Video: Ryan, Reich debate spending cuts

posted at 2:00 pm on April 29, 2010 by Ed Morrissey

Perhaps the best aspect of this debate between Rep. Paul Ryan (R-WI) on the Right and former Labor Secretary Robert Reich on the Left is the assumption that spending needs to get cut somewhere. Where, how much, and in what order is the question. Reich insists that the deficit commission on which Ryan is a member needs to focus on entitlements and military spending. Ryan agrees on entitlements, but challenges Reich to defend the almost-doubling of non-military discretionary spending over the last few years. It’s the rare instance where both are right:

Raising taxes is not good for economic growth. That raises the barrier and the hurdle to risk-taking, investment, innovation, entrepreneurship and job creation. I think that is bad tax policy and that is bad economic growth policy… We have to get spending on the right trajectory. If want to have these kinds of investments in infrastructure and education, we have got to get a grip on entitlements because they’re crowding everything out of the budget. I would argue that if we do real entitlement reform, which doesn’t hurt people in and near retirement right now, but puts us on a better trajectory going forward, that is going to give us some breathing space in the credit markets, it is going to take pressure off of interest rates, and that is going to help the economy right now.

In order to gain control of federal spending and expansion, everything has to be on the table. However, one has to remember that one of the few duties reserved to the federal government by the Constitution is national defense. There may be plenty of places to trim at the Pentagon, and some of our World War II-era deployments should be reconsidered, especially where we provide security for nations wealthy enough now to handle it themselves. With a war in Afghanistan and a massive counterterrorist effort deployed globally, however, we have to move cautiously and effectively when trimming defense spending.

Reich is correct when he says that spending cuts won’t matter until they take place in entitlements such as Medicare and Social Security. For that matter, neither will tax increases, as Ryan points out. We have over $70 trillion in unfunded liabilities in these programs under current obligations, and no amount of tax increases can possibly address that Sword of Damocles. Whether we like it or not, we need to reset those obligations, more narrowly define the mission of both programs and their eligibility requirements, and do that now rather than put it off any later. If we want to remain an engine of economic growth for the world, we have to ensure that we don’t allow the federal government to seize any more of our output than we do now — and that means we have to start making cuts.


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I hope we can last until 2013, because, even if we get Republican majorities in both houses, Obama will veto any non-defense spending cuts that hit his desk. He’s put a lot of effort into burying us in crippling debt and he isn’t about to allow that to go down the drain.

AUINSC on April 29, 2010 at 2:04 PM

The only thing that is rising faster than health care is government spending. Note that there will never be comprehensive government reform, even though the status quo is unacceptable.

jukin on April 29, 2010 at 2:06 PM

An across the board cut of 10% in every non-defense program would be a good start. I mean everything: medicare, medicaid, social security, and all. One of the few constitutional areas of spending is on the military; it is amazing how liberals are so quick to try and cut that.

Vashta.Nerada on April 29, 2010 at 2:09 PM

Cut entitlements? This should be labeled “Comedy Gold!”

mankai on April 29, 2010 at 2:10 PM

My biggest fear/hope is that the current administration wakes up and tackles these issues head on, saving us from almost certain economic doom.

I don’t think I need to explain to this audience why that holds both thrill and terror.

WitchDoctor on April 29, 2010 at 2:13 PM

some of our World War II-era deployments should be reconsidered, especially where we provide security for nations wealthy enough now to handle it themselves.

We really need to scale way back on our presence in Germany. We have been there way too long after the wall has come down. That money can be used in better places in the Pentagon’s budget.

Johnnyreb on April 29, 2010 at 2:13 PM

How about spending 10% cuts across the board for starters?

Spare nobody. Defense, welfare, education…cut it all and tell them to start prioritizing, like every American citizen has to.

Dark-Star on April 29, 2010 at 2:19 PM

Johnnyreb on April 29, 2010 at 2:13 PM

IMHO I think that Germany should pay us for protecting them. There are so many bases in Germany that house thousands of military members and families the biggest one being Ramstein. Not only does the govt pay for the salaries of these military members they also pay to lease the land that the base is on. Why? An American presence in Germany is a big deterrent for anyone wishing to do them harm. I feel they should pay for their own protection and at the very least stop collecting money for us being there.

milwife88 on April 29, 2010 at 2:21 PM

That’s comedy gold right there. We have a guy who voted for auto bailouts and TARP agruing about spending cuts.

GOLD JERRY! That’s GOLD!

Notorious GOP on April 29, 2010 at 2:22 PM

I agree with drawing down in Germany, but feel strongly we still need some presence there. It’s a very useful hub between here and the Middle East for one thing.

WitchDoctor on April 29, 2010 at 2:22 PM

Redeploy some of our troops from western Europe to eastern Europe, and bring others home. Maybe 1/3 remain, 1/3 redeploy, 1/3 come home. And bring home some from Japan & encourage Japan to increase their army.

Cut entitlements, yes. Especially for younger people. Those already on Medicare/caid (whichever one is for seniors) and social (in)security don’t get cut.

Tax increases lead to less incentive to invest & grow the economy, leading to less tax revenue, not more. Keep taxes low and easy to figure out. And cut government regulations; costs to comply with regs & the tax code are unproductive costs.

rbj on April 29, 2010 at 2:23 PM

I know of a big azz Health Care Bill that could be slashed that would save Trillions!

cntrlfrk on April 29, 2010 at 2:28 PM

Dark-Star on April 29, 2010 at 2:19 PM

Can’t disagree with you on this one. I don’t want the Administration and/or Congress micro-managing this. The people on the ground are the best equipped to determine how to reach performance goals within spending constraints.

