W. Bush Institute’s conference at the New-York Historical Society.
Treasury Secretary Tim Geithner came to the House Budget Committee about a month ago and said to us: “We’re not suggesting we have a solution to the long-term fiscal problem. What we do know is, we don’t like yours.”
This is the essence of failed leadership. Rather than put out a solution to this very clear and present danger to our country’s future, the president has decided to wait for the Republicans to offer their solution and then attack it.
If you put a budget plan in place that does deal with the drivers of our debt, that will give us an immediate boost of growth today. The bond markets and businesses are looking to see if leadership is getting this situation under control so that they can take risks, so that they know they will have a certain future to be optimistic about. Until you have a plan like this in place, you can’t reap that kind of a growth dividend.
But the president’s budget is the most “anti-growth” when it comes to taxes. He wants the top effective marginal income-tax rate to rise to 44.8 percent in January.
Think about what that means. Eight out of 10 US businesses aren’t corporations; they file their taxes as individuals, like partnerships or LLCs. And 65 percent of our net new jobs come from these businesses; they’re where more than half of Americans work today.
But the president is basically saying to them: If you get successful; if you buy four acres out in the industrial park in Elkhorn, Wis., and grow from five employees to 25 and then to 250 employees — well, we used to call that the American Dream, but now you’re part of the evil rich, and you’re going to be hit with a 45 percent effective tax rate. Throw in our state income tax, and you are over 50 percent.
We’re in a global economy. Where I come from, when we say “overseas” we mean over Lake Superior — Canada, which just dropped its business tax to 15 percent. How on Earth are our businesses going to be able to compete with the Canadians — or the Irish at 12.5 percent?
Since Japan just cut its corporate tax rate, the United States now has the “honor” of having the highest tax rate in the world. If we tax our job-creators at such higher rates than our competitors are taxing their companies — then we lose and they win.
Higher tax rates, more complexity, more loopholes is what the president proposes. But we’ve tried that approach: We have tried chasing higher spending with higher taxes and more debt, we tried all the stimulus spending.
It hasn’t worked. All we got was a debt hangover and a cloud of uncertainty hanging over our economy — and one out of six Americans is in poverty now, the highest rate in a generation.
There’s a better way, and some of us are actually putting ideas on the table to show there’s a better way. That is what our Path to Prosperity budget does.
We actually deal with the problem. We see the debt crisis coming and we deal with it — so that we’re not forced into austerity.
In our proposal, Medicare benefits don’t change for anybody in or near retirement. But if you wait much longer to change the long-term path, if you wait until you have a debt crisis — then all bets are off and you won’t be able to do that.
Let’s pre-empt austerity by getting us on the right path so that we don’t need to pull the rug out from under people (like my mom, who’s been on Medicare for 11 years) who have organized their lives around this promise.
The problem is, it’s a promise with a $37 trillion hole. If we reform these programs now for the younger generation, we can keep the commitment to the current generation — but we must do it soon.
Our budget cuts $5.3 trillion in spending from the president’s budget. We save and strengthen these critical entitlement programs. We get our debt under control. We get our budget on a path to balance, and we get our debt completely paid off.
If we keep going down the president’s path — a path that divides us from each other, where we tax ourselves at double the rates our competitors are taxing themselves — we’ll have a welfare state on our hands, with slow growth and economic stagnation.
The secret to success is economic growth along with spending discipline and entitlement reforms. With those three things, we can get America back on the Path to Prosperity.
Rep. Paul Ryan (R-Wis.) chairs the House Budget Committee.