The U.S. is headed toward European-style austerity unless government encourages growth through fiscal discipline, Congressman Paul Ryan (R-Wis.) said Tuesday in a speech in New York.
Significant reforms to entitlement programs, namely Medicare, the government-sponsored health care system for the elderly, and the complex U.S. tax system are needed if austerity is to be avoided, Ryan said at the George W. Bush Presidential Center’s conference on “Tax Policies For 4% Growth."
Austerity as it is currently being enforced in Europe means "pain," Ryan said, and the poor and the sick will be the first to suffer.
Austerity also means over-regulation and being held hostage to "bond market vigilantes," he said.
Worst of all, though, is that austerity all but precludes the growth and eventual prosperity Ryan is seeking in the U.S. through his reform proposals.
In the U.S., as in Europe, the path to austerity was created by "decades of politicians making promises to voters they couldn't keep," the Congressman said.
Criticizing politicians who shy away from difficult and unpopular decisions, he said, "If you're going to be good at this job you have to be willing to lose it."
Ryan, chairman of the House Budget Committee, introduced his version of a 2012 budget last month, a document that calls for lowering tax rates across the board, and dramatic spending cuts including cuts to Medicare for the next generation of Medicare recipients. Current recipients and those close to receiving their benefits would not be impacted by Ryan's reforms.
The budget proposal has been hailed by supporters as a starting point for negotiations to reduce the massive U.S. debt. Critics, including President Barack Obama, have accused Ryan of targeting the most vulnerable -- the poor and the elderly -- while cutting taxes for the wealthiest.
Ryan on Tuesday said the Democratic strategy toward fiscal policy and tax and entitlement reform seems to be to allow Republicans (meaning him) to offer solutions and then criticize them.
What's more, President Obama's budget, which calls for higher tax rates for America's wealthiest individuals, is "anti-growth," he said, and will ultimately force job creators to take their ideas and businesses out of the U.S. to countries with less onerous tax burdens.
The U.S. has reached two tipping points, according to Ryan. The first is related to debt and it could be kept at bay if true tax and entitlement reform is enacted. The second is a moral tipping point and could mean the difference between the U.S. evolving into a "taker society rather than a maker society."
In the former, a majority of U.S. citizens become dependent on the government for their livelihoods.
The upcoming presidential election, in which Ryan is frequently projected as a potential vice-presidential candidtate, could determine whether the U.S. reaches those tipping points, Ryan said.