back Tackling Deficit Calls for Spending Restraint Opinion Editorial by  Congressman Paul Ryan Thursday, November 10, 2005 In the aftermath of Hurricanes Katrina and Rita, countless Wisconsin residents have reached out to help by donating money, goods, and time to assist those who lost so much. This comes as no surprise to anyone familiar with the generosity of Wisconsinites. But we are also big believers in responsible budgeting, and many have shared with me their concern over rapidly escalating government spending in the wake of the hurricanes. Wisconsin citizens realize that, while the government has a responsibility to help people and communities recover following catastrophes such as this, government also has a responsibility to pay for the extra spending - not pass on the bill to our children. To renew our commitment to deficit reduction, we must work to control the growth of government spending and identify and cut wasteful spending to offset the cost of disaster relief funding. I support a five-point plan to do this, which calls for the following steps: Passing a budget plan to reform entitlement programs to save at least $50 billion over five years - up from the original savings target of $35 billion prior to the hurricanes; Offsetting new mandatory spending required to address the hurricanes with corresponding reductions in mandatory spending; Cutting next year’s discretionary spending by up to two percent across-the-board to ensure that savings come from all parts of government, including the Pentagon, (not just one department or program); Rescinding unnecessary spending and wasteful pork-barrel spending items; and Permanently eliminating the duplicative, wasteful, or unnecessary programs that the House of Representatives has already stopped funding through appropriations. The part of this plan that has generated the most attention so far has been the first point - increasing savings from mandatory spending. Unlike discretionary spending, mandatory spending primarily covers spending on major entitlement programs and is not subject to regular annual review by Congress. Instead, it operates largely on “auto-pilot” year after year. Mandatory spending today takes up 54 percent of the total federal budget and is growing at an unsustainable rate. According to some Office of Management and Budget projections, it could take up our entire budget by 2035, crowding out other priorities such as education and homeland security. If we are serious about reducing the deficit, Congress must not only crack down on pork-barrel projects and tighten our belts when it comes to regular spending bills, but we must also work to control the growth of mandatory spending. In the House, the legislation that starts us down this path is the Deficit Reduction Act of 2005, and it is the result of a long process in which eight House committees were instructed to find savings in the programs within their jurisdiction. If enacted, this measure would slow the growth rate of mandatory spending by about 0.1 percent over five years. Even with a little over $50 billion in savings, as provided in the House legislation, mandatory spending would keep rising at about 6.3 percent. This is good to remember when you hear opponents of spending reduction talk about Congress making drastic “cuts” to programs such as Medicaid. For instance, under the House plan, Medicaid funding would continue to grow by about 7.5 percent each year, instead of the projected 7.7 percent, due to cost-saving reforms based on recommendations by the bipartisan National Governors Association. Looking at the larger picture, as we grapple with unforeseen disaster relief expenses and anticipate major cost increases with the retirement of the baby boom generation, Congress has three basic options: increase taxes, let the deficit grow unchecked, or control spending. I opt for controlling spending. The last thing Wisconsin families and small businesses need right now is a tax increase. They already pay too much in taxes. Raising tax rates now would put a heavier burden on our citizens and put the brakes on the economic and job growth that has continued in spite of the hurricanes and skyrocketing energy prices. Make no mistake, a substantial tax hike is just what will happen if Congress lets the 2003 tax relief expire as scheduled. Counterintuitively, tax increases would also hurt, not help, our ability to reduce the deficit. When the economy is growing and businesses are hiring, more people are working and able to pay taxes. When there’s an economic downturn and businesses are struggling, people and companies generally have less income to tax. Historically, across-the-board tax relief has led to greater tax revenues flowing into the Treasury, and 2003 was no exception. After declining between 2000 and 2003, individual and corporate tax revenues rose in 2004 and 2005. Simultaneously, the deficit decreased. In 2004, the Office of Management and Budget (OMB) projected a deficit of $521 billion. The actual deficit was $412 billion. For 2005, OMB projected a deficit of $427 billion but released data in mid-October showing a decline of the estimated deficit to $319 billion - a 25 percent reduction this year. This is progress, but the need to provide sizable hurricane relief and recovery funds has set us back. That’s why we must work hard to restrain other spending to offset these costs if we are going to balance the budget. Like any responsible business or household, the government must learn to live within its means and balance spending on many priorities, while at the same time planning ahead to meet future needs. Wisconsin taxpayers deserve to know that their money is being spent wisely and effectively, and I remain committed to this purpose. Print