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May 16, 2011

"Nobody Ever Got Rich Betting Against The United States of America, And I’m Not About To Start"

Paul Ryan gave a major speech today to the Economic Club of Chicago. The title was "Shared Scarcity Versus Renewed Prosperity". As you can imagine from the title it was a mixture of some bracing economic truths and optimism that it's not too late to deal with them.

Ryan gets into some themes here I'd love to see more conservatives adopt. He talks about the danger increasing spending and the scope of government represents to liberty. He's not only sounding the fiscal alarm but calling on Americans to act in ways that we claim to admire (risk taking individualists) but is the opposite of how we actually vote (give me more and tax the other guy for it).

Whether or not we are willing to kick our addiction to 'free' government handouts and return to an entrepreneurial risk taking country isn't clear. Either way, we deserve to have the choice on the menu and Ryan is trying to put it there.

A longish excerpt.

In the coming years, our debt is projected to grow to more than three times the size of our entire economy.

This trajectory is catastrophic. By the end of the decade, we will be spending 20 percent of our tax revenue simply paying interest on the debt – and that’s according to optimistic projections. If ratings agencies such as S&P move from downgrading our outlook to downgrading our credit, then interest rates will rise even higher, and debt service will cost trillions more.

This course is not sustainable. That isn’t an opinion; it’s a mathematical certainty. If we continue down our current path, we are walking right into the most preventable crisis in our nation’s history.

So the question is, how do we avoid it?

The answer is simple. We have to make responsible choices today, so that our children don’t have to make painful choices tomorrow.

If you look at what’s driving our debt, the explosive growth in spending is the result of health care costs spiraling out of control.

By the time my children are raising families of their own, literally every dollar we raise in revenue will be paying for three major entitlement programs.

Some of this is demographic – every day, ten thousand baby boomers retire and start collecting Medicare and Social Security.

But a lot of it is simply due to the fact that health care costs are rising faster than the economy is growing. Revenues simply cannot keep up.

It’s basic math – we cannot solve our fiscal or economic challenges unless we get health care costs under control.

The budget passed by the House last month takes credible steps to controlling health care costs. It aims to do two things: to put our budget on a path to balance, and to put our economy on a path to prosperity.

I am here today to stress the point that these goals go hand in hand. Stable government finances are essential to a growing economy, and economic growth is essential to balancing the budget.

The name of our budget is The Path to Prosperity.

See, right now, we’re finally having a debate in Washington about how to address our fiscal problems. But we’re still not having the debate we need to have.

To an alarming degree, the budget debate has degenerated into a game of green-eyeshade arithmetic, with many in Washington – including the President – demanding that we trade ephemeral spending restraints for large, permanent tax increases.

This sets up a debate in which we are really just arguing over who to hurt and how best to manage the decline of our nation. It is a framework that accepts ever-higher taxes and bureaucratically rationed health care as givens.

I call it the “shared scarcity” mentality. The missing ingredient is economic growth.

Shared scarcity represents a deeply pessimistic vision for the future of this country – one in which we all pay more and we all get less. I believe it would leave us with a nation that is less prosperous and less free.

To begin with, chasing ever-higher spending with ever-higher tax rates will decrease the number of makers in society and increase the number of takers. Able-bodied Americans will be discouraged from working and lulled into lives of complacency and dependency.

Worse – when it becomes obvious that taxing the rich doesn’t generate nearly enough revenue to cover Washington’s empty promises – austerity will be the only course left. A debt-fueled economic crisis will force massive tax increases on everyone and indiscriminate cuts on current beneficiaries – without giving them time to prepare or adjust. And, given the expansive growth of government, many of these critical decisions will fall to bureaucrats we didn’t elect.

Shared scarcity impedes economic growth, results in harsh austerity, and ends with lost freedom.

And what is his solution?


We need to answer that call for new economic leadership by getting back to the four foundations of economic growth:

First, we have to stop spending money we don’t have, and ultimately that means getting health care costs under control.

Second, we have to restore common sense to the regulatory environment, so that regulations are fair, transparent, and do not inflict undue uncertainty on America’s employers.

Third, we have to keep taxes low and end the year-by-year approach to tax rates, so that job creators have incentives to invest in America; and

Fourth, we have to refocus the Federal Reserve on price stability, instead of using monetary stimulus to bail out Washington’s failures, because businesses and families need sound money.

Read the rest of the speech. He goes through each of these points in grater detail.

And his wrap up.

We face a choice between two futures. We can continue to go down the path toward shared scarcity, or we can choose the path of renewed prosperity.

The question before us is simple: Which path will our generation choose?

In 1979, my mentor, Jack Kemp, captured the essence of why we must choose the path to prosperity:

“We can’t progress as a society by using government to diminish one another. The only way we can all have more is by producing more, not by bickering over how to share less. Economic growth must come first… for when it does many social problems tend to take care of themselves, and the problems that remain become manageable.”

You know, there’s a question I get a lot from people at town halls. When you go around the country showing people a chart that shows that our debt is on track to cripple our economy, people start to ask you whether any plan, even a plan like the House-passed budget, can save America from a diminished future.

They say, Congressman Ryan, I know you have to sound optimistic in public. But in private, do you really think there’s anything we can do to save this country from fiscal ruin? Or should we just be bracing for the worst?

It’s a difficult question. It’s one that gives me pause. Frankly, it’s one that keeps me up at night.

But the honest answer is the one I’m about to give to you: Nobody ever got rich betting against the United States of America, and I’m not about to start.

Time and again, just when it looked like the era of American exceptionalism was coming to a close… we got back up. We brushed ourselves off. And we got back to work – rebuilding our country, advancing our society, and moving the boundaries of opportunity ever forward.

We can do it again. America was knocked down by a recession. We are threatened by a rising tide of debt. But we are not knocked out. We are America. And it is time to prove the doubters wrong once more – to show them that this exceptional nation is once again up to the challenge.

The speech reads very well. I didn't see how the delivery was but based on what I've seen of Ryan before, I'm guessing it went very well.

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posted by DrewM. at 02:40 PM

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