Interview With Brian Riedl of The Heritage Foundation on the Bush Tax Cuts & Fiscal Discipline

Thanks to Allie Winegar Duzett for the video.

The Debt-Paying Generation Has Arrived

In the near future, The Heritage Foundation’s Bill Beach and I will officially introduce the soon-to-be-important term “The Debt-Paying Generation,” (DPG) a term that all Americans should become familiar with. It is the financial future of America, and not a pretty one at that.

What is the DPG? It is those Americans who are presently between 5 and 30, and will be hardest hit from childhood through death by the debt irresponsibility in Washington. According to calculations broken down from Census Bureau data, the DPG is approximately 35% of the total American population, and currently stands at 108,670,000. Given expected life spans- nearly 80 years old on average, and having increased an average of three years since 1990- it is not impossible to believe that the DPG will be the longest-lived generation in American history.

Why is this age group being named the “Debt-Paying Generation?” Well, primarily because this generation will almost certainly have to pay down most of our national debt through higher taxes, which almost certainly will relegate them to the status of being  the first generation of Americans to live a worse life than its immediate predecessors. Additionally, to rub salt in the wound, the big three entitlement programs—Social Security, Medicare, and Medicaid—will have to be cut and, thus, will pay less to the Debt Paying Generation than the Boomers.

In short, to summarize an upcoming Heritage Foundation paper on the subject, a huge population of Americans will be financially burdened, and their quality of lives diminished, because of errors and dereliction of duty by Members of Congress and presidents in both parties. (Full disclosure: I worked for two months at Heritage on said paper.)

When I interviewed Rep. Michele Bachmann (R-MN) for this site, I asked her about the DPG. She expounded upon how much debt is being added by the Democrats, and how it is demoralizing to young people. According to Bachmann,

I will tell you, anywhere I go to speak, I ask that question. “Do you believe you live better than your parents?” Almost everyone in the audience puts their hand up. I ask them, “do you think your children will live better than you financially?” Virtually no one puts their hands up. I doubt in the last 234 years, if you ask that question of any generation, that they would think that their children would not be better off than they are; I just don’t think that you would have gotten that response. That’s really what is frightening today, because we’ve always been a country that’s been about forward- looking people, and growth. And this is one of the first times when Americans look into the future, and they see diminished way of life, and they see decline.

It is not only Democrats, of course, who are at fault. Republicans voted in unpaid-for Medicare legislation; tax cuts that added to the debt, according to the Congressional Budget Office; and launched a War on Terror that, according to the Congressional Research Service, had cost over $900 billion as of September 2009. Additionally, few Republicans are willing to address our overall defense spending, which increased between 2001 and 2008 by over 90%, not including inflation. However, the real problem is the unwillingness of both parties to address our growing entitlements which, according to the International Monetary Fund (IMF), need to be cut by 12% of GDP by 2015 in order to keep the debt manageable. (This equals just over $400 billion in annual cuts at the federal level, in 2012 dollars.) In absence of this courage, of course, tax hikes (or “revenues,” in the election-year language of Democrats) will be necessary, and the level of taxation will just devastate the DPG.

Unfortunately, I do not see the political will in Congress necessary to make the changes the IMF recommended. From the Beach/Siggins essay:

The IMF recommendations would consist of Congress eliminating, in 2012 dollars:

  • 57% of defense; or, if Congress keeps the full defense budget,
  • Over twice the interest payments for next year; or, for a third option,
  • Over 30% more than the president’s entire proposed Medicaid budget.

Each of these would have to happen every year until 2015. Of course, Congress could simply eliminate the entire discretionary budget; all of Social Security; and two-thirds of the interest payments for FY 2011  (well, except that not paying the debt’s interest would be to default on the debt itself) to reach the same total cuts this year, and leave the budget in other years untouched.

