Paul Ryan: Road to Economic Recovery - Part II
By Congressman Paul Ryan
In last week’s post, I outlined the key shortcomings of attempts to spend, borrow, and tax our way out of our current economic crisis. Today, I want to put forth an alternative economic recovery plan.
We must recognize that real, sustained growth comes from the work, savings, and investment of American families and businesses – not from the Federal Government. We can, and should, take immediate action to address a weak economy with initiatives that produce lasting economic gains. There are legitimate steps Congress can take to help the American economy in both the near and long term. These include the following:
- Provide Help to Those Who Need It. With the economy still shedding jobs, it makes sense to extend unemployment benefits, as we have already done.
- Stop Overselling What Congress Can Do. Congress must stop pitching the false notion that we can simply spend (then tax and borrow) our way to prosperity. Last year, Washington increased Federal spending by 8.3% – more than twice the growth of our economy or Americans’ wages; this included 11,000 pork-barrel earmarks at a cost to taxpayers of $17 billion. If – as Washington likes to suggest – higher government spending leads to stronger economic growth, our economy today would be the strongest in our nation’s history.
- Support Real Policies for Growth. Fast-acting tax policy – such as allowing expensing on all new investments – would boost incentives to expand business operations and create jobs. In addition, lowering the corporate income tax rate -- currently the second highest in the industrialized world -- would help attract investment in the U.S., and reduce the incentives to shift business operations, and jobs, overseas.
- Provide Tax Certainty. In its most recent budget, the Democratic Majority assumed the largest tax increase in history by letting a scheduled tax increase in 2010 occur, which would increase taxes on investment, savings, businesses, families, and workers. This threat is stifling business investment and job creation today, because of the uncertainty in tax laws. Congress should permanently extend the current tax laws, and drop tax increases. This would serve as a de-facto tax cut, increasing the after-tax rate of return on investment, and unlocking billions in private, idle capital.
- Help Stabilize Financial Markets. Existing Securities and Exchange Commission [SEC] regulations, or the lack thereof, are aggravating the sharp declines in asset values and the confidence in markets. Current mark-to-market accounting rules, last year’s repeal of the uptick rule, and the opaque nature of the credit default swaps [CDS] market, when combined, are aggravating the distress in our financial markets and our economy.
The Federal Government can help stabilize these markets by reforming the mark-to-market accounting rule to require a rolling average, restoring the uptick rule to put a brake on short selling of stocks to manipulate stock prices, and providing greater transparency in the CDS market.
- Get Spending under Control and Address the Long-Term Spending Crisis. Congress must also get control of its own spending – particularly wasteful earmarks, and the unsustainable growth rate of our largest entitlement programs. Our three largest entitlements – Medicare, Medicaid and Social Security – have a current unfunded liability of $56 trillion; and every year we fail to act, we dig ourselves another $2-$3 trillion in the hole. Without reform, these programs will not only grow themselves right into extinction – they will impose a crushing blow to our budget and economy in the process.
I hope Washington can come together in a bipartisan fashion to address our greatest economic and fiscal challenges by: keeping taxes low so our economy can thrive; reforming regulations that are contributing to problems in financial markets; getting our spending under control and ending the wasteful practice of earmarking; and addressing the looming entitlement crisis. Such efforts would assure financial markets in the U.S. and around the world that we are serious about promoting real growth – both today, and well into the future.
Congressman Paul Ryan serves Wisconsin’s 1st Congressional District. To contact him by phone in Washington, D.C., call (202) 225-3031. Or visit Paul Ryan at www.house.gov/ryan