For the first time in almost 50 years, a congressional budget is on the table that would make an actual spending cut. We're not talking about a Washington "cut" that happens when government spends more money but less than it would have liked to have spent. House Budget Committee Chairman Paul D. Ryan, Wisconsin Republican, gives a nod to the common-sense understanding of the term with an outline for federal expenditures in 2012 that would come in at $89 billion less than outlays in 2011. That's a real 2.5 percent reduction.
Even the "cuts" Republicans still want to make to the 2011 budget would, if enacted, represent an overall increase from last year's spending. In that context, Mr. Ryan's proposal brings the nation closer to solvency but not quite as much as the "$6 trillion in savings over a decade" headline might imply. Specifically, Mr. Ryan's 2012 deficit would remain near $1 trillion. Over a decade, overspending would continue adding more than $5 trillion to the national debt. That's a 46 percent improvement over the $9.4 trillion in overspending under Mr. Obama's budget. Both figures are too much.
Fortunately, the "Path to Prosperity" economic blueprint recognizes that Mr. Obama's Keynesian borrow-and-stimulate policy has been an utter failure. It articulates that the best way out of the malaise is to follow the tax simplification model President Reagan used in the 1980s. Here, the House plan would reduce the top corporate tax rate from 35 percent - the highest in the industrialized world - to 25 percent. It would also close some of the corporate-welfare loopholes. The individual top rate would likewise fall from 35 to 25 percent.
The idea is simple. When companies pay less money to Uncle Sam, they have more capital available to hire employees and expand. When tax rates are lower, people work harder because they can keep more of what they earn. The Budget Committee asked the Heritage Foundation to estimate the economic impact of these incentives using a dynamic scoring model. Heritage numbers crunchers predicted Mr. Ryan's plan would result in 1.6 million more jobs in the private sector and a $400 billion increase in gross domestic product by 2021.
The House plan also advances GOP priorities by zeroing out funding for Obamacare, addressing entitlement reform and taking the best of the budget savings ideas offered by various commissions. Given that Democrats already have planned to label any reduction - no matter how tiny - as "extreme," this modest proposal will be a tough sell. It shouldn't be.
The last time the federal government imposed a real 0.25 percent spending cut, Lyndon B. Johnson, a Democrat, sat in the White House. This was accompanied by a reduction in the top corporate and individual tax rates the previous year under a proposal first offered by President Kennedy. The combination worked - at least until the Great Society's spending spree kicked in. House Republicans are right to embrace the low-tax, low-spending model that has proved successful. This plan is a great alternative to the Carter-Obama economic model just does not work.
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