We last week passed the $15 trillion national debt mark.  It continues hurtling upward, almost completely unabated.

We the People did our job and then some in the historic 2010 election, delivering more than 70 new Republicans to the Congress – on their promises to rein in out-of-control Washington spending.

We sent these folks to D.C. in large part to prohibit President Barack Obama and his Democrats from continuing to explode the budget – and the deficits and debt along with it – the way they had when exclusively in the Majority in 2009 and 2010.

So when President Obama campaigns asking for reelection and more D.C. Democrats – to undo this “do nothing” Congress – remember that stopping Obama and his Party colleagues was what We the People elected these “do-nothings” to do.

Serving as an impediment (modest though it may be) to the Democrat fiscal train wreck is, in fact, doing something.

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Here’s some friendly fiscal advice: Any time some Washington big shot like Ben Bernanke or Tim Geithner claims that immediate spending cuts in the debt deal will harm the economy—ignore them. Completely. You know why? Because in this great country of ours, spending never goes down. Never.

Take a look at the following chart:

The blue line you see is President Obama’s budget. The green line is Congressman Paul Ryan’s budget.

Now, Paul Ryan’s is of course a couple of trillion dollars lower than Obama’s over the next ten years. But what do they both have in common? They both go up. As in spending more, not less. As in, roughly $40-45 trillion dollars more. That’s a whole lot of taxpayer money, folks.

Now why is this? It’s because of something called the “current services baseline” which includes population and inflation increases built into the budget. Entitlements have their own formulas.

So when you hear a politician tell you they’re cutting spending, they’re actually referring only to reducing the growth of spending. Rarely, if ever, do they actually reduce the level of spending.

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Are we headed for more political business as usual, where Republicans give up too much and get too little back in the debt-ceiling fight? Friday’s papers are loaded with stories on the GOP giving up Paul Ryan’s Medicare-reform package. It’s being called “political reality.”

But let me ask this: Will they also give up any attempt to slow Medicare spending in the next couple of years, at least a down-payment on the budget deficit?

And I don’t see much talk anymore about tax reform as part of the new package. But the economy still needs an incentive jolt, which could be supplied at least by dropping the business tax rate.

Conservative Canadian Prime Minister Stephen Harper is moving to a 15 percent corporate tax rate. We’re still at 35 percent. Canada’s open for business. Are we?

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As I have explained elsewhere, tax increases are a bad idea – unless you favor bigger government.

And I’ve already added my two cents to the tax debate between Senator Coburn and Grover Norquist regarding the desirability of higher taxes.

So it won’t surprise anyone to know that I fully agree with this new video from the Center for Freedom and Prosperity, which offers seven reasons why higher taxes are a bad idea.

The video is narrated by Piyali Bhattacharya of Young Americans for Liberty, and here are her seven reasons.

1. Tax increases are not needed
2. Tax increases encourage more spending
3. Tax increases harm economic performance
4. Tax increases foment social discord
5. Tax increases almost never raise as much revenue as projected
6. Tax increases encourage more loopholes
7. Tax increases undermine competitiveness

I think reasons #1, #2, #3, and #5 are the most powerful.

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P.J. O’Rourke in The Weekly Standard:

President Obama has contempt for real money. And why not, since his government has the power to print all the fiat money he wants? Power is the politician’s paycheck. Power gets politicians all the good things money can buy and plenty of other things as well. Businessmen work for money because money gives them mastery over their own lives. Politicians work for power because power gives them mastery over the lives of others.

Obama, in pursuit of power, has been as greedy and irresponsible as any Wall Street tycoon in pursuit of money. After short-selling Hillary Clinton, he used the insufficient capital of one term in the U.S. Senate to engineer a highly leveraged buyout of the Democratic presidential nomination followed by a hostile takeover of the Oval Office. His political thinking is full of shady derivatives. His economic policy is a risky collateralized debt obligation. His campaign promises are junk bonds.