Dee2008 on April 29, 2010 at 2:31 PM

I don’t want the Administration and/or Congress micro-managing this.

So. Much. Agreement.

Top-down cuts suck, and often as not the ‘cuts’ are just reshuffled because some high-ranking suit(s) played a numbers racket.

Dark-Star on April 29, 2010 at 2:42 PM

Long term U.S. policy is to keep Japan and Germany compliant. Think of any powers in the world that can mount the technology and the money to counter our military in this time, it would be these two. Think about it, wouldn’t you (if we could) rather have several U.S. bases in China and Russia in exchange for those two countries not having their own offensive militaries? This is our deal with Japan and Germany and I say we keep that deal.

milemarker2020 on April 29, 2010 at 2:50 PM

My proposal:

10 to 20 percent reduction in funding to each cabinet level department (after mergers mentioned below), excluding defense (5 to 10 percent reduction)

Systematic phase-out of Medicare and Obamacare with free-market, alternative

Privatization of the Post Office, Fannie and Freddie Mac, Amtrak, Bureau of Engraving and Printing, IRS (replaced with a “publican” private tax collection agency bidding for a contract with the federal government), department of education, Social Security (federal access to funds, and or use as collateral for borrowing, eliminated; management turned over to private corporation subject to federal regulation and management), Transportation Security Administration, Census collection and processing.

Revamping the tax code to feature flat tax rates for corporations and individuals, eliminating all deductions.

Merge:

Department of Labor
Department of Energy
Department of Agriculture
Department of the Interior

with Department of Commerce.

Combine:

Department of Housing and Urban Development
Department of Transportation

as Department of Infrastructure

Merge:

Department of Homeland Security

into Department of Justice

Merge:

Department of Veterans Affairs

into Department of Defense

Leaving:

Department of State
Department of Defense
Department of the Treasury
Department of Commerce
Department of Infrastructure
Department of Justice
Department of Health and Humans Services

Across the board cut in federal employee salaries of 20 percent for those making more $50,000, 10 percent for all others.

Phase-out of federal pension system, replace with modest retirement packages commensurate with those offered to the lowliest employees of the average Fortune 500 company.

Creation of a United States Sovereign Wealth Investment Fund (USSWIF) within the Federal Reserve modeled after those in Japan and China. Assets collected as a small tax on financial institutions; 20 percent of annual collections contracted out to various financial institutions for investment. Would manage U.S. investment in foreign currency markets, foreign debt, foreign stock investments. 10 percent available annually for use in balancing budget.

andy85719 on April 29, 2010 at 2:57 PM

Hey, let’s start cutting government employee benefits, including their top-shelf healthcare, and cushy retirement plans. OK, so we’d have purple shirt riots comparable to those in Greece when they were facing cuts, but I can live with that.

iurockhead on April 29, 2010 at 3:01 PM

…we have to move cautiously and effectively when trimming defense spending.

If the bulk of that spending went to actually defending the nation, I’d understand. But as it stands, defense spending may in fact be a bigger boondoggle than SS. You all can’t trust government to tax you fairly or regulate your health care, but spending trillions like its nothing on war machines?? Government could neeeever act inefficiently or in a corrupt manner when it comes to thaaaat!

ernesto on April 29, 2010 at 3:07 PM

The whole states vs federal government spending/obligation argument is a loser. Most people don’t understand the difference and those who do don’t much care.

Jaynie59 on April 29, 2010 at 3:19 PM

Yeah, many overseas deployments (Europe, Korea, Japan) should either end or generate a profit through fees from relevant nations. Those folks aren’t having to spend to fully defend themselves, and if they aren’t, they should be paying us – with markup.

Midas on April 29, 2010 at 3:27 PM

We need to get out of Japan too. We are in Okinawa and the citizens there really want us to leave. We are paying the Japanese government to stay there. World war II ended ~65 years ago. Why aren’t we leaving? We could relocate the base there to Guam or somewhere else in the Pacific.

nazo311 on April 29, 2010 at 3:31 PM

Creation of a United States Sovereign Wealth Investment Fund (USSWIF) within the Federal Reserve modeled after those in Japan and China. Assets collected as a small tax on financial institutions; 20 percent of annual collections contracted out to various financial institutions for investment. Would manage U.S. investment in foreign currency markets, foreign debt, foreign stock investments. 10 percent available annually for use in balancing budget.

andy85719 on April 29, 2010 at 2:57 PM

Or we could just eliminate the federal reserve…..

nazo311 on April 29, 2010 at 3:32 PM

My solution: read the Constitution and take it seriously.

mankai on April 29, 2010 at 4:00 PM

Communing with Milton should be a mandate, on government.

Speakup on April 29, 2010 at 4:16 PM

SPENDING is out of control and must be stopped.

Obama’s un-realeased spending this year exceeds revenues by ~40%! This is not an accident or an unfortunate circumstance. Obama’s stated position to spend as he sees fit regardless of what it does to the economy!

Reich’s arguement about ‘government investment spending’ is code for ‘handouts to government unions’. Reich will support those unions until the entire economy is destroyed. Then he will blame that destruction on the US NOT being a communist country like his beloved Red China!

Freddy on April 29, 2010 at 4:38 PM

Means testing for all future Soc Sec & Medicare recipients. Perhaps those future recipients that are 50 & under right now. Gives you enough time to sock more money away. However DO NOT raise any of the FICA taxes – otherwise you are screwing the under-50s coming & going.

mdenis39 on April 29, 2010 at 6:45 PM

It looks to me as if our whole economic system is a house of cards just waiting to fall. On second thought someone gave it a push almost two years ago and it is falling and gaining momentum as it crashes.

lewis1940 on April 30, 2010 at 7:58 AM