Medicare and Medicaid are necessarily the biggest concern of budget hawks, especially those who look decades into America’s financial future. Not far behind, however is Social Security. I recently conducted an interview with James Agresti, the founder of Just Facts, a New Jersey-based think tank, about Social Security and its impact on the National Debt. James- who regularly updates the burden of the national debt on Americans on his website- informed me that the Social Security Administration (SSA) may be misrepresenting the solvency of Social Security. According to James,

[I]n 2001, the Social Security Administration projected the trust fund balance would reach $2.54 trillion by the end of 2007. It actually reached $2.24 trillion- 13 percent lower than projected. Yet, if you compare the projections from the 2001 report and the 2008 report, they’re more optimistic in the 2008 report than in the 2001 report. So the financial condition of the Social Security program is worse than they projected…but yet they are saying it’s going to be better in the future. So in 2001 they were saying, [with] expected annual deficit in 2075, we’d have to increase Social Security taxes by about 49 percent to cover that deficit. In 2008, they said we’ll only have to increase taxes by 32 percent.

On April 15, The Center for American Progress noted that in President Obama’s proposed Fiscal Year 2011 budget, Social Security, Medicare and Medicaid add up to 41.5% of the federal budget. That is expected to grow astronomically over the next 70 years, under current budget proposals and with Congress’ current intestinal fortitude. Unfortunately, it won’t be these politicians who suffer- it will be their kids and grandchildren. To paraphrase a columnist from the Center for American Progress in The Washington Post some weeks ago, we need a generation of politicians who don’t care about being re-elected, and will thus make the tough choices. Hopefully, the American people vote in such politicians this fall, and in 2012, to prevent America from having its own Greek Tragedy, riots and all.

An Interview With Republican Study Committee Chairman Tom Price (R-GA)

Dr. Tom Price (R-GA) is the current chairman of the Republican Study Committee, and has represented the 6th Congressional District of Georgia since 2005. We here at thelobbyist.net are honored he gave us a few minutes of his time to speak about a number of the important issues facing this country.


Siggins
: I saw you speak the other day at The Heritage Foundation and I was really impressed with the stuff you and Senator DeMint had to say about the budget and about dependency.  It was really good to see.

Price: Wasn’t that something? I found that to be a sobering but also an uplifting exchange just because there are wonderful paths to get out of this craziness if we just seize them.

Siggins: I write for thelobbyist.net, and the founder of the site is a Georgian and is a big, big fan of yours. And we started a new site called ConservativeCongress.com and it’s a sister site and our goal is to bring conservatives to Congress and we put our stamp of approval on those who want to balance the budget, deregulate the federal government and increase our energy independence and reform.

So I guess my first question would be: I know there were issues when the Republicans held all three branches regarding drilling.  I know that ANWAR was held up by filibustering…all sorts of issues.  With health care attention has been diverted away from energy.  But assuming you take back the House which you said the other day “will,” not if.

Price: Right!

Siggins: How do you think Republicans will move forward on drilling, on wind farms, on nuclear power, and getting us away from sending our money to terrorists and the like?

Price: Well it’s kind of the Raison d’etre for your new organization.  The secret is to have a conservative congress and that’s what we need.  And it requires us to have a conservative Congress and leadership that will move us in the right direction.  The remarkable thing to me is the solutions to the challenges that we face are really not that complex.  It’s relatively simple.

In August of ’08 when we took to the House floor when the Speaker shut the House down and we stayed for that month because gas had at that point spiked to $4/gallon.  We laid out an all of the above energy plan that I believe will still solve the challenges that we face in the area of energy.  It’s a plan that would allow us to utilize our own resources in very robust and vibrant ways and environmentally sound and sensitive ways.  Whether it is offshore exploration or onshore exploration or clean coal or oil shale.  All of those things in addition to the use of nuclear power so that we get off our dependence on foreign oil which is huge and growing.

Secondly, conservation has to be a key component.  And incentives for conservation of individuals.  And championing conservation.  The root word for conservation is conservative!  We ought to at least champion that!

And then thirdly it is to not game the system, not have the federal government be the ones who pick the winners and losers- but to incentivize a robust investigation in research and development for the new energy.  That’s what we ought to be doing, not picking winners and losers. The last winner the federal government picked, and I use the term ‘winner’ loosely, was corn based ethanol and that’s not working out too well.

Siggins: That’s not working at all.  Didn’t that cause starvation in Africa a couple years back?

Price: When you distort markets, markets betray you.  So the secret is not to distort markets.

Siggins: Newt Gingrich spoke at the Heritage Bloggers Briefing two weeks ago.  And he talked about this being one of his top three priorities.  Do you think energy will be one of the top three priorities for Republicans?