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I recently had the opportunity to ask Michigan’s 1st District Freshman Rep. Dan Benishek a few questions about the state of affairs in Congress in the wake of the battle between Speaker Boehner, Senate Majority Leader Reid, and President Obama over what to do with the budget for the remainder of the fiscal year. What follows are his responses, and a brief wrap at the close.

[Lead in to Rep. Benishek]
The debate over the budget for the remainder of this year was very contentious. There’s been a tremendous amount of pressure; from the media, to the President and the Democrats (including a great deal of rancor within the Republican caucus itself), the Continuing Resolution (H.R. 1473) to fund the Government through September 30 had the attention of the entire country.

Many people have been very critical of Speaker Boehner and the process that got this deal done as well as what it actually contains. A great deal of attention has been paid to this fight by Tea Party folks and many others. A lot of Americans, both left AND right, believe they were “played” by Leadership on both sides of the aisle – sold a bill of goods filled with what we once called “fuzzy math” – and they are not happy. But the vote is done now, the bill has passed, and we’re moving ahead.

Q: In 2010 Americans sent a lot of new faces to Washington to change the direction of the country. Right now, people are feeling they’ve been sold out. Were they?

Congressman Benishek: People should not feel sold out. They can be frustrated. I am frustrated that the cuts were not bigger, but we have to remember Democrats still control the Senate and White House. I believe the Speaker did the best he could with the resources he had. I was not directly involved in negotiating with President Obama and Senator Reid, but I can tell you that as long as I am given the opportunity to vote for significant reductions in spending, I will be a “Yea” vote every time.

Q: What happened, how are you going to handle negotiations differently going forward, and what do we all need to be paying closer attention to?

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As we have opined in the recent past, we believe the Ryan budget plan is still a work in progress and not a panacea for the nation’s budget, deficit and debt woes.  It is, however, the first serious congressional attempt to identify most (not quite all) of the structural issues that play havoc with the integrity of our national fisc, and advance serious steps to reform these fiscal time bombs that are ticking loudly and rapidly. We believe almost everyone now hears the ticking, except those who live and work in the isolation of 1600 Pennsylvania Avenue.

President Obama seems to have his eyes focused like a laser on the rapidly advancing 2012 election season, and has responded to the Ryan budget proposal with campaign-crafted rhetoric that unblushingly stakes out political battle lines rather than serious alternatives.  His twofold objective is to try to cut Ryan off at the knees before too many people rally behind the Wisconsin congressman’s approach to budget reform, while simultaneously staking out for himself a strong populist position for the upcoming election.  Keep in mind that Ryan proposed a detailed framework for the 2012 budget.  Obama not only did not make a Presidential proposal, he made a campaign stump speech.

Sadly, this is no time to be playing politics with the budget.  Last week, April 18^th, Standard & Poors put the U.S. Government on notice that it risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt.

“If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns,” New York-based S&P said in a report that maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time.

The Treasury Department scoffed at the S&P outlook complaining that the rating agency “underestimates” U.S. leadership. Obama’s chief economic adviser, Austan Goolsbee also rejected the S&P’s negative outlook, calling it a “political judgment” that he said doesn’t deserve “too much weight.”  Well, given that Standard and Poors has determined that the U.S. fiscal profile is meaningfully weaker (emphasis added) than that of peer AAA sovereigns, we wouldn’t be quite as dismissive as the Administration’s folks at Treasury and the Council of Economic Advisors.  The S&P forecast is based on an experienced and independent view of today’s sovereign bond markets and can’t be brushed away with the back of the hand.

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America is in fiscal peril in the short run because of a 10-year spending binge by Bush and Obama and in the long run because of a toxic combination of entitlement programs and demographics.

Congressman Paul Ryan has introduced a budget plan to address America’s fiscal crisis, but Senator Reid and President Obama have summarily rejected his proposal, so it appears the United States will continue to drift in the wrong direction.

