By Paul Ryan
Tuesday, October 08, 2013
The president is giving Congress the silent treatment.
He's refusing to talk, even though the federal government is about to hit the
debt ceiling. That's a shame—because this doesn't have to be another crisis. It
could be a breakthrough. We have an opportunity here to pay down the national
debt and jump-start the economy, if we start talking, and talking specifics,
now. To break the deadlock, both sides should agree to common-sense reforms of
the country's entitlement programs and tax code.
First, let's clear something up. The president says he
"will not negotiate" on the debt ceiling. He claims that such
negotiations would be unprecedented. But many presidents have negotiated on the
debt ceiling—including him. In 1985, Ronald Reagan signed a debt-ceiling deal
with congressional Democrats that set deficit caps. In 1997, Bill Clinton
hammered out an agreement with congressional Republicans to raise the debt
ceiling, reform Medicare and cut capital-gains taxes. Two years ago, Mr. Obama
signed the Budget Control Act, which swapped spending cuts for a debt-ceiling
hike.
So the president has negotiated before, and he can do so
now. In 2011, Oregon's Democratic Sen. Ron Wyden and I offered ideas to reform
Medicare. We had different perspectives, but we also had mutual trust. Neither
of us had to betray his principles; all we had to do was put prudence ahead of
pride.
If Mr. Obama decides to talk, he'll find that we actually
agree on some things. For example, most of us agree that gradual, structural
reforms are better than sudden, arbitrary cuts. For my Democratic colleagues,
the discretionary spending levels in the Budget Control Act are a major
concern. And the truth is, there's a better way to cut spending. We could
provide relief from the discretionary spending levels in the Budget Control Act
in exchange for structural reforms to entitlement programs.
These reforms are vital. Over the next 10 years, the
Congressional Budget Office predicts discretionary spending—that is, everything
except entitlement programs and debt payments—will grow by $202 billion, or
roughly 17%. Meanwhile, mandatory spending—which mostly consists of funding for
Medicare, Medicaid and Social Security—will grow by $1.6 trillion, or roughly
79%. The 2011 Budget Control Act largely ignored entitlement spending. But that
is the nation's biggest challenge.
The two political parties have worked together on
entitlements before. In 1982, Social Security's trustees warned Congress that
the program would go bankrupt within a year. If it had, seniors would have seen
an immediate cut in their benefits. Instead, Congress passed a package of
reforms—the most important of which was an increase in the retirement age.
Because Congress phased in this reform over time, there were no budget savings
in the first five years. But through 2012, the savings were $100 billion. In
the next 75 years, Social Security's actuaries expect that these reforms will
save $4.6 trillion.
Just as a good investment gets higher returns through
compound interest, structural reforms produce greater savings over time. Most
important, they make the programs more secure. They protect them for current
seniors and preserve them for the next generation. That's what the president
and Congress should talk about.
Here are just a few ideas to get the conversation
started. We could ask the better off to pay higher premiums for Medicare. We
could reform Medigap plans to encourage efficiency and reduce costs. And we
could ask federal employees to contribute more to their own retirement.
The president has embraced these ideas in budget
proposals he has submitted to Congress. And in earlier talks with congressional
Republicans, he has discussed combining Medicare's Part A and Part B, so the
program will be less confusing for seniors. These ideas have the support of
nonpartisan groups like the Bipartisan Policy Center and the Committee for a
Responsible Federal Budget, and they would strengthen these critical programs.
And all of them would help pay down the debt.
We should also enact pro-growth reforms that put people
back to work—like opening up America's vast energy reserves to development.
There is even some agreement on taxes across the aisle.
Rep. Dave Camp (R., Mich.) and Sen. Max Baucus (D.,
Mont.) have been working for more than a year now on a bipartisan plan to
reform the tax code. They agree on the fundamental principles: Broaden the
base, lower the rates and simplify the code. The president himself has argued
for just such an approach to corporate taxes. So we should discuss how Congress
can take up the Camp–Baucus plan when it's ready.
Reforms to entitlement programs and the tax code will
spur economic growth—another goal that both parties share. The CBO says stable
or declining levels of federal debt would help the economy. In addition,
"federal interest payments would be smaller, policy makers would have
greater leeway . . . to respond to any economic downturns . . . and the risk of
a sudden fiscal crisis would be much smaller."
This isn't a grand bargain. For that, we need a complete
rethinking of government's approach to helping the most vulnerable, and a
complete rethinking of government's approach to health care. But right now, we
need to find common ground. We need to open the federal government. We need to
pay our bills today—and make sure we can pay our bills tomorrow. So let's
negotiate an agreement to make modest reforms to entitlement programs and the
tax code.
This is our moment to get a down payment on the debt and
boost the economy. But we have to act now.
The Federal Reserve won't keep interest rates low
forever. The demographic crunch will only get worse. So once interest rates
rise, borrowing costs will spike. If we miss this moment, the debt will spiral
out of control.
That's why I want a budget agreement—because if we don't
make the tough decisions now, we'll face only tougher decisions later. We can
work together. We can do some good. All it takes is leadership—and for the
president to come to the table.
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