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The House Republican Plan
Where We Go From Here:
A Leadership Budget Briefing on
The House Republican Plans
for a
Better American Future
April/May 1995
I
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The American Opportunity:
Creating a Safe and Prosperous Future
for
Our Generation and Our Children
We are proposing the most significant change in American
Government since 1933.
This change involves $11.7 Trillion in Federal Spending, the
fundamental direction of American Society, and the lives of
260 million Americans.
The significance of this opportunity requires an investment of
time in order to understand what we're trying to do.
2
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Coming Debate:
Is not about just the Budget
It is about America's Future
It is about the Doing the Right Thing
It is about an opportunity to create the potential for
prosperity, safety and a better life for virtually every
American
t will take hard systematic work and real change, but
it can be done and it will improve our lives and our
childrens' lives
3
The Republican Plan for a Better American Future - Draft 3/30/95
12:49
PM
Doing the Right Thing Means:
Being Truly Compassionate by replacing the Welfare State
with an Opportunity Society
Restoring Freedom by ending Centralized Bureacratic
Micromanagement
Promoting Prosperity, Economic Growth, and Take Home
Pay by Reducing Taxes, Litigation and Regulation
Creating Opportunity for every American by Leading the
Transformation to a Third Wave, Information Age Society
Creating a Safe Financial Future for Our Children and Our
Retirement Years by Balancing the Budget and Solving the
Crises in funding Medicare and Social Security
4
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
The Majority Party in American
Politics Is Responsible for
Leading the Civic Discussion
About the American Idea
It is our Moral Responsiblity
5
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
As the Majority Party, we must lead
a New Dialogue
to achieve the needed changes
That New Dialogue must lead
to a New Partnership with the
American People
6
The Republican Plan for a Better American Future - Draft 3/30/95 12: PM
Through our New Dialogue we can:
Change Today's Public Opinion into
Tomorrow's Public Judgment
Given enough facts people will decide we must
create new opportunities by reshaping American
Government and balancing the budget. The
American people will join a partnership to create a
safe retirement for the Babyboomers and a safe
future for their children.
7
The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
In 1995 we are at a crossroads: America has been in
similar situations and always risen to the challenge.
"We have nothing to fear but fear itself"
Franklin Delano Roosevelt, 1933
Facing 25% unemployment in the Great Depression
"Our Generation has a Rendezvous with Destiny"
Franklin Delano Roosevelt, 1936
Facing Nazi Germany, Facist Italy and Imperial Japan
8
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
"We have every right to dream heroic dreams
the
crisis we are facing today requires our best effort
and our willingness to believe in ourselves and to
believe in our capacity to perform great deeds, to
believe that together with God's help we can and
will resolve the problems which now confront us.
After all, why shouldn't we believe that? We are
Americans."
Ronald Reagan, 1/81
Facing 13% inflation, 22% interest rates, the Iranian hostage crisis and the Soviet
Empire's invasion of Afghanistan
9
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Our Opportunity:
We have the potential to improve every
American's life through 5 strategic
improvements:
1. Creating an Opportunity Society out of the Welfare State
2. Decentralizing and Privatizing American Government
3. Creating Economic Growth and Re-establishing
America's Competitiveness in the World Market by
Reducing Taxes, Litigation and Regulation
4. Leading the Transformation to a Third Wave, Information
Age Society
5. Balancing the Budget and Solving the Financial Crises in
Medicare and Social Security
10
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
To embrace change
on this Historic Scale
we must use an appropriate
Planning Model:
Vision
Strategies
Projects (definable, delegatable achievements)
Tactics
11
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
We must ask ourselves:
What is our vision of America's Future?
What are our Strategies to achieve that Vision?
What Projects are the building blocks to implement
our Strategies?
What Tactically do we need to do today to Model and
Fulfill our Vision?
12
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
f we fulf 1 our dest'ny, we' achieve: Burden To Be in May
Our Vision of a Successful 21st Century America - 1
Every American Safe from Violence and Drugs
Every willing person will be integrated into the world of Work,
Property, and Achievement
A Healthy Environment will be managed through sound science and a
-common sense, effective and economical approach
New technologies and new approaches will extend
Opportunities in Learning, Health and Jobs to the Poorest Rural and
Inner-City neighborhoods
Government will be Lean, Customer Responsive and Effective
13
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
Our Vision of a Successful 21st Century America -2
A Renewed American Civilization with a renewed understanding of
"Our Creator", our traditions and our institutions will have created a
renaissance in civic responsibility and in voluntary and non-profit
charities and activities
The best system of health in the world
Effective lifetime learning
New technologies and approaches to create the fullest possible
participation of every American with disabilities
14
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Our Vision of a Successful 21st Century America - 3
A Pro-entrepreneur, Pro-science, and Technology, Pro-savings and
investment America that is inventing the best products with the highest
values in the world
Job Opportunities for Every American with the greatest value-added,
highest productivity, largest incomes and best job security in the
world as the best exporting country that creates American jobs
through world sales
Low Taxes so incomes translate into take home pay and the family
budget has precedence over the government budget
A Regularly Balanced Budget with declining national debt so money
will maintain honest value without inflation, taxes to pay interest will
be declining and interest rates will be low
15
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
We have living proof Amer ca ca 1 succeed
in the 21st Century.