Price: Well it has to be, because the bi-product of our current energy policy is to make us more dependent of foreign oil, and also to increase our debt and our deficit.  We are just shooting ourselves in the head three times, not just once, so we have got to reign this in.  This is common sense stuff, there are simple truths to our public policy and one of our simple truths is if spend more money outside of your nation than inside of your nation then you have a balance-deficit that is moving in the wrong direction.

Siggins: Speaking of the deficit- I was brought in to Heritage to work on The Debt Paying Generation, which is those between five and thirty, including myself, who would just be crushed by upcoming taxes, lack of benefits et cetera et cetera. Senator Demint mentioned some of what he considers to be relatively painless solutions the other day, to help with the deficit and balancing the budget.  What do you think are some of the major solutions, or I would say the top three solutions, but also, would you include cutting the Pentagon Budget, or at least streamlining it, as part of one of those solutions.

Price: Well I was so pleased to see so many individuals under the age of forty as I mentioned in our briefing the other day, because you’re right, this is exactly where this is going to hit and it’s going to decrease the ability of you and your peers to have the kind of opportunity that my generation has had.  That is why it is morally incumbent upon us to solve this before we pass the baton completely.

There are relatively simple things to do to turn this whole thing around.  The first to do is to end the uncertainty here in Washington.  When businesses, the job creation engine of this nation, especially small businesses don’t know whether the government is going to come in and punish them or reward them or reward their competition or change the rules of the game completely, then they just hunker down and that’s what’s happening right now.  So you can’t get an economy moving, and you’ve got to get an economy moving to end this remarkable death spiral the President and his cronies have us on.

Siggins: Sure.

Price: It’s imperative to decrease the tax burden on individuals and businesses. As you know, we have the second-highest business corporate tax in the entire industrialized world; that makes us competitive with nobody, from the nature of setting up businesses and the job creation- creators. We ought to…I would put a moratorium on business tax at least for two years, and ideally, I would do away with it all together. The lack of incentives that we put on individuals to invest, to utilize their money in ways that puts it at their own decision at various levels of risk so that they can enjoy various levels of reward, but the taxation we put on that, either through capital gains or dividends- the president wants to increase all of these things, [it] is just foolishness if you want to actually get the economy going. So there are simple things you can do just by changing the rules of the game and making it more certain to revitalize and make our economy robust again.

Siggins: Sure, sure- and I agree with everything you’re saying. I guess my last question would be…getting the economy growing is great, and I don’t usually like to cite Paul Krugman, but he even said that even if the economy grows at a 5% rate a year, or 3.5% rate a year, it’s going to take many, many years to get back to 5% unemployment, or 4.5% unemployment like we had five or six years ago.

Price: Sure.

Siggins: So…jobs are going to- jobs, jobs, jobs is going to be the fall election, obviously, and you just described some great ideas to increase jobs, but we can have all the jobs we want to, but the entitlements, upcoming inflation, are just going to crush everybody. So how do you think Medicare, Social Security and- I’ll be the only conservative ever to say this- military spending can be reformed, if you think military spending needs to be reformed. How would you go about that, and I know I only have a couple more minutes with you. I just wanted to get your thoughts on that.

Price: You absolutely need fundamental reform. I’ve got kind of a ten-point plan that I alluded to the other day, and one of them is fundamental reform of our entitlement system. And by that I mean not just decreasing the monies in but increasing the freedom and the liberty of those within the systems themselves, which is, I believe, a very positive tradeoff. And so in Medicare and Medicaid you got to, we’ve got to have a system that allows the people in those programs the opportunity and the privilege to voluntarily move to a system that’s more responsive to them, and you can do that in very predictable ways. Paul Ryan’s “Roadmap for America’s Future” outlines the way in which one can do that relatively easily. And does it take time? Sure it takes time, because you don’t want to- I’m opposed to forcing individuals off of those programs because people…we are forty years into this dependency society, at least, if not more. But there are ways you can do it that make a whole lot of sense from a financial standpoint and increases [an] individual’s liberty and freedom.

From a defense spending standpoint, we spend less now in defense than we did when we were probably not as challenged as we are right now. I think we can spend more wisely, and I think we can do so in ways that get bigger bangs for the buck, if you will, no pun intended, but I think it’s imperative that we do that.

