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Romney, Ryan bet U.S. is ready for an adult debate by Robert Robb, columnist - Aug. 15, 2012 12:00 AM The Republic | azcentral.com Everyone is saying that the choice of Paul Ryan to be Mitt Romney's running mate offers the country a stark choice between competing visions for the country's future. Even the campaigns and the candidates are saying it. But on the issue for which Ryan is most relevant -- fixing the federal government's finances -- that's not really accurate. That's because President Barack Obama doesn't have a plan to fix the federal government's finances. He proposes to leave them unfixed. Right now, total federal debt exceeds 100 percent of gross domestic product. Four years ago, it was 70 percent. During the Reagan years, which were supposedly a period of undisciplined deficit spending, it barely got above 50 percent. The last time federal debt exceeded GDP was World War II. So, we're in unprecedented territory. Economic historians say that when sovereign debt gets above 90 percent of GDP, it adversely affects the performance of the private-sector economy and raises questions about the ability of the government to pay it back. So, we're in unprecedented, dangerous territory. Getting federal debt back below 90 percent of GDP should be an urgent national priority. Obama's proposed budget plan for the next 10 years doesn't get national debt below 90 percent of GDP. In fact, it never gets debt below 100 percent. After 10 years, the country would still be in the same unprecedented, dangerous debt territory we are in now. It is very important to note that this isn't some conservative critique of the president's budget. The conclusion isn't from some conservative think tank or the calculations of a conservative scribbler. It's what Obama's own budget says. If every tax increase Obama proposes is enacted and raises to the penny what Obama says it will raise, and if the federal government spends to the penny what Obama proposes on every program for the next 10 years, and if the economy responds precisely as Obama's economists predict it will respond, federal debt after 10 years will still exceed 100 percent of GDP. It gets worse. If Obama's budget proposal were enacted in its entirety, what the country spends to service the national debt would increase from around $225 billion today to $850 billion in 2022. Again, that's the projection of Obama's own budgeteers. In short, Obama's budget will lead the country into a debt trap similar to the one many European countries are trying to escape, in which debt never gets retired and the cost of servicing it constantly increases. Given that much of U.S. debt is short-term and has to be continuously refinanced, that's a reckless vulnerability to the bond markets. The Ryan plan, far from being radical, barely gets the United States out of the danger zone on debt. Ryan's budget wouldn't get the country's debt below 100 percent of GDP until 2016. It wouldn't dip below 90 percent until 2020. At the end of 10 years, it would still be at 85 percent. That's out of the danger zone, but it's far from healthy. And far from a starvation diet, federal spending under Ryan's plan would increase from $3.6 trillion today to $4.9 trillion in 2022. There are plenty of other ways to get the federal government out of the danger zone on debt. Taxes could be increased by more than Obama is proposing. An argument could be made for less military spending and more domestic spending than is in Ryan's budget. The point, however, is that Obama isn't proposing alternative ways to get the country out of the danger zone on debt. He is proposing that the country stay in it. I have no idea whether the selection of Ryan as his running mate makes it easier or harder for Romney to get elected president. But it makes victory, should it come to pass, more consequential. And it says something important about Romney. He's betting that the country is ready for a grown-up conversation about debt and the tough choices involved in getting it under control. Obama is betting that it isn't. Reach Robb at robert.robb@arizonarepublic.com. |