All around us scientists and entrepreneurs are inventing a
better future
All around us corporations are re-thinking and re-engineering
to produce more, better and faster,
with fewer resources
All around us the private sector and private citizens are
changing, adapting and improving
The Federal government is the least changed major
institution in America.
We know we can have a leaner, better, more effective
government that does more and serves people better with
fewer resources
16
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
When we have our plan thought out, we must lead
by listening to others about their plans, their hopes
and their fears.
Listen, Learn, Help, Lead:
These are the 4 key steps to getting people to
implement large scale change
17
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
Five Strategic Improvements will help
us create a better government and a
better America:
-Be
Becompasionate
1. Creating an Opportunity Society out of the Welfare State
2. Decentralizing and Privatizing American Government
3. Creating Economic Growth and Re-establishing
America's Competitiveness in the World Market by
Reducing Taxes, Litigation and Regulation
4. Leading the Transformation to a Third Wave, Information
Age Society
5. Balancing the Budget and Solving the Financial Crises in
Medicare and Social Security
18
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The First Strategic Improvement
Being Truly Compassionate requires:
Replacing the Welfare State with an
Opportunity Society
19
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Welfare State has Failed
It is a failed model of delivering goods and
services to help people. It actually hurts the poor.
Its failure is reflected by the violence, brutality,
child abuse and drug addiction in every local TV
news broadcast.
The culture of violence increasingly permeates our
entertainment and denigrates our civilization.
The non-working, non-productive part of our
society is a factor in the deficit and declining
American competitiveness in the world market
20
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Human Cost of the Welfare State
It is the human cost to the poor, not just the financial burden on
taxpayers or an exploding deficit that is the true tragedy
of the Welfare State
Poor Americans are:
Trapped in Unsafe Housing
Maintained in Unsafe Neighborhoods
Saddled with rules that are anti-work, anti-family, and anti-
property
Forced to have their children attend public monopolies that
cost a lot but accomplish little
21
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
In the name of "compassion"
we have funded a system that
is cruel and
destroys families
22
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
A Failed Welfare State
Welfare spending now exceeds $ 305 billion per year, for a
total of $5 trillion since 1965 - more than the cost of
winning WWII.
This $ 305 billion is roughly 3 times the amount needed to
raise all poor Americans above the poverty line.
Since 1970, the number of children in poverty has
increased 40%
Since 1965, the juvenile arrest rate for violent crimes has
tripled.
Since 1960, the number of unmarried pregnant teens has
nearly doubled and teen suicide has more than tripled.
23
The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
As Welfare Spending has Grown, So
has illegitimacy:
$350
30%
$300
25%
$250
20%
$200
15%
Welfare Spending
$150
Illegitimate Births
10%
$100
$50
5%
$0
0%
1960 1965 1970 1975 1980 1985 1990 1992
Welfare Spending in $ billions vs. % illegitimate births
of all births
24
The Republican Plan for a Better American Future - Draft
3/30/95
12:49
PM
Source: Heritage Foundation, National Center for Health Statistics
As Education Spending has
Risen, SAT scores have fallen
$250
950
I-+
940
$200
930
920
$150
910
Education Spending
900
$100
SAT Scores
890
$50
880
870
$0
860
1960
1970
1980
1990
Education Spending in $ billion
vs. Average SAT scores
25
The Republican Plan for a Better American Future - Draft
3/30/95
12:49
PM
Source: National Center for Education Statistics, The College Board
The failure of the welfare state strikes at the
heart of the American Belief that every
citizen is endowed by our Creator with
certain unalienable rights among which are
life, liberty and the pursuit of happiness.
