Paul Ryan’s Growth
By Larry Kudlow
Of all the discussion about Paul Ryan’s big-bang budget plan, the
element I like best was caught in this Wall Street Journal op-ed title:
“The GOP Path to Prosperity.” In other words, it’s a growth
budget. It has plenty of spending cuts, but it also has significant
pro-growth tax reform.
Obsessing over the debt is not by itself a policy. Advancing the
economy and setting the stage for more job creation is a policy. Mr.
Ryan kept an important dose of Ronald Reagan in both the spirit and
reality of his plan. Limited government, lower tax rates, and
deregulation (of energy) will all promote the path to prosperity.
The other big-picture thought is that the fiscal-policy ball is moving
in the right direction. Most of what is being proposed faces a rocky
political future. But the direction is unmistakable: less government,
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This really started back in December with the extension of the Bush tax
cuts and the withdrawal of the trillion-dollar omnibus
continuing-resolution spending bill. It continues into the new year
with new CRs. Whether Speaker Boehner gets $30 billion or $40 billion
in cuts, the direction is clear: lower spending.
Just before the election, John Boehner told us he would stop the bad
stuff. Looks like he has. And now Mr. Ryan keeps the drumbeat going
with a 2012 budget that would cut $179 billion from the president’s
budget baseline. In 2013, Ryan would take down over $220 billion.
Again, the direction is more important than the actual number.
Ryan included the thinking of Dave Camp (the Ways and Means chair) on
tax reform, which is a 25 percent top rate for individuals and
businesses with a full-scale reduction in all the tax-credit, K Street,
flotsam-and-jetsam loopholes. That’s very pro-growth.
Ryan also includes deregulation of energy for drill, drill, drill --
another big growth and jobs measure.
The health-care entitlement picture is going to be very muddled, and
the outcome is impossible to figure. So I’ll leave that aside for a
moment. The only thing Ryan neglected to do was highlight the need for
stable money to stop the damaging Fed rollercoaster. But with so much
on his plate, I can understand that omission for now.
Ryan basically stole the bacon from President Obama, who should have
put this kind of plan in his State of the Union. He didn’t. And now
he’s got to play catch-up, although the Senate Democrats are utterly
hopeless. The public mood is still where it was last fall: less
government spending and borrowing. Ryan delivers on that and then some
with his tax-cut growth booster.
I’m not so worried about deficits and debt, as long as I know the
spending baseline has new discipline and sufficient incentives exist to
grow the economy. In some sense I hear Paul Ryan saying, “I will not
allow America to become Greece.”
Read it at Townhall