Something is needed to compel action. One might think that such an impetus would have been provided by the recent decision by Standard & Poor to downgrade the fiscal outlook for the United States. But this development hasn’t affected the spending culture in Washington.

But there is hope. Senator Corker has legislation that would force Congress to act – and automatically impose fiscal discipline if they don’t. His bill caps – and then slowly reduces – government spending as a share of national economic output (gross domestic product).

I’ve already written about the merits of this proposal, including an explanation of the all-important enforcement mechanism of sequestration (automatic spending cuts). Here’s Senator Corker’s description of his plan, as delivered at a Cato Institute conference on the Economic Impact of Government Spending.

To build on the Senator’s comments, there are two things that deserve special emphasis.

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President Obama didn’t offer a budget plan yesterday. The White House hasn’t released anything beyond a set of talking points.

But that’s not terribly surprising since his speech was really the opening salvo of his 2012 reelection fight. And it’s clear that a central theme of his campaign will be class warfare.

But if we translate his campaign-style demagoguery into the overall budget framework, we get something like this fiscal continuum. Obama, for all intents and purposes, has taken the moderately left-wing proposal crafted by his Fiscal Commission and moved it significantly in the wrong direction by adding class-warfare tax policy. As such, he is close to the left end of the line, which represents “Statism.”

The Ryan plan, by contrast, is the moderately right-wing mirror image of the Fiscal Commission. But rather than cementing in place bigger government, as proposed by Simpson and Bowles,  Ryan’s budget slowly shrinks the fiscal burden of government. As such, it is on the “Liberty” side of the continuum.

America’s Founding Fathers had the right idea, of course, They envisioned a very limited central government, and for much of our nation’s history, the federal budget consumed about 3 percent of GDP. Unfortunately, the Hoover-Roosevelt policies began the process of moving America in the wrong direction, and federal spending now consumes nearly one-fourth of America’s economic output.

But enough history.

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Responding to widespread criticism of his AWOL status on the budget fight, President Obama today unveiled a fiscal plan. It already is being criticized for its class warfare approach to tax policy, but the most disturbing feature may be a provision that punishes the American people with higher taxes if politicians overspend.

Called a “debt failsafe trigger,” Obama’s scheme would automatically raise taxes if politicians spend too much. According to the talking points distributed by the White House, the automatic tax increase would take effect “if, by 2014, the projected ratio of debt-to-GDP is not stabilized and declining toward the end of the decade.”

Let’s ponder what this means.

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There were reports about 10 days ago that the crowd in Washington reached a budget deal, for the remainder of the 2011 fiscal year, with $33 billion of cuts. That number was disappointingly low. I wrote at the time that if this was a kiss-your-sister deal, we didn’t have any siblings that looked like Claudia Schiffer.

knew it was unrealistic to expect the full $61 billion, but I explained that $45 billion was a realistic target.

We now have a new agreement, which supposedly is final, and the amount of budget cuts has climbed to $38 billion. So our sister is getting prettier, but she still isn’t close to being a supermodel. Here are the highlights (or lowlights) from the New York Times story.

Congressional leaders and President Obama headed off a shutdown of the government with less than two hours to spare Friday night under a tentative budget deal that would cut $38 billion from federal spending this year. …the budget measure would not include provisions sought by Republicans to limit environmental regulations and to restrict financing for Planned Parenthood and other groups that provide abortions.

As with all deals (such as last December’s agreement extending the 2001 and 2003 tax cuts), there are good and bad provisions. The good news is:

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From Associated Press:

Perilously close to a government shutdown, congressional leaders reached agreement with the White House late Friday night on a deal to cut tens of billions of dollars in federal spending and avert the closure.

House Speaker John Boehner informed the GOP rank and file of the accord, reached in grueling negotiations over several weeks, an official said.

“We have an agreement,” concurred a spokesman for Senate Majority Leader Harry Reid, Jon Summers.

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Just days after the introduction of a very good plan by the Chairman of the House Budget Committee, leaders from the Republican Study Committee in the House of Representatives have introduced an even better plan.