26
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
No Civilization can survive with:
12 Year olds having babies, 15 year olds killing each other,
17 year olds dying of AIDS, and 18 year olds receiving
diplomas they can't read
Furthermore, no civilization can survive with parents and
grandparents cheating their children by refusing to Balance
the Budget and live within their means
The Welfare State Cheats the Poor
The Unbalanced Budget Cheats every child
27
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The legacy we're leaving
to our children:
Moral and Fiscal Bankruptcy
28
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Our program for a better American
future begins with replacing the
Welfare State with an Opportunity
Society
A Cheaper Welfare State is
an inadequate response
29
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Transform ng the Welfare Sta e in o an Opportuni y
Society for the Poor requires:
Morris Sheekmen
Shift from caretaking to caring
Alcezkas-
Welfare Reform that emphasizes work, family and
opportunity
Volunteerism and Spiritual Renewal
Renewing the Basic Values of American Civilization
Tax Incentives for work, investment, and entrepreneurship
Re-establishing property ownership and full citizenship for
the poor
Polly Williams
Learning as the focus of Education
Government protection for the poor against violence and
drugs
30
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
The Second Strategic
Improvement
Restoring Freedom by
Ending Centralized Bureaucratic
Micromanagement by the
Government in Washington
31
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Centralized, Washington-
based system of bureaucratic
micro-management has failed
in a diverse, continent-wide
country
32
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Reforms should emphasize decentralization from
Washington and return authority to state and local
government
A General Rule for Decision Making:
For local problems, Local Government is
generally better than National Government and
the Private Sector is generally better than Local
Government
The Private Sector includes non-profits as well as
for-profit activities.
33
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Andi Gou d dobe: PTO Freedur
The Jeffersonian Model of Limited Government
for Small will
4 Zones of a Free Society:
1
Culture & Society setting the
3 Private Property
rules we live by
Free Markets
Entrepreneurship
Wealth Creation
2 Civic Responsibility
4 Limited Effective
Non-Profit
Government
Private Association
Tocqueville's Association
Any effort to increase government comes at the expense
of the other 3 elements of society
34
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Elected Leaders have Four Roles
in this New Opportunity Society:
Visionary Definer and Value Articulator
Symbol of Community Power and Standing
Recruiter of Talent and Energy for Private
Sector Solutions
Administrator and Manager of the
Government
35
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
When Re-thinking the Federal Government, we must ask:
1
Does the Community Leadership have an interest in making this happen even
Subcommity
without Federal intervention?
2
Is it something which is morally and spiritually more appropriate in a non-
profit, voluntary system?
3
Does the project symbolize and communicate the values we want the society
and culture to be reinforcing?
4 Can a private, for-profit business achieve the same goal as well or better than
the government?
5
Is there a Third Wave Information Age technology that improves service or
lowers cost or does both?
6 If government is the best place to do it, can it be done at the state or local
level?
7 If the Federal government is the best place to do it, where is it on the priority
list? Can we afford to do it?
8
Have we thought through the least expensive, most citizen oriented, most
entrepreneurial way to do it with maximum satisfaction and minimum
resources?
The Real issue is: What Works and What Doesn't?
36
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Third Strategic Improvement
Promoting Economic Growth, Jobs
and Prosperity by
Reducing Taxes, Litigation and
Regulation
37
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The American Economy needs to
grow within an increasingly
competitive world market
To provide more jobs and increased take home pay
To provide resources for charities, local and state governments
To increase revenues so the Federal Government Budget
can be balanced without raising taxes
To pay for Social Security and Medicare in the 21st Century
38
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
As Wash ngto: Crows, le
Economy Slows
40%
4%
35%
30%
3%
25%
20%
2%
Government
15%
Spending
GDP
10%
1%
5%
0%
0%
1889-1916
1919-1948
1948-1973
1973-1992
Spending as % of GDP vs. Annual Change in GDP
39
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: The US Budget, Historical Tables, and Stephen Moore
The Middle Class Squeeze:
Today most families are
working harder - they're just not
getting ahead
40
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
Real Total Government Taxes
Per Household, 1900 - 1994
$20,000
$15,000
$10,000
Taxes Per
Household
$5,000
$0
1900
1950
1994
$1,370
$6,970
$18,500
$ billions
constant 1990 $
41
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: Tax Foundation
Federal Taxes as a Share of
Median Household Income
1950
1970
1990
5%
16%
24%
If we were paying taxes today at the 1970 level of
government, the average family would have $ 4,000 more in
Take Home Pay every year.
42
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: Hertitage Foundation
Why Bush hosd
Middle Class Anxiety is Justified
40,000
39%
39,500
Taxes
I
38%
39,000
38%
38,500
38,000
37%
37,500
37%
37,000
36,500
Wages
36%
36,000
36%
35,500
35%
1988
1989
1990
1991
1992
Real Median Income vs. Taxes as a Share of National Income
43
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: Tax Foundation
Creating more effective government that
needs fewer resources will allow us to lower
taxes and increase take home pay for working
middle class families.