The statistic that I used the other day that I think is important to remember is that we have spent $16 trillion in this nation in the war on poverty. $16 trillion since the mid-sixties. We’ve increased poverty and we’ve destroyed sectors of our society’s culture, and that’s a reckless and irresponsible, and I believe to be, immoral- in that same…in our entire nation’s history, in our entire nation’s history, we’ve spent a little over $6 trillion, in 2008 dollars, on all of the wars we’ve ever fought. So it’s important to keep things in perspective. We no longer survive as a nation if we don’t have appropriate defenses and national security. So the number one priority of Congress has to be that- we just need to spend smarter.

Siggins: Okay. Well, sir, thank you very much for your time- I really appreciate it.

Price: My pleasure. I look forward to seeing you again.

Siggins: All right. Take care.

The interview can be heard in its entirety here. I would like to thank our founder Nick Brown, as well as one of our contributing editors, RJ Caster, for their help with transcribing the interview.

Can Americans Make the Tough Choices?

The Center for American Progress, which bills itself as the liberal Heritage Foundation, has a really good pie chart of how the federal budget is split among the various areas it funds. I recommend taking a look, so you can see exactly where this massively oversized budget is going.

CAP also has a quick take- they call it an analysis, though it is far short of that- on where the money goes. In actuality, it discusses where Americans would cut the budget. Their findings, as correlated by the numerous sources the “analysis” cites, show Americans are mostly abstract about cutting the budget. According to CAP:

But, the American public’s disdain for “government spending” only holds up in the abstract. The public is much less willing to pull out the hatchet when asked about specific parts of the federal budget. That same Economist poll gave respondents a list of budget areas and asked them which ones should be cut. Only one area garnered majority support for reductions— foreign aid. And foreign aid makes up less than 2 percent of the federal budget even using the most expansive definition. Even eliminating it completely would have little discernible impact on the federal bottom line.

There was not even one other area aside from foreign aid where support for cuts cracked 30 percent, let alone 50, including everything from science and technology to aid to the poor. Support for cuts to two of the biggest budget items—Social Security and Medicare—didn’t even make it out of the single digits. And lest one think this one poll was an anomaly, recent polls from Quinnipiac and Democracy Corps confirm the overall message: people support the abstract idea of spending reductions, but don’t like actually cutting specific programs.

Americans need to make tough choices over the next several years to begin the long process of balancing the federal budget and eliminating our national public debt. CAP’s piece does a credible job of showing that, unfortunately, this may very well not happen. In particular, two segments of Americans deserve blame. First, young-and-middle-aged people don’t want higher taxes for entitlements they won’t receive. Secondly, old people don’t want to lose entitlement benefits for which they have been taxed; and middle-class America. Unfortunately, unless the sacrifices are made, our national debt will swallow this country whole. Hopefully, Americans will realize this and prepare themselves for the tough but necessary path to prosperity.

(For the record, I am one of the young people who doesn’t want to be taxed. I am all for cutting entitlements over time, slowly phasing people out of certain, among other ideas to balance the budget and lessen the debt. This is not fair to older people, but I think it’s the only viable option to kick-start the process. Otherwise, we’ll have to raise taxes, and that will devastate the economy. I have many other ideas, including ones I will address at a later time, but for the sake of this post I will stop with what I have above.)

Dependency Will Destroy Our Republic

Yesterday, The Heritage Foundation’s Center for Data Analysis Director, Bill Beach, presented at The Heritage Foundation’s weekly Bloggers Briefing. Unfortunately, I was a few minutes late, but the gist of Mr. Beach’s presentation was that the seventh annual Dependency on Government Index shows that this country is increasingly dependent on government. See a primer Mr. Beach wrote for The Foundry here, and the full report here.

I had seen the primer last week, and was confused as to why Beach had written the following:

Most disturbing of all, all of the evidence points to even more rapid increases in dependency ahead, which well could threaten democratic government.

No, of course dependency on government is not good, but if we don’t necessarily correlate dependency with government control- though, of course, they generally go hand-in-hand- how does that destroy the (as Beach put it) democratic underpinnings of our republic?

Beach’s answer was simple (if paraphrased for this post): in order to have a functioning civil society and republic, there had to be an appropriate separation between the public and the private. It made a lot of sense, though admittedly it was more profound when he said it than when I typed it.

