By: AIF Staff
Washington, DC – Yesterday, American Idea Foundation President and former Speaker of the House Paul Ryan talked with Fox Business’ Larry Kudlow about how our nation’s growing debt will have real economic consequences for Americans over the short-term and long-term.
On Kudlow, Ryan reflected on the pro-growth economic policies passed during his time as House Speaker and his efforts to promote upward mobility. In discussing the looming insolvency of our entitlement programs and the need to get ahead of it, Ryan foreshadowed a forthcoming project with the American Enterprise Institute focused on modernizing our nation’s social safety net for the 21st century.
Ryan’s full conversation on ‘Kudlow’ is accessible here and excerpts follow.
How can we have a pro-growth, balanced budget?
“This is what I’m working on at the American Enterprise Institute, today, putting together a plan to do this.
Everybody forgets – probably not you, Larry – but most people forget about growth. You have to have a growing GDP and you need pro-growth policies: pro-growth regulatory policy, pro-growth tax policies, and sound money policies from the Fed, but that’s another conversation.
But you’ve got to deal with these entitlements and for the big three entitlements, we’re at the beginning of the boomer retirement so we haven’t even seen the big bulge of boomers retiring. And so, we have to pass entitlement reform once and for all in this country if we’re ever going to get this under control.
You can’t tax your way out of this problem. Frankly, you can’t grow your way out of this problem. Growth helps a lot but you have to reform these entitlement programs.
Right now, they are open-ended defined-benefit programs that grow far faster than our ability to pay for them. Medicare is already more than half bond-financed. The Medicare HI Trust Fund goes bankrupt in 2030, Social Security goes bankrupt in 2035, and across the board benefit cuts kick in right then and there. Not to mention the fact that I think our reserve currency status will be put in great peril and be in jeopardy. Meaning, the sooner we get a handle on this problem, the better off we’re going to be.”
How can leaders alter our debt trajectory & save these critical programs?
“If you think we’re a polarized country today, wait until the day comes where we can’t actually finance our social safety net or can’t fulfill the social contract and we have to cut these programs in real-time for real people who have organized their lives around these benefits.
I always quote my late mother-in-law: “A stitch in time saves nine.” If you pass the right reforms now that are phased out over time, you can really dodge this debt bullet and get the debt under control.
By the way, in the House, when we had the majority, we passed budgets in the House of Representatives that balanced the budget and paid off the debt. We did it for 8 years.
When I first was a Chairman of the Budget Committee, we passed [balanced budgets] and subsequent to my chairmanship, Tom Price & Diane Black passed budgets that actually laid out how to balance the budget and how to have a pro-growth budget.
Tax reform, entitlement reform, and spending caps can get you to a balanced budget and fulfill the mission of these programs – health and retirement security, upward mobility, a social safety net built toward work. Those things can be done and we can still have these things that we’ve come to a consensus that we want in America in the 21st century but you have to reform these programs to get there. “
How can we expand upward mobility?
“I really believe that you can rework our safety net to focus on upward mobility, helping people who cannot help themselves and getting people into lives of self-sufficiency by having work requirements.
“It does work. We are proposing a dramatic overhaul of our safety net at AEI that we’re going to release later this Fall to do just this, to show how you can have a very good, vibrant safety net that gets people up and on in life and helps them find work.
“Skills and work – it totally works. We have experimented with these ideas for 30 years. We now know what does and doesn’t work. We have so much data and analysis. There have been hundreds of randomized controlled trials from economists on what works and what doesn’t work in poverty and we do know that work works. Encouraging work is the way to get people out of poverty.”
*Note: Ryan is a member of the board of Fox Corporation*