Re-engineering government to cut out waste,
lower costs, increase productivity and increase
quality will also allow us to lower taxes on
entreprenuers and inventors so we can create
more Economic Growth
44
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Economic Growth:
The consistently
underestimated contributor to
our economic well-being
45
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
At 1% LESS GROWTH than the current projection:
Social Security goes into deficit 13 years sooner (in 2016)
The Federal Deficit is $ 640 billion bigger over the next 7 years
Federal Tax Revenues are $ 716 billion smaller
Individuals will have $ 9,329 less personal income over 7 years
At 1% MORE GROWTH than the current projection:
Social Security maintains its surplus as far as our current model
looks into the future
The Federal Deficit shrinks by $ 640 billion over the next 7 years
Federal Tax Revenues are $ 716 billion greater
Individuals will have $ 9,678 more personal income over 7 years
The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
Source: Joint Economic Committee
46
In 7 Years, the difference between the high and low
Economic Growth projections means:
$ 1,280 billion swing in the size of the
Federal Budget Deficit
$ 1,432 billion swing in Federal Revenues
$ 19,007 swing in what individuals could make over
7 years
47
The Republican Plan for a Better American Future . Draft 3/30/95 12:49 PM
High Growth Rates can be achieved and sustained
and are a response to following the right policies -
just as good health comes from
good nutrition and exercise
Example:
Japan 1975 - 1993
18 Years without a Recession
4.2% Annual Growth Rate
3.6% Annual Personal Income Increase
48
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: GAO
Compared with America's performance
1975 - 1993:
Three Recessions during that period
2.6 % Annual Growth Rate
1 % Annual Personal Income Increase
49
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
Source: GAO
Imagine if America had matched
the Japanese in Economic
Growth over this period of time:
Real GDP would have been $ 1.8 trillion
greater
Per Capita Income would have been $ 8,955
greater
Federal Revenues would have been $ 393
billion greater
50
The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
Greater A I er can Co I pe i ve ess a id
Increased Economic Growth Requires:
A Tax Code that favors work, savings and investment
Less litigation
Less regulation and Red Tape
Lean and Effective Bureaucracies
Lifetime learning
Entrepreneurial culture
Sensible government investments in infrastructure
Government research and development leading to
corporate product development and marketing
More aggressive U.S. government support of exports and
more effective enforcement of trade agreements
51
The Republican Plan for a Better American Future - Draft
3/30/95
12:49
PM
The Fourth Strategic
Improvement
Creating Opportunity by
Leading the Transformation to a
Third Wave, Information Age
Society
52
The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
America needs to lead the world into
the emerging Third Wave Information
Revolution and its new technologies
53
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Information Revolution will lead to changes
on a historic scale:
The First Wave:
Hunting Gathering to Agriculture
The Second Wave:
Agriculture to Industry
The Third Wave:
Industry to Information
54
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
Source: Alvin and Heidi Toffler, The Third Wave
The Information Age will create
opportunities in a wide range of areas:
Computers
Worldwide Electronics
Molecular Medicine
Breakthroughs in Material Technology
Exploring and Manufacturing in Space
Microminiaturization
Virtual Reality
55
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
In the Third Wave Information Age,
We can do Far More for Far Less:
The advance from the vacuum tube to the transistor to the computer
chip has resulted in a one million fold improvement in productivity over
40 years
The power of computer chips will multiply one million fold over a ten
year period - as much as the entire increase in productivity over the last
40 years. This means a one trillion fold increase in productivity after
the year 2000.
f the federal government had undergone this rate of improvement,
today's federal government would be providing the same level of
service and programs with only four federal employees and at a total
budget of $100,000.
56
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: Bill Loughery, Scientific Atlanta
Over the last 15 years, the Ford Motor Company
has transformed itself through new technology
and a new culture of quality and productivity.
Today Ford Produces the same number of cars:
Two and 1/2 times the quality with,
1/2 the work force
Consider what a government that matched that
standard would look like.
Consider how much we could improve services,
reduce spending, reduce taxes and balance the
budget with this approach
57
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Cand remeed old government
*
New Breakthroughs do not fit into the
Traditional model of government
New Breakthroughs require Bold Rethinking
based on Peter Drucker, Edwards Deming,
and others.
We must apply these New Breakthroughs as
part of replacing the Welfare State with an
Opportunity Society
58
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
In a Success ful 2 S : Centu ry gover If e 1, we can
replace the wasteful bureacracies of today with
programs that serve citizens and save tax dollars.
