Shadow Government

A roadmap worth following

Advocates of a strong national defense ought to be thinking seriously about entitlement reform. Whatever one thinks of our current policies, recent reports by the Congressional Budget Office and testimony by Federal Reserve Chairman Ben Bernanke make clear our current course is unsustainable. The most frightening description to date of our problem is that if ...

Brendan Smialowski/Getty Images
Brendan Smialowski/Getty Images

Advocates of a strong national defense ought to be thinking seriously about entitlement reform. Whatever one thinks of our current policies, recent reports by the Congressional Budget Office and testimony by Federal Reserve Chairman Ben Bernanke make clear our current course is unsustainable. The most frightening description to date of our problem is that if we continue as we are, "by 2058, the economy enters a free-fall, beyond which the catastrophe cannot be measured: CBO cannot model the impact because debt rises to levels the economy cannot support."

This has important effects not just for our national solvency, but also for our national security. Our current national indebtedness and its projections based on the president’s budget will increase spending to $5.1 trillion by 2019, nearly a full quarter of the nation’s economic resources. As CBO points out, "deficits never fall below $633 billion in the next 10 years, and exceed $1 trillion by the end of the decade." With non-discretionary spending constituting an increasing proportion of federal outlays, defense, diplomacy, and foreign assistance will inevitably be squeezed.

The United States’ Joint Forces Command (JFCOM) sounded the alarm earlier this year by naming federal debt and deficits as a major threat to the continued strength of our American military. JFCOM’s Joint Operating Environment 2010 states that "interest payments, when combined with the growth of Social Security and health care, will crowd out spending for everything else the government does, including National Defense."

As Representative Paul D. Ryan of Wisconsin stresses in his "Roadmap for America," the threat to adequate defense spending is entirely from the price tag for domestic programs. Defense spending isn’t even addressed in the roadmap, because it is not material to the debt picture. That is, before we fight about what defense spending should be (and I’ve argued here it should be reduced), we ought to be arguing about a long-term program for bringing our national spending into alignment with our revenue.

The "Roadmap for America" is a terrific place to start. It proposes sweeping changes to our tax code, provision of medical insurance, retirement programs, and process of budgeting for entitlements. It would raise the age of retirement and reduce benefits for those under 55. But it would also expand our choices — and not simply by keeping entitlement programs solvent. The roadmap would allow individuals to determine for themselves what they value and want in their medical plans, retirement programs, and would even allow a choice in type of taxation.

It is often work to read, with sections on the investment and labor force participation effects of taxes, calculation of the fiscal gap, unfunded liabilities and third-party payer health care.  But it is a genuine delight to see a major public policy proposal argued passionately for, with assists from Thomas Jefferson, John Locke, and Alexander Hamilton’s "Federalist No. 12." The driving philosophy of Ryan’s approach is empowerment of the individual. And on the whole it explains in plain language the current state of our public finances, and the choices available to us to remedy our problems.

Importantly for conservatives, Ryan’s plan recaptures our proud legacy of fiscal prudence without sounding reckless about what government should and does contribute to our lives.  

He makes a sound fiscal argument for acting now by demonstrating the cost of delay: "waiting just 11 years to take action increases by nearly 20 percent the amount of spending reductions or tax increases (as a percentage of GDP) needed to close the fiscal gap. Waiting until 2030 increases the amount by about 50 percent; and waiting until 2040 nearly doubles the spending cuts or tax hikes needed to close the gap."

There will be many who denounce Ryan’s plan as radical. They should be rebutted by CBO data showing that under his proposals, "the standard of living for a child born today would double (i.e. per-capita output would rise from $45,000 to more than $90,000) by the time he or she reached middle age, just after the middle of the century." What a fantastic legacy for us to leave our children and with which to strengthen our nation. Unless we get our spending in line with our revenues, we will not only leave our children worse off than we have been, but we will be unable to afford a strong military.

Kori Schake is the deputy director general of the International Institute for Strategic Studies.

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