Friday, December 10, 2010

Palin And The Ryan Roadmap

by John Hayward

Writing for the Wall Street Journal today, Sarah Palin unfurls the fiscal “road map” prepared by Representative Paul Ryan of Wisconsin, and likes where it leads.

She didn’t much care for the recommendations of the President’s bipartisan deficit reduction panel, co-chaired by Erskine Bowles and Alan Simpson, although she commends the authors for taking the problem seriously. “The report shows we're much closer to the budgetary breaking point than previously assumed,” Palin says. “The Medicare Trust Fund will be insolvent by 2017. As early as 2025, federal revenue will barely be enough to pay for Social Security, Medicare, Medicaid and interest on our national debt. With spending structurally outpacing revenue, something clearly needs to be done to avert national bankruptcy.”

I personally think 2017 and 2025 are generous assessments of the fiscal “doomsday” date, because those dates don’t properly account for the dynamic affects of a shrinking economy as fiscal collapse approaches. If we don’t get on a road map to fiscal sanity very soon, we’re going to arrive in 2017 on a roller coaster, picking up speed as it rattles down the tracks.

Palin judges the deficit commission’s report inadequate because it leaves three major financial tumors largely untreated: Social Security, ObamaCare, and our incredibly convoluted tax system. The commission would address Social Security by raising the retirement age, long after the point where the system would have become insolvent – and even at that, it would be making an already rotten deal for future retirees even worse. Ryan’s “Roadmap For America’s Future,” on the other hand, offers a program for younger workers to opt into a private retirement account, while preserving existing benefits for those 55 and older. There is, quite frankly, no other approach that will save the system.

“On health care,” Palin continues, the Roadmap “would replace ObamaCare with a new system in which people are given greater control over their own health-care spending. It achieves this partly through creating medical savings accounts and a new health-care tax credit - the only tax credit that would be left in a radically simplified new income tax system that people can opt into if they wish.” It also reforms Medicare for those under 55 into a “voucher with which people can purchase their own care.” The one thing we’ve never tried to do, in the course of “reforming” health care, is give individuals more control over it, coupled with more incentives for health care providers to win their business through competition.

On taxes, the Ryan plan would “replace our high and anticompetitive corporate income tax with a business consumption tax of just 8.5%. The overall tax burden would be limited to 19% of GDP (compared to 21% under the deficit commission's proposals).” From World War II to the 1970s, the government spent less than 20% of GDP. Our fiscal health went terminal when that limit was exceeded. There is a school of economic thought that suggests it’s essentially impossible for any government to indefinitely sustain spending beyond the 20% threshold, as the recessive effects of excessive taxation and spending cause the economy to begin deflating. I think we’ve gotten close enough to proving this theory to suspend the experiment.

Ryan’s plan also simplifies the tax system to two rates, 10% for single filers up to $50,000 or joint filers up to $100,000, and 25 percent for higher amounts, with a generous standard deduction. It eliminates double taxation on savings, investments, and estates, taxing only income. Aside from the health care credit, the rest of the complex maze of deductions, subsidies, and penalties that turn our current tax code into an instrument of social control are eliminated.

“Together these reforms help to secure our entitlement programs for the 21st century,” Palin concludes. “According to the Congressional Budget Office (CBO), the Roadmap would lead to lower deficits and a much lower federal debt. The CBO estimates that under current spending plans, our federal debt would rise to 87% of GDP by 2020, to 223% by 2040, and to 433% by 2060. Under Rep. Ryan's Roadmap, the CBO estimates that debt would rise much more slowly, peaking at 99% in 2040 and then dropping back to 77% by 2060.”

It’s important to see one of the most popular figures in the conservative movement throwing her weight behind a carefully thought-out set of proposals like Ryan’s. As Palin concedes, the Roadmap for America’s Future isn’t perfect, but it’s clearly not a bunch of cockamamie ideas Ryan tossed out in a beer-fueled rant after realizing he couldn’t handle Speaker Nancy Pelosi for one more instant. Ryan’s ideas are also consonant with a lot of interesting things Mike Pence has been saying lately.

The common liberal knock on the Tea Party movement in general, and Sarah Palin in particular, is that they have no ideas, only complaints and sound bites. Palin expresses her own concrete proposals on a regular basis, and now she’s signing on to the reinforced concrete of Paul Ryan’s comprehensive plan. As Americans watch the Democrats dissolve in a petulant meltdown over their own childish demands, economic fantasies, and utter irresponsibility, they would do well to learn that people like Palin, Ryan, and Pence are the adults in the room.


John Hayward is a staff writer for HUMAN EVENTS, and author of the recently published Doctor Zero: Year One. Follow him on Twitter: Doc_0. Contact him by email at

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