Among the proposals some House Republicans have
already offered:
Merge the Departments of Education and Labor
Saving $ 4 billion every year
Eliminate HUD
Saving up to $ 15 billion over 5 years
Eliminate the Department of Energy
Saving up to $ 20 billion over 5 years
59
The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
The Fifth Strategic Improvement
Creating a Safe Future for Our Children and
Ourselves by
Balancing the Budget and Solving the Financial
Crises in Medicare and Social Security
60
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Budget Deficit combined with the
Baby Boomers' coming retirements will
cause a crisis of Historic Proportions
unless the problem is honestly faced and
managed well in advance.
If we face up to these challenges now, we can
establish the foundations of a safe financial
future for ourselves and our children.
a Better American Future - Draft 3/30/95 12:49 PM
The Debt Consumes America
62
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: OMB, CBO, Economic Report of the President - 1995, JEC
The Clinton Administration
knows a crisis is coming
"Social Security will face a cash deficit in 2013
the unified
deficit will increase unless taxes are raised or benefits reduced
and (it) could come even earlier (1999)
- Clinton OMB Director - Alice Rivlin, 10/94
but fails to provide a solution.
63
The Republican Plan for a Better American Future . Draft
3/30/95 12:49 PM
The Clinton debt numbers actually understate the
problem because they fail to account for 4
additional powerful factors:
1 The taxpayers' burden in paying interest on the debt
2 The cost of higher interest rates caused by federal
government's borrowing
3 The imminent financial crisis in Medicare
4 The soon to be retiring Baby Boomers and their effect on
the Social Security Trust Fund
64
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Fact: Every Citizen will have to
pay a lot in taxes for
interest on the debt
65
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
The Current Budget Deficit is Projected by
the Clinton Administration to continue
growing into the future without solution
Debt in 1995
$ 3,618,366,000,000
Interest for Debt
$ 235,000,000,000
in 1995
Debt in 2005
$ 6,968,931,000,000
Interest on Debt
$ 412,000,000,000
in 2005
Interest on Debt
$ 3,922,000,000,000
1995 - 2006
66 The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
Sources: CBO, GAO estimates
Over the next 11 years, we'll pay
as much in taxes just to pay
interest on the debt as today's
entire debt
Debt in 1995
- $ 3.6 trillion
Interest on the Debt - $ 3.9 trillion
1995 - 2006
67
The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
The following Americans will pay a lot just on interest on
the debt that builds up over their entire lives:
Year of Birth
Interest payments over
over a lifetime of 75 years
Robert
1959
$ 75,851
Mary
1974
$115,724
Sally
1995
$187,150
Our spending today saddles our children with debt
tomorrow.
Sally will have to pay $ 187,150 in taxes for interest on
the debt and more taxes to pay for her parents and
grandparents Medicare and Social Security before she
pays taxes for any government service herself.
68 The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
Source: Joint Economic Committee
According to Clinton Administration Budget Projections:
In 1997 we will pay more for
interest on the debt than we
will pay for National defense
National Defense in 1997: $257 billion
Interest on Debt in 1997: $270 billion
69
The Republican Plan for a Better American Future - Draft
3/30/95 12:49 PM
Source: President's FY96 Budget
In just 17 years, spending on entitlements and
interest on the debt will consume all tax
revenues
40%
35%
30%
Tax Revenues
25%
20%
15%
10%
Discretionary
5%
Spending
0%
Net Interest
1970 1980 1990 2000 2010 2020 2030
Entitlement Spending
Outlays as a % of GDP
The only item in the budget that we'll be able to afford is
interest on the debt and entitlements - discretionary
spending will be beyond our means.
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Source: Bipartisan Commission on Entitlement and Tax Reform
"A family should know it is over-
extended when its debts exceed 15%
of its take-home pay"
--- Leonard Sloan - New York Times
Personal Finance Handbook
Interest on the Federal debt alone
already exceeds 17% of Federal tax
revenues.
71
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Source: CBO
Fact: Budget deficits raise
interest rates and cost everyone
additional money
72
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What a Balanced Budget will
mean for most Americans:
"I think their real incomes and purchasing power
of their real incomes would significantly improve
they would look forward to their children
doing better than they."
- Fed Chairman Alan Greenspan
73
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One recent estimate is that a Balanced
Budget would produce a 2% lower
interest rate for everyone.
