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The Mitch Daniels/Paul Ryan Ticket to Fiscal Health

Thomas F. Roeser 2 March 2010 4 Comments

With Republicans on the brink of winning not just the House but the Senate due to severe public dissatisfaction with Barack Obama and the recalcitrant Dems running Congress, legions of GOPers are mouthing old clichés that all is needed is to “cut spending, push tax reform and balance the budget.”

To which old veterans like me who have gummed this pablum from Republicans for so many years their ears are ready to fall off say: yeah-yeah-yeah. Cut spending WHERE? Push WHAT KIND of tax reform? Balance the budget HOW? That’s where the usual pol shrinks away because to specify is to violate a canon of politics—blur the oratory so no one really understands the pain.

But there are two guys who really understand the details of what fiscally ails the United States of America—and they’re far from household names. You know the household Republican names—Palin, Romney, Paul (who just won the CPAC poll for president), Huckabee, Pawlenty etc. These folks make good speeches…but I’m thinking of two men who have actually rolled up their sleeves and worked at making government solvent.

Both are idea men who (in the case of one anyhow) disclaimed any interest in running for president. We’ll start with the younger one first who just might be agreeable to serve as vice president if he were allowed to run the fiscal side. He is Congressman Paul Ryan of Wisconsin. 40.

Ryan Steps Up to the Plate.

A brilliant, pro-life Irish Catholic, Paul Ryan …a policy wonk…has come up with an imaginative counter-budget called A Road Map for America’s Future that’s tough, is destined to be unpopular with liberals and which to enact will be a very tough slog. It is controversial to be sure but it is so unique that much more senior lawmakers are stepping back to allow this young guy to go front and center. His ideas are the antithesis of Barack Obama’s but last week appearing before a Republican House group to seek bipartisan support, Obama stunned attendees and the media by praising Ryan for advancing challenging and substantive views.

Who is Paul Ryan and what is he advocating?

Six-term congressman Paul Ryan of Janesville represents the southern tier of Wisconsin from Lake Michigan to the Rock River Valley. His district takes in some of the nation’s prime industrial areas. It was settled by Yankee and German dairy farmers almost 200 years ago but Wisconsin’s 1st district has now become known for industry…industry which like the rest of the country’s isn’t doing very well: for example, Johnson’s Wax in Racine with its modernistic Frank Lloyd Wright tower.

General Motors closed its Janesville plant, idling 2,500; Chrysler closed its Kenosha plant laying off 850. A good part of Ryan’s district melds Chicago exurban towns with Milwaukee suburbs including Lake Geneva, a vacation spot for rich Chicagoans. The district has ups and downs economically…running from Lake Michigan west to Janesville and taking in all of Racine and Kenosha counties on the Lake, including the south Milwaukee county suburbs as well including the towns of Oak Creek and Greenfield, the southern tier of townships in Waukesha county as well as New Berlin. In 2004 the district went 54% for George W. Bush but four years later voted for Barack Obama 51% to 47%.

Ryan was reared in Janesville where in 1884 his great-grandfather built a construction company now run by his cousins. He attended Miami of Ohio University and from the outset became deeply involved in the technics of governing: tax inducements, governmental policies and focusing on things individuals and private associations can do without government subsidies. He decided on being an economist and applied at the University of Chicago, intellectual home of Milton Friedman but kept on being offered what he calls “really interesting jobs in politics”—such as a staff position with U. S. Sen Bob Kasten [R-Wis.] an earlier supporter of the Laffer Curve, tax inducements to grow the economy.

Ready to go to the U of C again, Ryan delayed to take a job as legislative analyst and speech-writer for the late Rep. Jack Kemp (R-NY) and later joined the think tank “Empower America” composed of Kemp and former Education Secretary Bill Bennett. Then he was made a top staffer for Republican Sen. Sam Brownback of Kansas. Finally he gave up on academia altogether and ran for Republican Rep, Mark Neumann’s House seat when Neumann ran against…and was defeated by… Sen. Russ Feingold in 1998.

That year, Ryan faced popular Democrat Kenwood county official Lydia Spottswood. He campaigned for lower taxes and for gun ownership rights. The 1st district race was one of 10 top priorities with Democrats. Spottswood spent $1.3 million and Ryan $1.2 million but the results were not close—Ryan defeated her 57% to 43%. Since being elected to the House, Ryan has been touted as a “comer” who’s very-very smart and who does his homework.

Ryan Thought Bush’s Tax Cuts too Modest.

