U.S. Headed Toward Bankruptcy, Says Top Budget Committee Republican

August 4, 2008 - 1:20 PM
The ranking Republican on the House Budget Committee said the U.S. government is headed toward bankruptcy if it stays on its current fiscal course.

U.S. Headed Toward Bankruptcy, Top Republican Says (image)

The ranking Republican on the House Budget Committee said the U.S. government is headed toward bankruptcy if it stays on its current fiscal course.

(CNSNews.com) - The ranking Republican on the House Budget Committee said the U.S. government is headed toward bankruptcy if it stays on its current fiscal course.

“We know that for a fact,” Rep. Paul Ryan (R-Wis.) told CNSNews.com in a video interview. “All the actuaries, all the objective scorekeepers of the federal government, are predicting this.”

To back up this claim, Ryan cited an estimate by the non-partisan Government Accountability Office that says the government faces a $53-trillion shortfall to cover the costs of promised benefits in its entitlement programs.

“They say we are $53 trillion short of fulfilling the promises the government is making to the American people, in today’s dollars,” said Ryan.

“Meaning that if we want to keep the promises of Medicare, Medicaid and Social Security, which are basically the three major entitlement programs, today we would have to set aside $53 trillion dollars and invest them at Treasury rates in order to do it,” he said.

Ryan said that to deal with this situation the government must either reform the entitlement programs or eventually impose massive tax increases on American workers.

“For the last 40 years, the federal government has had to tax every dollar made in America at 18.3 cents on that dollar to pay the bills of the federal government,” said Ryan.

“By the time my three children – who are three, five and six years old—are my age, the federal government will have to tax 40 cents out of every dollar made in America just to pay the bills for the federal government at that time,” he said.

Ryan asked the Congressional Budget Office to determine what the tax rates would need to be to cover federal spending at that level.

“What they told me was really startling,” said Ryan. “They said that the current low rate, the 10-percent bracket for low-income Americans, would have to go up to 25 percent.  The middle-income tax rate for middle-income Americans would have to go up to 66 percent, and the top rate, which is what small businesses pay, would have to go to 88 percent.

“Those would be the tax rates you would have to have if you wanted to tax your way out of this problem,” he said. “And if you did that, all experts conclude, you would literally crash the American economy.”

Ryan portrayed the long-term budget crisis he believes the country is now facing as a generational challenge.

“The legacy of this country has always been that each generation confronts the challenges before it so that the next generation is better off,” said Ryan. “In the past, we brought down the Iron Curtain and won the Cold War.  We got through World War I. We got through World War II.  We won the war on the Great Depression.

“The problem that we have right now—putting foreign policy aside and our fight with Islamic radicalism—is that we have an economic crisis, we have a fiscal crisis, and, that is, we will bankrupt this country, and the best century in America will be the last century,” he added.

“Unless we turn our fiscal situation around and pay off this debt, and change the way these programs work to a more sustainable path, the next generation will have inferior living standards,” said Ryan.

Ryan and his Budget Committee staff have developed a comprehensive plan for reforming federal taxing-and-spending policies that they believe will restore long-term solvency to the federal government.

Entitled “A Roadmap for America’s Future: A Plan to Solve America’s Long-Term Fiscal and Economic Crisis,” the plan has been introduced as legislation (H.R. 6110) in the current Congress.