2% lower on your car
2% lower on your mortgage
2% lower on your credit card
2% lower on building a new factory
2% lower on keeping a family farm in
business
This is a Balanced Budget Dividend
74
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Source: Joint Economic Committee, CATO
While 2% may not
seem like much, it adds
up to a lot of money
over a lifetime
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What 2% Means for a
30 Year Mortgage:
For a $75,000 home at 8.75% Annual Interest Rate:
Annual Mortgage + Your National Deficit Tax = What you Pay
Payment
(2% added to interest rate)
every year
$5,832
$1,248
$7,080
Extra mortgage you pay over 30 years
due to the National Deficit:
$ 37,440
76
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Source: Joint Economic Committee
What 2% Means for
Your Car Payment:
For a $15,000 car at 9.75% Annual Interest Rate:
Annual Car + Your National Deficit Tax = What you pay
Payment
(2% added to the interest rate)
every year
$3,624
$180
$3,804
Extra interest you pay over 4 years on your auto loan
due to the National Deficit: $ 900
77
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Source: Joint Economic Committee
What 2% means for a Family
Farm:
For a 6 month, $350,000 Farm
Operating Loan at 10% Annual
interest rate:
6 month
+
Your National Deficit Tax = What a Family
Interest Payment
(2% added to the interest rate)
Farm pays
$13,936
$3,484
$17,420
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Source: Univ. of Georgia
2% lower interest rates will make America a much
more competitive economy in the world market.
With a Balanced Budget lowering interest rates (the
Balanced Budget Dividend), experts believe the
American economy will:
Create 6.1 million more jobs in 10 years
Increase per capita incomes 16.1%
Generate $235 billion more revenue for the Federal
Government without a tax increase
Generate $232 billion more revenue for State and Local
Governments without a tax increase
79
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Source: Joint Economic Committee
Fact: The imminent crisis in
Medicare funding is real and
unavoidable. It must be
corrected within the next
few years.
80
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Medicare Spending will soon
outrun Revenues, and its deficit
will climb:
80
60
40
20
o
1996
2002
2005
$2 billion
$39 billion
$71 billion
Medicare Deficit
81
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Source: CBO
Medicare goes bankrupt in 6 years
$2,000
$1,800
$1,600
$1,400
$1,200
Medicare Outlays
$1,000
Medicare Payroll &
$800
Medicare Trust Fund
Benefits Tax
$600
Exhausted
$400
$200
$0
1994
2001
2006
2014
2022
2030
$ Billions
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By 2002 the Medicare Trust Fund runs out of money
If we wait until then, everyone will pay for our failure to
solve the problem.
The Medicare portion of FICA taxes for everyone will have
to be raised 125% from their current level
and
Senior Citizens will have to pay 300% more in yearly
premiums
The cost of Medicare to everyone will go up again and
again until Medicare is transformed.
83
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Source: CATO Institute
Because a centralized government monopoly is
herently inefficient, wasteful and too slow to adapt
to new ideas and new solutions:
Brans
Medicare must be Transformed
into a system in which every senior citizen has more
choices in health care and more control over their
own lives
A Transformed Medicare system will provide better
health at lower cost with greater choice.
Failure to transform Medicare will lead to cuts in
services and financial crisis.
84
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The immediate Medicare challenge will ultimately be
dwarfed by an even bigger Social Security challenge.
Fact: When the Baby Boomers begin to retire,
they will put enormous pressure on the
Federal Budget
Baby Boomers begin to retire in 2008.
In 2013 Social Security spending will exceed the taxes
workers are paying into the system.
In 2030 the Social Security Trust Fund will be entirely
depleted.
85
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Source: Social Security Administration
The Baby Boomers' retirement threatens the
Social Security Trust Fund
1,000,000
500,000
Spending exceeds taxes
Spending
'Taxes
o
1995 1999 2004 2014 2019 2024 2029 2030
-500,000
$ Billions
The Republican Plan for a Better American Future - Draft
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Source: Senate Budget Committee
The Baby Boomers' retirement drains the
Social Security Trust Fund, and adds to the
already massive deficit
2000
1500
Social Security Trust
1000
Fund
Deficit Excluding
Social Security
500
Combined Deficit
0
2000 2005 2010 2015 2020 2025
-500
$ Billions
87
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Source: Social Security Administration
Faced with combined deficits on this gigantic scale,
the politicians of 2013 will only have four choices:
Ruthless Spending Cuts of Unprecedented Depth
or
Massive Tax Increases
or
Tremendous Cuts in Social Security benefits
or
Fiscal crisis leading to massive inflation
88
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For the politician who fails to provide leadership, it's
better to enjoy the present and postpone worries
about the future no matter what the ultimate cost.
