When it comes to fiscal legacies, no speaker of the House has a record even approaching that of Paul Ryan, the gentleman from Janesville, Wis.
There are three major accomplishments that Ryan’s speakership, and before that his stewardship of the House Ways and Means Committee and the Budget Committee, will be remembered for.
The first is the most recent. In large measure due to his dogged leadership over many years, Congress passed and President Trump signed the first major tax reform in three decades. The law cut the corporate income tax rate from 35 percent (the highest in the developed world) to 21 percent (ahead of major trade competitors Japan, Mexico, Canada, Germany, and France). It moved us toward full expensing of business capital purchases, which many economists think is as important as a rate cut. It adopted a modified form of territoriality, allowing U.S. companies to avoid international double taxation without trapping earnings overseas. It lowered the top tax rate on small and family owned businesses from nearly 40 percent to less than 30 percent.
It cut taxes for middle class families by doubling the standard deduction, doubling the child tax credit, and lowering rates. It simplified the tax code for millions of families by making the standard deduction more attractive than the hodgepodge of itemized deductions they were formerly forced to add up.
As a result, the Congressional Budget Office just this week projected that America will enjoy the fastest economic growth since before the Great Recession, passing the 3 percent real GDP growth barrier in 2018. Job creation has been strong, as unemployment is projected to dip under 4 percent. Last year’s tax cut-driven run up in stocks padded the nest eggs of every family with a 401(k), IRA, or 529 education savings plan.
This tax relief record alone would be enough for most. But Ryan has an equally impressive resume on the spending side.
Working with Speaker John Boehner, Ryan, as chairman of the House Budget Committee, helped craft and then enact the Budget Control Act of 2011. Over the objections of Senate Majority Leader Harry Reid and President Obama, this law resulted in the largest discretionary spending reduction since the end of World War II. Discretionary spending — what Congress spends money on every year, separate and apart from entitlements and interest on the national debt — declined from 9.1 percent of GDP in 2010, the last pre-Boehner/Ryan year, to 6.4 percent of GDP in 2018, Speaker Ryan’s last year in office. That’s the equivalent of more than $500 billion per year in spending (in today’s dollars) that was wrung out of the federal leviathan. The bipartisan budget deal from this past spring locked in these gains, despite all the hair pulling at the time from the conservative commentariat.
The third and final major fiscal legacy of Speaker Ryan has to do with bringing federal entitlement policy from the 19th century to the 21st century. Unfortunately, this is one area where Ryan’s legacy points toward victory rather than reflects upon it. For years, Budget Committee Chairman Ryan wrote and Congress passed budgets which would have authorized major entitlement reforms and budget balance. In Medicare, they called for premium support as the missing piece of Medicare Advantage. In Medicaid, they called for states to take a greater role with limited federal support. In Obamacare, they called for repeal and replace. And in Social Security, they called for greater personal control and a transition to a system that looks more like your IRA than your grandfather’s industrial pension. Had any of these reforms become law — and the House passed both Obamacare and Medicaid reform last year, only to see it scuttled by a few myopic Republican senators — this, too, would be a major enacted policy accomplishment of the Ryan era.
But as the CBO points out in their long-term budget report, the entitlement crisis is not going away. The major entitlement programs — Social Security, Medicare, Medicaid, and Obamacare — took up only 7 percent of GDP in 2000. Today, that number is nearly 11 percentage points. By 2047, it will be nearly 16 percentage points. We’ve already lost so much time. The longer we wait, the more painful it will be to get these entitlement programs under control. The longer we wait, the more current seniors will have to face some of the cuts. Ryan understood this, which explains why this was such an urgent priority of his public career.
Going forward, Ryan leaves his country a more prosperity-friendly federal government than the one he inherited. We have a tax code that tells the world that America is in business again and that middle class families won’t be the Beltway’s piggybank. He helped reverse the tide of the “war and stimulus” fiscal policies of the late Bush and Obama eras. And he very nearly enacted full-scale entitlement reform — and whoever does that will have Ryan to thank.
[Opinion: The Paul Ryan I know]
Ryan Ellis (@RyanLEllis) is senior tax advisor for the Family Business Coalition.
