Rep. Paul Ryan: Obama’s New Budget Will ‘Literally Crash the U.S. Economy’
March 17, 2010Rep. Paul Ryan (R.-Wis.), the ranking member of the House Budget Committee, told CNSNews.com that the new fiscal year 2011 budget proposed by President Barack Obama will "literally crash the U.S. economy" with the new debt it plans for the federal government.
“They literally crash the U.S. economy, if these kinds of deficits that he’s proposing persist,” Ryan said, referring to the fact that the Congressional Budget Office has reported that the president's 2011 budget proposal would nearly triple the publicly held portion of the federal debt over the next ten years.
CNSNews.com interviewed Ryan Monday evening during a break in the Budget Committee’s consideration of a 2,400-page health-care “reconciliation” bill that the House Democratic leadership is crafting to make changes that Democratic House members want in the health-care bill that passed the Senate in December.
Ryan pointed out that the Government Accountability Office recently reported that the federal government already faces a “fiscal gap” of $76 trillion, meaning that over the next 75 years the cost of the benefits promised in federal entitlement programs exceeds the tax revenues expected to pay for those benefits by that amount. That works out to almost $250,000 for every single American and about $650,000 for every American household.
The new debt President Obama plans for the federal government to incur over the next decade would come on top of this existing $76 trillion "fiscal gap."
“All those unfunded liabilities, all that debt I’ve been telling you about, is before you pass this budget,” said Ryan. “That’s if we don’t pass the budget. If we pass the Obama budget, it just gets worse. He doubles the debt in 5 years and triples it in 10.”
The federal government currently divides its total debt into two categories: debt held by the public and debt the government owes to itself because it has borrowed and spent money taken out of the so-called Social Security and Medicare “trust funds.”
“Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020,” says the CBO report on Obama’s fiscal 2011 budget. “As a result, net interest would more than quadruple between 2010 and 2020 in nominal dollars (without an adjustment for inflation); it would expand from 1.4 percent of GDP in 2010 to 4.1 percent in 2020.”
Ryan pointed out that President Obama’s own Treasury Department recently conceded that the new debt the government is now planning to take on is unsustainable.
“What really matters in these numbers is how big are these deficits relevant to the size of our economy and ability to pay for it,” said Ryan. “And under the president’s own definitions, they’re unsustainable. They literally crash the U.S. economy, if these kinds of deficits that he’s proposing persist.”
On Feb. 26, Treasury Secretary Timothy Geithner published “A Citizen’s Guide to the 2009 Financial Report of the U.S.Government.” It said that current spending policies are “not sustainable” and that the current budget path will cause the annual interest payments paid by the federal government to increase almost 8-fold over the next 30 years.
“Looking forward, in the absence of policy changes, large and growing primary deficits will increase debt held by the public and related interest on that debt,” said the Treasury Department guide. On the current trend “net interest expressed as a share of GDP could rise from 1.3 percent in 2009 to 10 percent in 2040 and 35 percent in 2080. Because interest expenses grow so rapidly, the total deficit and debt held by the public grow much more rapidly than does the primary deficit.”
“These estimates illustrate that current policies are not sustainable,” said the Treasury Department guide.Here is a transcript of CNSNews.com’s interview with Rep. Paul Ryan (R.-Wis.), ranking member of the House Budget Committee:
Terry Jeffrey: You’re marking up the reconciliation bill to apparently “fix” the Senate health care bill. There’s been a lot of talk in there congressman about unfunded liabilities, a term many Americans may not be familiar with. What is an unfunded liability?
Rep. Paul Ryan(R- Wis.): It’s debt. It’s promises the government is making to people that it cannot afford. It’s empty promises. And the unfunded liabilities last year, for the federal government, were$ 62.9 trillion, this year its $76 trillion.
Jeffrey: So as if right now, the U.S. government has promised benefits to people through entitlements that are $76 trillion above what--
Ryan: Over funded, above what we can pay.
Jeffrey: Above what taxes can bring in?
Ryan: Above what taxes are bringing in. That’s exactly right.
Jeffrey: About how much is that per American household, do you know?
Ryan: Well just for Medicare alone, it’s $433,000 per household. So, that’s just for Medicare alone--if we don’t get a handle on this situation. So, we’re talking hundreds of thousands of dollars per household just to fill in the gap between what money is coming in and what money we promised will go out.
Jeffrey: Okay, and this is before we pass the health care bill?
Ryan: That’s the existing structure. That’s the current state of play before we created this new entitlement.
Jeffrey: A couple weeks ago, the Congressional Budget Office scored President Obama’s fiscal 2011 budget--hasn’t gotten a lot of publicity--but I put down the numbers here in terms of deficits. We got $1.412 trillion last year, $1.5 trillion this year. The lowest it ever goes is $724 billion, then it starts going back up as you can see. You know these numbers real well.
Ryan: Yeah, and what these numbers--What really matters in these numbers is how big are these deficits relevant to the size of our economy and ability to pay for it. And under the president’s own definitions, they’re unsustainable. They literally crash the U.S. economy, if these kinds of deficits that he’s proposing persist.
Jeffrey: And under the plan that he’s proposing, on the horizon long term we don’t see a decrease in deficits but an increase.
Ryan: No, so all those unfunded liabilities, all that debt I’ve been telling you about, is before you pass this budget. That’s if we don’t pass the budget. If we pass the Obama budget, it just gets worse. He doubles the debt in 5 years and triples it in 10.
Jeffrey: In 2008, the last year President Bush was in office, the deficit was $458 billion. Under President Obama’s budget, will there ever be a deficit that low again?
Ryan: No and the last year the Republicans controlled Congress the deficit was $164 billion. So, look, we got to acknowledge Republicans didn’t do things right either, but we’re talking orders of magnitude now that are un-comparable as far as the debt and deficits that are being piled up right now.
Jeffrey: Okay, one of your colleagues in the hearing said that the CBO had reported the senate health care bill would actually decrease the deficit by $132 billion. Now, I know you believe that the CBO does honest work, but is that really a fair and accurate accounting of this?
Ryan: No, because what you’ve given the CBO is a manipulated piece of legislation to try and get that kind of a score by omitting lots of costs--$371 billion dollars to the Doc fix, by double counting different kinds of revenue.
Jeffrey: What’s the doc fix?
Ryan: The Doc Fix is to prevent doctor payments from getting cut by 21 percent this year, 23 percent the next year, and thereon after, in Medicare. And to prevent those cuts from occurring, which is because of this sort of flawed formula that exists, there’s $371 billion that the president is proposing to spend that’s in the legislation to begin with, but once they realized by having all this spending in the bill it made the CBO score it as a big deficit. So, they took the spending out of the bill and they’re running it as separate legislation and passing it. And the point is: They’re not measuring all the costs that are involved.
Jeffrey: So, if you add the Doc Fix back in, this goes into deficit?
Ryan: It goes into deficit. I’ll be walking through this in a minute. We have a motion to instruct right now coming up, and I’ll bring up a chart. Jeb Hensarling and I are going to bring up a chart to untangle this web here to show just how this thing creates a deficit.
Jeffrey: The bottom line, Congressman, last question: They pass this health care bill, not only do we have the $1.2 trillion deficit 10 years down the road the Obama budget shows now, it gets bigger?
Ryan: That’s right, and the cost will explode under this new entitlement.