The core of Beach’s presentation was terrifying. Not only are we going into incredible debt, we are not solving the entitlement issues so crucial to erasing that debt over time. Add private sector subsidies and bailouts, military overspending, welfare programs etc. we have a perfect storm. As Beach put it, we have 40% of taxpayers not paying taxes. These people vote on how federal money is spent, but have no skin in the game.

Solutions offered by Beach: stop expanding the programs that exist (including making them more efficient); tax reform through expanding the tax base by encouraging fewer taxes paid by each person but more people included in the tax system (thus, with more people having skin in the game, more people will watch how the programs work); and Congress needs to get control of mandatory spending. Other, side solutions include generally living within our means (government-wise) and holding down inflation.

The presentation can be heard here. I think Beach does an excellent job of talking about conservative policy principles as well as showing how conservative philosophical principles will help on the humanitarian level more than dependency programs. I encourage everyone to listen to Beach’s presentation by clicking on the Blog Radio on the top right of the page. It is the first presentation of the Briefing, so just hit play and enjoy. Or, rather, don’t enjoy, but be inspired to step up and become part of the solution.

The Heritage Foundation Bloggers Briefing

Rob Bluey, The Director of Online Strategy for The Heritage Foundation, was kind enough to invite me to the weekly Bloggers Briefing held at The Heritage Foundation every Tuesday. Today’s speaker was Representative Mike Pence (R-IN), a leading conservative in the House and the first Member of Congress to have a blog, which can be seen here.

Below are my takes from the event:

1. I met a number of interesting people, including Dan Kotman, Press Secretary for American Solutions and Steve Johnston, Associate Director of New Media for the office of the Republican Whip. I also met bloggers from Think Progress and RedState, and managed to give my card for www.thelobbyist.net to all of these people.

2. Pence spoke and, as always, was excellent (this is the third time since October I have heard him speak in person). He turned down the opportunity to run for the Senate this year, and he said it was because he wanted to lead a “conservative majority” in retaking the House in 2010. When asked if he wanted to run for President in 2012, Pence said of course he did (as he said, “Isn’t that the American Dream?), but that it would depend on the time and circumstances. He also said he was staying because he felt it was his “duty.”

3. The Think Progress blogger- a very brave young man, showing his face and speaking up, I might add- asked Pence about the Citizens United vs. FEC decision by the Supreme Court last week. In short, Pence made two points: first, that “Congress shall make no law…abridging the freedom of speech” means just that. Secondly, he said he agreed with the great conservative writer George Will, in that transparency was the issue at hand, not who can and cannot have freedom of speech. He said he would have no problem with a requirement that all Members of Congress should have to put received funds on their websites at the end of every day.

One thing Pence avoided answering by sticking to the transparency and freedom arguments was the Think Progress blogger’s second question, which was what did Pence think of the ramifications of the SCOTUS decision regarding international funding of campaigns. Pence made reference to the Democrats having to pay back such funding in the 1990s, said foreign funds should not have influence on our elections…and then never really answered the question any further.

4. I managed to put a plug in for www.rightosphere.com. A CATO blogger sitting next to me immediately began asking me about www.Race42012.com, which he said he enjoyed reading.

5. I asked Pence two questions. The first was would he prefer a Republican majority in the House or a conservative majority? He stated that he believed the new conservative majority would be made up of a new generation of leadership in Washington, DC, but never answered the real question I had, which was the difference between conservatives and Republicans.

The second question was what would a new conservative majority in 2011 push for their first step in transparency. While he never directly answered the question, he did reference negotiating bills in front of the public and a couple of other basic points that are slipping my mind at the moment.

6. Four excellent quotes from Pence:

A. On the expected move by President Obama to try to freeze billions of dollars over three years: “I never met a spending freeze I didn’t like.” Pence was also asked when he had first heard about this freeze proposal, and said it was in December, when Republicans recommended it to President Obama at a jobs summit. 

B. “Any gesture at fiscal sanity would be welcome.” Pence said , however, that Republicans would compare that proposed freeze to the laundry list of expected spending programs in tomorrow’s State of the Union speech. 

C. “This isn’t anymore about debates about actuarial perfection – this is about what kind of country we are.” Possibly the best quote of his 50-minute presentation (including Q & A). Pence made the point that the bailout in 2008, the stimulus from 2009, the takeover of the private industry etc. by the government was about who we are as a country regarding the role and size of government, as well as regarding personal responsibility. Regarding the latter, Pence was almost entirely directing his comments at Wall Street.