Named to the Ways and Means committee early, Ryan soon became one of the congress’ best communicators on difficult-to-understand fiscal issues. He has pushed for line-item veto, tax cuts to spur business growth, soon tied up with the pro-investment “Club for Growth” in criticizing President George W. Bush’s tax cuts as too modest. He became an adept spokesman for increased competition in Medicare plans and for creation of health savings accounts. He quickly became a major advocate of Bush’s plan that drew much fire for adding personal accounts to the Social Society system. By 2005 he had aligned with Sen. John Sununu (R-NH) to create payroll-funded private retirement accounts funded through spending cuts and new revenues that would result from the accounts.

In 2005 after his reelection as president, Bush offered the top job of budget director to Ryan but Ryan turned it down to stay in Congress. Two years later he became the top Republican on the House Budget committee, chosen over 12 more senior Republicans in the group. That year he wrote his first “counter-budget,” which would have cut entitlement and discretionary spending and extended all expiring tax cuts but which would have aimed for a balanced budget by 2012—losing in the House 160 to 268 (where he lost 40 Republican “mainstream” congressmen who don’t want to ruffle public sentiment.

Opposed Bush and Paulson on Bank Bailout.

In 2008, Bush’s last year, Ryan opposed the president and Henry Paulson on the $700 billion bailout of the financial services industry and almost derailed it. But that year he rose above principle and voted for the bailout of the domestic auto industry—after two car plants closed down in his district.

After huge Democratic victories in 2008, the editorial board of The Wall Street Journal, citing Ryan as one of the brightest Republicans in the House, urged him to run against Minority Leader John Boehner (R-Ohio) in a leadership fight but Ryan declined. Instead he was an electrifying keynote speaker at the 2009 Conservative Political Action Conference (CPAC) and wrote a counter to Obama’s first budget. His counter-budget was so tough and detailed that GOP Leader Boehner, feeling it would kill the GOP if it got out so he had it scrapped. Ryan has been consistently more conservative than his district and has said “A lot of guys get to vote how they want and then go home and go fishing…I’ve got to vote and then go home and explain what I did and why I did it.”

Interestingly enough, he has had no trouble winning reelection having won last year with 64% of the vote, topping McCain’s number in the district by 17 points.

Last week in response to some public appeals that he run for president, Ryan declined. He said “I’m not looking to become some famous conservative movement leader.” Instead he is either looking to be chairman of Ways and Means if and when Republicans take charge of the House or run for the seat to be vacated by Sen. Herbert Kohl (D) who will be retiring in 2012.

But try as he might, Ryan can’t shake the aura of intellectual leader of the Republicans on fiscal policy. Here are some features of his Road Map for America’s Future.

Courageous New Approaches.

On Social Security he says that for those 55 or older today, his plan would remain unchanged. For those younger, benefits would be reduced—but with no cuts for the poorest workers. Workers 55 and younger in 2011 would be granted the right to establish individual investment accounts that would be funded with part of their payroll taqxes—government guaranteeing a return equal to inflation.

Regarding Medicare, current recipients and those signing up in the next decade would continue in the program as is, although wealthier recipients would pay somewhat higher premiums. In 2021 Medicare would become a voucher program for new recipients—those who today are 54 and younger with subsidies for the poor and means testing for the wealthier, the goal being to hold the growth of the vouchers below projected growth in health care costs. With vouchers, recipients would be entitled to buy Medicare-certified private insurance—which in today’s dollars would ultimately grow to $11,000. Eligibility ages for Medicare and Social Security would slowly hike up toward 69 and then 70.

Concerning government spending, “non-defense discretionary spending”—amounting to 1/6th of the budget, taking in everything from housing, parks and education—would be frozen at 2009 levels.

Turning to the issue of simplified taxation, under Ryan’s Road Map, taxpayers could choose between today’s system or a streamlined replacement with no deductions and no special tax breaks. There would be a tax-free income ($39,000 for a family of four) after which taxpayers would choose from two rates: 10% up to $100,000 for joint filers and 25% on income higher than that. And this is important: He would eliminate taxes on corporate income, dividends and capital gains and in their place implement what he calls a “business consumption tax” – or VAT (value added tax).

To be sure, Ryan’s innovative Road Map for America is not criticism-free. Some critics on the right point out that since under Ryan’s plan the budget will not be balanced by 2063, it is far too distant…arguing that his plan should be amended to contain greater tax hikes than he would like and greater spending cuts liberals would like. Liberals who like bumper-sticker rhetoric say he is trying to “privatize” Social Security, “cut taxes for the rich,” hike taxes for the middle class and let Medicare “die on the vine.”

