I’m going to take a quick detour from economics, to talk about, the economy. Too often we forget about our past. We can learn a lot just by looking back.
During the ’80s, President Reagan was spending lots of money building up our military. And a democratically controlled Congress was spending lots of money on everything else. By the early ’90s we were drowning in debt, deficits, a struggling economy, and unemployment was pushing 8%. Sound familiar?
Much of the 1992 presidential election campaigns were focused on these issues. As then Governor Bill Clinton so eloquently described, “It’s the economy, stupid.” And who can forget Ross Perot and his famous charts? As a third party candidate and founder of the Reform Party, Perot garnered almost 19% of the popular vote with his simple themes. For Perot, the math was simple. To get out from under the deficits and debts, we must increase taxes, and decrease spending. He also talked about tax reform, and entitlement reform, as necessary steps for fixing our economy.
In ’92 we elected Bill Clinton, who came into office having won only 43% of the popular vote. Dick Morris has often told the story about how Clinton wanted to work with the republicans to pass bipartisan legislation. But the democrats in Congress told him no. That this was their chance to pass their agenda. After two years, the people were fed up, and voted in a new Congress filled with the likes of Newt Gingrich and his fiscal conservatives.
It was the fiscal conservatives in Congress and Bill Clinton who created the prosperity of the late ’90s. How did they do it? They constrained government growth. They passed pro-business legislation. And they tackled entitlement reform — in this case, welfare reform.
The result? Unemployment dropped to its lowest rates since the ’60s. And budget deficits became budget surpluses for the first time since the ’60s.
So how does this compare to today? We have surpassed $14 trillion in national debt. We have a projected budget deficit this year alone of more than $1.6 trillion. And unemployment remains well above 8%.
The president says that he’s concerned about our debt and our deficits. He went so far as to put together a bipartisan debt commission headed up by Alan Simpson and Erskine Bowles. Much like Ross Perot in the ’90s, the debt commission has recommended budget cuts, tax increases, tax reform and entitlement reform.
President Obama has completely ignored the recommendations of his own commission. He has provided us with a long-term budget plan that will double our national debt. And today, Congress can’t agree on a few billion in cuts. We’re still negotiating over the 2011 budget because the democrats never bothered to pass a budget LAST year when they controlled both houses in Congress and the White House!
So how do we fix our problems? Constrain government growth (cut spending). Develop pro-business legislation, which should include repealing ObamaCare. Entitlement reform. And tax reform. Sound familiar? It’s worked before.
Enter the Paul Ryan budget plan. I have not read it yet, and am not endorsing it. But he is on the right path from what I have seen.
Much like the left did during the ’90s over welfare reform, liberals will demonize the right over entitlement reform. A member of Bill Clinton’s staff, Peter Edelman, resigned under protest over welfare reform, decrying that it would throw a million children into poverty. On the contrary, within five years, child poverty declined by more than 2.5 million. Welfare reform is now championed by the left as a great accomplishment under Clinton.
Similarly, expect the left to accuse Ryan of throwing the poor and elderly under the bus with his “extreme” budget cuts and entitlement reform. It’s already started. It will get loud. It will get messy. But entitlement reform is necessary if we want to fix our short-term and our long-term economic problems. We can’t cut enough “discretionary” spending to dent the deficits. We need smart, long-term solutions. And we need them now.