Ryan & Christie, the GOP’s Dynamic Duo
Meet Paul Ryan and Chris Christie, the GOPâ€™s dynamic and dangerous duo. One is the author of â€śA Roadmap for Americaâ€™s Future,â€ť a bold blueprint that shows policymakers how they can shrink entitlement spending while also growing the economy. The other is the Garden Stateâ€™s chief executive and YouTube sensation who’s implementing his own roadmap in a blue state drowning in red ink. Both are fighting back hard against the idea that government spending canâ€™t be cut and thus taxes must be raised in order restore Americaâ€™s long-term fiscal solvency.
Now this is the worst sort of heresy to the liberal economic intelligentsia — and mainstream media — who all pretty much belong to the cult of Adolph Wagner, a German economist who died in 1917. Wagnerâ€™s Law basically says that as a nation gets wealthier, its citizens demand more social services and bigger government. As a result, itâ€™s far easier for government to raise taxes than cut spending. Not surprisingly, Wagnerians are enthusiastic supporters of layering a value-added tax onto the current U.S. income tax system.
Peter Orszag, the just-departed White House budget chief, is an obvious Wagnerian. He told CNN over the weekend that America cannot afford the Bush tax cuts of 2001 and 2003. None of them. Not the ones for the rich (and entrepreneurs and investors). Not the ones for the middle class. They all have to go, every last smidge of them. â€śWe, unfortunately, canâ€™t afford the tax cuts over the medium and long term,â€ť Orszag said on CNNâ€™s â€śFareed Zakaria GPSâ€ť program. â€śWe face too large a deficit out in 2015, 2018, 2020.â€ť
Really? Really? Now letâ€™s say all the tax cuts were permanently extended — Orszagâ€™s nightmare scenario. According to Orszagâ€™s old pals at the Congressional Budget Office, federal tax revenue would be 18.6 percent of GDP in 2020, 19.2 percent in 2035, 19.8 percent in 2050 and 22 percent in 2080. In other words, even with all the tax cuts extended, government revenue would still rise well above its historical average of roughly 18 percent since World War Two.
Instead, itâ€™s historically unprecedented government spending thatâ€™s behind the projected debt explosion. As the CBO itself puts it:
As a result, revenues would grow only slightly faster than the economy, equaling 22 percent of GDP by 2080. Slowly growing revenues combined with sharply rising expenditures would create an explosive fiscal situation. Under the spending and revenue policies incorporated in this scenario, federal debt would surpass 100 percent of GDP in 2023 and exceed 200 percent of GDP by the late 2030s.
And although the Wagnerians think they are marching along with History, they somehow seem to have missed a generation of growing American skepticism about the size and scope of government, beginning with the Reagan Revolution in the 1980s. More recently, thereâ€™s been widespread revulsion at the Obama spending orgy and his monstrous deficits, evidenced by tea parties and polls today and perhaps by vote totals in November.
And the political personification of this revolt: Ryan and Christie. But for the Wagner cultists, these heretics just donâ€™t compute. How can they be Americaâ€™s fastest-rising political stars by preaching such a different truth — a message of smaller government fully in line with Americaâ€™s deep values of self-reliance, private enterprise and entrepreneurism? For the Wagnerians, however, Ryan and Christie are like a nasty computer virus that threatens to overwrite Americaâ€™s liberal operating system.
But the two rebels are putting the lie to such dogma. They are lighting a different way forward, one to a more fiscally sustainable and prosperous U.S. economic future.