Ryan counters that his plan is not as radical-right as Democrats allege. On Social Security he would allow workers to invest in personal savings accounts (hardly privatization). He would reform the tax code to provide a credit for paying for health coverage. The income tax for households earning up to $100,000 would be set at 10%; those earning over that amount would pay 25%. He would eliminate the alternative minimum tax, the estate tax and would trim some business taxes.

Is the Ryan plan perfect? Even he doesn’t think so. But the important point still remains: It shows the possibility of common ground between the “redistributionist Left” and “limited government right” which moves to solvency over the long term as well.

It’s amazing to note that Paul Ryan is the only Congressman of either party who has launched a counter-budget and has started a conversation on the limits of government. Knock his plan if you wish but recognize he’s the only guy who has struggled to counter the bad liberal tax idea with a conservative idea…which is rather sad to realize.

Daniels Works Wonders in Indiana.

Aside from Ryan there is really only one other Republican who has tackled tough budget problems—and he has done so not as a theorist as Ryan but on a tough practical basis–as a working governor. He’s the popular…strange to say because he’s not especially charismatic …governor of Indiana, Mitch Daniels, 61. To my mind, the best team possible for 2012 would be Daniels for president and Ryan for vice-president. Presbyterian Daniels, 20 years older than Ryan, married with four children, has had matchless experience in business and government. In fact the possibility of Daniels for president and Ryan for vice president really gets me excited.

Both are pro-life. Daniels, educated at Princeton (BA) and Georgetown (law) began as a staffer for Indianapolis mayor Dick Lugar, served as chief of staff when Lugar went to the Senate, then became director of the GOP Senate campaign committee and senior adviser to President Ronald Reagan…all before going private sector—joining Eli Lilly the pharmaceutical giant based in Indianapolis where by sheer intellectual strength he climbed the ladder to become president of the company’s North American pharmaceutical operations.

Then he liquidated $27 million in stock holdings to take a job as director of President George W. Bush’s budget office. His relations with Congress were so stormy that Sen. Robert Byrd (D-WVa.) once shouted that Daniels was a “Little Caesar” and the prince of pork, Ted Stevens (R-Alaska) advised Daniels to go back to Indianapolis and stay there.
Daniels did return to Indiana in 2003 but to run for governor of the state. Daniels won with 53% and took over with the state facing a $645 million deficit and owing $710 million in back payments to public schools, universities and local governments. The first thing Daniels did was convince business to agree that the state should go on daylight savings time (it was one of only three states not to do so which severely hobbled its ability to deal with other parts of the country).

Indiana had found itself at a great disadvantage in sticking the old central savings time system. But the farmers, a strong constituency in the state, wanted it and to tinker with the issue was regarded akin to stepping on a highly electrified third rail. But Daniels convinced them and a majority of Indianans to scrub the old system and now everybody’s happy.

Turning to the state’s economy, Daniels slashed spending to the bone, created tax breaks for business against liberal opposition, initiated tougher enforcement of child support obligations by deadbeat dads. He cut the state’s property tax relief payments and expanded local governments’ control over how they raise revenue.

He created health savings accounts for state employees; he ditched the old patronage-riddled state department of commerce and replaced it with a streamlined economic development public-private corporation to do the job better. His Indiana Economic Development corporation committed $700 million in tax incentives to new businesses and produced more than 75,000 new jobs. His abstemious fiscal policy won the state an AA+ credit rating in 2006 and an AAA score in 2008. He masterminded a 1% increase in the sales tax in return for a cap on property taxes of 1% of assessed valuation.

In 2008, a notably bad year for Republicans when Barak Obama was elected and both houses of Congress went strongly Democratic, Mitch Daniels was reelected governor of Indiana, winning metro Indianapolis handily, Like Paul Ryan of Wisconsin, he has said he won’t run for president—but he recently amended that by saying he’s keeping all options open.

My hope: If Daniels can be encouraged to really make a run of it and convinces Ryan to run with him as a team, they could put this country back on an even keel—A.O. (After Obama).

**

Tom Roeser is the Chairman of the Editorial Board of the Chicago Daily Observer

4 Comments »

  • Phil Krone said:

    Scares the bejeezuz out of me.

  • REP. RYAN PUTS THE LIE TO CLAIMS THAT GOP HAS NO IDEAS ABOUT HEALTH CARE | Virginia Right! (author) said:

    […] is his article in the Post today.  This article shows a bit of his wonky […]

  • alliebabaoopcat said:

    Paul Ryan.. the epitome of slimy GOP politician. He is telling people that they will get a tax cut, while the only ones who will benefit are the super wealthy. He is a part of the old boys club and he is looking out for all the other old boys.

  • james said:

    CBO says Ryan’s plan increases the deficit…still want to know more, but severe scepticism seems to be in order.

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