D. Paraphrased: “Two things have happened [since I came to Washington in 2000]. My opinion of national government has gone down and my opinion of the American people has gone up.”

*Originally posted at THE LOBBYIST.

Punishing the Guilty- Unless We Don’t

The Heritage Foundation nailed it in their Morning Bell yesterday:

The TARP program has so far distributed $247 billion to more than 700 banks. Of that, $162 billion in principal and $11 billion in interest and dividends have already been repaid. Except for AIG, almost all banks that received taxpayer money are expected to pay back the American taxpayers in full. As The New York Times reports: “The losses from the bailout fund are expected from money paid to rescue Chrysler and General Motors and the insurance giant American International Group, and from a program to help homeowners avert foreclosures.”

So the real deadbeats that are not giving us “our money back” are not the banks, but the union-backed car companies and failed government mortgage modification programs. But guess what? The White House has chosen not to include the car companies among the institutions that will pay this so called “Financial Crisis Responsibility Fee.” Also exempted are Fannie Mae and Freddie Mac, the government-sponsored entities that helped create the crisis.

It’s time we told our elected officials to stop picking winners and losers, and voted in people who are in favor of term limits and in favor of a separation of business from government. Beyond liberal or conservative, these are the issues that are so important to America. After all, when Howard Dean, Markos Moulitas and Arianna Huffington agree with The Heritage Foundation…perhaps it’s time for- and I dislike using this word- change to how our system works. Of course, it’s up to us, the voters and citizens of America, to make said change.

Media Holding Democrats Accountable on Transparency

Over the last few weeks, there has been talk of not having the traditional “conference” to meld the Senate and House health care reform bills. I laughed off such thoughts, as transparency is something this administration and congressional leaders have been hammered for over the last several months. However, it appears I was wrong. Senate Majority Leader Reid (D-NV) and House Majority Leader Pelosi (D-CA) are setting things up so they will not have to have the conference, and instead get the “conference” bill without a conference.

This is bothersome. However, a number of media sources are doing their job and calling for the Obama administration to open the melding process to the public. (H/T to The Heritage Foundation’s “The Foundry.”) Let’s make our voices heard in support of C-Span’s efforts and make certain Democrats know they should have full transparency in this debate or face the wrath of the voters come November.

Health Care Updates

Lawsuits galore from at least a dozen states over the individual mandate, says The New York Times. The Times cites a Heritage Foundation legal analysis on the subject that is being used by many mandate opponents, including the Florida Attorney General highlighted in the article, to show how such an individual mandate is unconstitutional.

Other conservatives are attacking the mandate by reminding us that the Congressional Budget Office had multiple issues with the idea during the Clinton health care reform efforts.

Also, good times for Democratic Members of Congress and their trial lawyer buddies. Apparently, the latter worked really hard to make sure their industry wouldn’t get tagged in the health care reform efforts, and Democrats appeased them. Of course, former Vermont Governor Howard Dean made clear this would happen months ago. Unfortunately for Democrats, the CBO used real numbers and evidence to show tort reform would save the public $54 billion over ten years. (Conservatives, this is where we write, call, e-mail and fax our Senate and House Members of Congress to tell them they are not representing us…)

For fun- H/T to Ed Morrissey at Hot Air- here are some lobbying numbers from the law industry. Surprisingly, Republicans have averaged around 25% of lobbying efforts from lawyers since 1990. I didn’t expect it to be that high.

Reid’s Bill Could be the End of Private Insurance

The following was originally published and is the sole property of FrumForum.com

The left blogosphere is denouncing Obamacare as a triumph for private insurers. But Robert Book of the Heritage Foundation argues that it is much more plausible the operations of the plan will extinguish the private insurance industry.

The Senate bill would force private plans to spend a minimum amount on paying medical claims and tax excessive premiums.? The tax on those premiums however would not count towards the limits.

As Robert Book explains:

It would be very easy for regulators to become to develop a plan ?with a minimum benefit package that is high enough (say, above $8972 in average claims) that makes it literally impossible for health plans to break even, let alone make a profit.

Sam K. Theodosopoulos is the Editor of the GW YAF Blog.

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