If you plan to be alive in 2013, NOW is the time to
ensure that Baby Boomers will be able to retire
without:
Massive inflation
Massive tax increases
Massive cuts in Social Security
NOW is the time to prepare for a Safe and
Prosperous Future
89
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Recap: The Four Fiscal Facts that make change in
the Federal Government unavoidable are:
1. Rising cost to taxpayers of interest on the
debt
2. Cost to everyone of higher interest rates
caused by the deficit
3. Imminent crisis in Medicare funding
4. Shift in Social Security from surplus to
deficit as the Baby Boomers start retiring
90
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Five Strategic Improvements
define "Doing the Right Thing":
Replace the Welfare State with an Opportunity Society
End Centralized Bureacratic Micromanagement by the
Government in Washington
Reduce Taxes, Litigation and Regulation
Lead the Transformation to a Third Wave,
Information Age Society
Balance the Budget and Solve the Crises in Medicare
and Social Security
91
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What will our childrens' lives be like if the Leadership for a Safe
and Prosperous Future prevails?
What if the Status-Quo Leadership Prevails?
Take the story of 2 children
Danny and Theresa
Danny is a successful suburban child who's family is well-off and
who's future is bright
Theresa is a poor inner-city child who's life is bleak and future is
uncertain
92
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Danny
A successful suburban 18 year-old who's family is well-off
and his otherwise bright future is threatened and he
doesn't even know it
More children Danny's age believe that UFOs might exist than believe that Social Security will be there
for them when they retire.
Danny has already inherited a bill of $125,000 from the Federal government that he will have to pay over
his lifetime in interest on the Federal Debt.
Beeause the government has not balanced its budget, interest rates are 2% higher. For Danny, that means
a (40% tax on his lifetime earnings.
Our current policies offer Danny and his generation an ugly choice:
By the time he's 43, he could be paying 28% of his income just to fund Social Security and
Medicare. Or, he could wait until he's 53, do nothing, and be faced with a bankrupt Social
Security system
If Danny can't provide for his own future, how can he
provide for America's?
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The Republican Plan for a Better American Future . Draft
3/30/95 Source. Third Millenium Poll, JEC, National Taxpayers Union, Social Security Administration
Theresa
A poor inner-city 15 year-old who's life is
bleak and future uncertain
Theresa has been raised by her mother alone, as is the case of 1/3 of the children like her in America's
inner cities.
She was born when her mother was only a teenager herself.
Theresa's family is on welfare - which is not unusual. 77% of all unmarried teen mothers go on welfare
within 5 years of giving birth. More than 40% remain on welfare for more than 10 years.
Theresa's 10 year old brother is twice as likely as any of the types of boys his age to be the victim of a
serious crime, and nearly three times as likely to be murdered by the time he reaches 18 years old.
Theresa is at great risk of becoming pregnant, as children of teen mothers are 2 1/2 time more likely to
become mothers themselves. If she becomes a teen mother, she is 3 times as likely to remain in poverty.
If Theresa is unable to break the cycle of poverty, violence
and drug addiction to improve her future, how will she be
able to contribute to America's?
Sources: CRS, Heritage Foundation, Bureau of Justice Statistics, Journal of AMA,
94
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All of the world's children rely on
American leadership for a safe, free
and prosperous future.
There is no alternative Leader.
The alternative to a strong America is a
dark and bloody planet:
Bosnia, Somalia, Rwanda, Haiti,
Chechnya
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For our Children's sake, our Country's Sake
and the World's sake, we must wrest control
from those who refuse to take responsibility
and insist on a plan to create a Safe and
Prosperous Future for our Children and for
our own retirement years.
96
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Our Challenge is to have a Federal Government that
spends $ 11.7 Trillion over 7 years and does it well
enough to provide goods and services effectively.
If we implement the 5 Strategic Improvements, we
can actually have better government services with
less money and a lot less Washington bureaucracy
and Red tape
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The Steps to a Do-able, Practical,
Common Sense Balanced Budget Plan
98
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1995 Revenues - $1.419 Trillion
2002 Revenues - $1.788 Trillion
99
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Source: CBO
2002 Spending = 2002 Revenues
$1.788 trillion = $1.788 trillion
Budget Balanced
100
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Source: CBO
Total Spending for Last 7 Years
1989 - 1995
$ 9.5 Trillion
Total Spending for Next 7 Years
(Under a Balanced Budget)
1996 - 2002
$ 11.7 Trillion
Source: CBO
101 The Republican Plan for a Better American Future . Draft 3/30/95 12:49 PM
Social Security is off the table
No Social Security spending will be
cut to get to a Balanced Budget
Social Security Spending:
1989 - 1995 = $ 1.997 trillion
1996 - 2002 = $ 2.892 trillion
Source: CBO
102 The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
Non Social Security Spending
will still go up every year
Non Social Security Spending
1989 - 1995 = $ 7.5 trillion
1996 - 2002 = $ 8.8 trillion
1350
1300
Non Social
1250
Security
1200
Spending
1150
1996
1998
2000
2002
1203 1225 1242 1264 1284 1300 1307
$ billions
103 The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
