A Washington Politician Who Gets It Right

Wisconsin Congressman Paul Ryan is apparently one politician in DC who gets it relative to runaway government spending. In a Fortune magazine article form the March 22, 2010 issue, writer Shawn Tully captured some of Mr. Ryan's views and fears:

• "We are walking towards a debt crisis. Within a few years a sale of government bonds will fail. The capital markets will go crazy, and the Fed and Treasury will run to Capitol Hill demanding a giant bailout." (Without foreigners willing to buy these bonds, Americans will have to pay for them immediatley and out of their own pockets or the country goes under financially).
• "Adding Obamacare would make the crisis go deeper and arrive faster."
• Obama's 2011 budget forecasts has a deficit of more than $1 TRILLION ... This budget assumes low unemployment and decent economic growth, both of which are highly unlikely. For comparison, if the TRILLION deficit does occur, that would cost each of the 115 million households about $800 more in taxes beyond what the average household pays today.
• Ryan published his comprehensive budget fix plan, Road map For America's Future, in January where he laid out a long term, comprehensive plan to first reduce the deficit spending and eventually eliminate the national government debt by mid-century. His plan reviewed and analyzed every part of the Federal budget.
• His plan aims to protect the sick and poor in the future but force those that can pay to pick up more of the burden of paying for their retirement.
• The Congressional Budget Office analyzed the plan and confirmed that it would produce the falling deficit and debt levels Ryan promised.
• The White House has not challenged Ryan's numbers or analysis but others (e.g. Pelosi) have accused him of shortchanging the elderly by increasing tax breaks for the rich (which his plan apparently does not do.)
• Alan Greenspan stated that Ryan was "demonstrating the nature of the solution that just occur. You cannot close the gap with tax increases alone."
• Basically, Ryan's plan would increase the amount of economic and behavior FREEDOM for all Americans while keeping a safety net for the most needy and make the country economically stronger in the process.

Finally, someone who understands that the financial path we are on as a country is a suicidal path and has come up with a pan to fix the situation. What is Obama's plan? Continue to increase spending and push off the hard decisions to an independent panel that will have non-binding recommendations sometime by later this year or early next year after we have put an additional TRILLION dollars or so on the national debt. That is not a plan and it is not leadership, Mr. Obama. It is business as usual which is going to be fatal.

Mr. Ryan's analysis and plans take on even more importance when you consider two other recent articles that addressed the growing economic problems in China. While Chinese growth continues to be phenomenal, there are signs of trouble, especially in the real estate market. In a Charlie Rose Business Week article in their April 19, 2010 issue, an interview with Jim Chanos, who runs a $6 billion hedge fund, was insightful. Mr. Chanos believes that a giant real estate bubble is blooming in China and that when the bubble bursts, who knows what will happen. Will the Chinese stop buying U.S. Treasury debt in order to keep their wealth home to help their own people? If so, all of a sudden the U.S. Treasury will find it very difficult to finance Obama's deficit spending resulting in 1) more taxes on Americans to pay for the deficit spending, 2) higher interest rates to attract non-Chinese investors, accelerating the rise in the national debt or 3) Obama cutting spending (highly unlikely). If Chanos is right, the political class might lose their cash register if the Chinese real estate market collapse infects the rest of their economy just like our housing bust affected our economy.

And Chanos is not the only one worried about China. Dexter Roberts wrote an article in the April 25, 2010 issue of Business Week, "How Do You Say Trouble In Chinese?" He basically came to the same conclusions: the Chinese government is faced with a very hot economy and a real estate market, so hot that most now think it is not sustainable. (Note: in a different part of this Business Week issue, it was reported that the value of Chinese property increased 11.7%, on average, in just the month of March). The article also reports that China needs about an 8% annual growth rate in order to provide jobs for 10 million Chinese who enter their workforce every year. If their economy collapses, will they keep their money home to support this rapidly growing workforce and the expectations of continued high economic growth? If so, then where does this administration go for debt financing to support their deficit spending?

A lot of this downside could happen well before we even get a plan from Obama's deficit reduction commission. The bottom line is Congressman Ryan is the only one in Washington with a plan and that plan is unlikely to proceed with the Democrats in power. They have controlled Congress for over three years and this is where they have gotten us. I fear that they will all be just spectators again, just like they were on the "Great Recession." They appear unable or unwilling to take leadership roles and anticipate the next financial crisis, just sitting there with their thumbs you know where when the deficit problem explodes in their face.

That is why Step 1 in "Love My Country, Loathe My Government" is so important and is so consistent with Congressman Ryan's plan. Step 1 would begin a five year plan of reducing the size of all government functions by at least 10% a year across the board. My only worry is that the 10% target may not be high enough and the five years may not be quick enough, given the deficit spending binge of the Obama administration. However, Step 1 would at least be a good start and would be consistent with the only plan coming out of Washington today to address the problem, courtesy of Congressman Ryan.

Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.