Source: CBO
The Key to getting to a Balanced
Budget is to be sufficiently
Innovative, Creative and
Transformational to meet
America's Key needs while
spending $ 11.7 trillion over the
next 7 years
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Getting to a Balanced Budget
will save:
$ 125 billion through lower deficits
$ 298 billion through 1% lower interest rates
(the Balanced Budget Dividend)
Or, $ 423 billion savings on taxes just through interest
savings over 7 years
Source: CBO
105 The Republican Plan for a Better American Future - Draft 3/30/95 12:49 PM
If reformed Litigation, Taxation and
Regulation combine with Lower Deficits and
Lower Interest rates, the economy will grow
and Federal Revenue will be higher
1% higher growth increases Federal revenues
2000
1500
1000
Federal Revenue
500
o
1996
1998
2000
2002
1446 1494 1576 1659 1753 1858 1969
$ billions
and gets us to a balanced budget in 2000
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Source: CBO
If we fulfill our destiny, we'll achieve:
Our Vision of a Successful 21st Century America -1
Every American Safe from Violence and Drugs
Every willing person will be integrated into the world of Work,
Property, and Achievement
A Healthy Environment will be managed through sound science and a
common sense, effective and economical approach
New technologies and new approaches will extend
Opportunities in Learning, Health and Jobs to the Poorest Rural and
Inner-City neighborhoods
Government will be Lean, Customer Responsive and Effective
107
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Our Vision of a Successful 21st Century America -2
A Renewed American Civilization with a renewed understanding of
"Our Creator", our traditions and our institutions will have created a
renaissance in civic responsibility and in voluntary and non-profit
charities and activities
The best system of health in the world
Effective lifetime learning
New technologies and approaches to create the fullest possible
participation of every American with disabilities
A Pro-entrepreneur, Pro-science, and Technology, Pro-savings and
investment America that is inventing the best products with the highest
values in the world
108
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Our Vision of a Successful 21st Century America -3
Job Opportunities for Every American with the greatest value-added,
highest productivity, largest incomes and best job security in the
world as the best exporting country that creates American jobs
through world sales
Low Taxes so incomes translate into take home pay and the family
budget has precedence over the government budget
A Regularly Balanced Budget with declining national debt so money
will maintain honest value without inflation, taxes to pay interest will
be declining and interest rates will be low
109
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The Time for Cheating Our Children has Ended.
The Time to Balance the Budget has Arrived.
America's Future Requires a
New Dialogue and a New Partnership
with the American People
That is what the House Republicans are dedicated
to achieve in April and May of 1995
The Republican Plan for a Better American Future . Draft 3/30/95 12:49 PM
The Clinton debt numbers actually understate the
problem because they fail to account for 4
additional powerful factors:
1 The taxpayers' burden in paying interest on the debt
2 The cost of higher interest rates caused by federal
government's borrowing
3 The imminent financial crisis in Medicare
4 The soon to be retiring Baby Boomers and their effect on
the Social Security Trust Fund
64
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If we fulfill our destiny, we'll achieve:
Our Vision of a Successful 21st Century America -1
Every American Safe from Violence and Drugs
Every willing person will be integrated into the world of Work,
Property, and Achievement
A Healthy Environment will be managed through sound science and a
common sense, effective and economical approach
New technologies and new approaches will extend
Opportunities in Learning, Health and Jobs to the Poorest Rural and
Inner-City neighborhoods
Government will be Lean, Customer Responsive and Effective
107
The Republican Plan for a Better American Future - Draft
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Our Vision of a Successful 21st Century America -2
A Renewed American Civilization with a renewed understanding of
"Our Creator", our traditions and our institutions will have created a
renaissance in civic responsibility and in voluntary and non-profit
charities and activities
The best system of health in the world
Effective lifetime learning
New technologies and approaches to create the fullest possible
participation of every American with disabilities
A Pro-entrepreneur, Pro-science, and Technology, Pro-savings and
investment America that is inventing the best products with the highest
values in the world
108
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Our Vision of a Successful 21st Century America -3
Job Opportunities for Every American with the greatest value-added,
highest productivity, largest incomes and best job security in the
world as the best exporting country that creates American jobs
through world sales
Low Taxes so incomes translate into take home pay and the family
budget has precedence over the government budget
A Regularly Balanced Budget with declining national debt so money
will maintain honest value without inflation, taxes to pay interest will
be declining and interest rates will be low
n for a Better American Future - Draft
3/30/95 12:49 PM
The Time for Cheating Our Children has Ended.
The Time to Balance the Budget has Arrived.
America's Future Requires a
New Dialogue and a New Partnership
with the American People
That is what the House Republicans are dedicated
to achieve in April and May of 1995
110
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