In a previous post, I compared spending levels from the Obama budget and the Ryan budget and showed that the burden of federal spending would rise much faster if the White House plan was adopted.

If the goal is to restrain government, the RSC blueprint is the best of all worlds. As the chart illustrates, government only grows by an average of 1.7 percent annually with that plan, compared to an average of 2.8 percent growth under Ryan’s good budget and 4.7 percent average growth with Obama’s head-in-the-sand proposal.

According to the numbers released by the Republican Study Committee, the burden of federal spending would fall to about 18 percent of GDP after 10 years if the RSC plan is implemented.

While that’s a great improvement compared to today, the federal government would still consume as much of the economy as it did when Bill Clinton left office.

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Washington is filled with groups that piously express their devotion to balanced budgets and fiscal responsibility, so it is rather revealing that some of these groups have less-than-friendly responses to Congressman Ryan’s budget plan.

The Committee for a Responsible Federal Budget, for instance, portrays itself as a bunch of deficit hawks. So you would think they would be doing cartwheels to celebrate a lawmaker who makes a real proposal that would control red ink. Yet Maya MacGuineas, president of the CRFB, basically rejects Ryan’s plan because it fails to increase the tax burden.

…while the proposal deserves praise for being bold, the national discussion has moved beyond just finding a plan with sufficient savings to finding one that can generate enough support to move forward. All parts of the budget, including defense and revenues, will have to be part of a budget deal… Now that both the White House and House Republicans have made their opening bids, this continues to reinforce our belief that a comprehensive plan to fix the budget like the one the Fiscal Commission recommended has the best hope of moving forward.

I’m mystified by Maya’s reference to an “opening bid” by the White House. What on earth is she talking about? Obama punted in his budget and didn’t even endorse the findings of his own Fiscal Commission. But I digress.

Another example of a group called Third Way, which purports to favor “moderate policy and political ideas” and “private-sector economic growth.” Sounds like they should be cheerleaders for Congressman Ryan’s plan, but they are even more overtly hostile to his proposal to reduce the burden of government.

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Forget all this talk about giant “spending cuts” of $6.2 trillion in Congressman Ryan’s budget plan. That’s music to my ears, but it’s also based on Washington’s bizarre budget math – i.e., the screwy system where politicians can increase spending but say they’re cutting spending because the budget could have grown even faster.

What really matters is how much money government is spending this year compared to how much money will be spent in subsequent years. Using this common-sense benchmark, let’s look at two competing proposals.

According to the new numbers released today, Congressman Ryan’s budget plan will result in government growing, on average, by almost 2.8 percent annually over the next 10 years.

President Obama’s budget plan, by contrast, would increase the burden of government spending by an average of nearly 4.7 percent each year.

This chart compares the two budget plans. Because Chairman Ryan does not let spending grow as rapidly, cumulative spending over that period will be $6.2 billion less than it would be based on the President’s plan. That’s an impressive amount of money that taxpayers will save if Ryan is successful, but it’s not a spending cut.

Not surprisingly, the big spenders in Washington are claiming that the “spending cuts” in Representative Ryan’s budget are “harsh” and “extreme.” But Ryan’s proposal would allow the budget to grow faster than inflation, which is projected to average less than 2.1 percent annually over the 10-year period.

Good fiscal policy is very simple. Restrain the size and scope of government so that outlays grow slower than the private sector. If that happens, the burden of federal spending will shrink as a share of economic output.

That’s exactly what happens with Ryan’s plan.

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From The Wall Street Journal:

Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.

A study just released by the Heritage Center for Data Analysis projects that The Path to Prosperity will help create nearly one million new private-sector jobs next year, bring the unemployment rate down to 4% by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade. It spurs economic growth, with $1.5 trillion in additional real GDP over the decade. According to Heritage’s analysis, it would result in $1.1 trillion in higher wages and an average of $1,000 in additional family income each year.

Here are its major components:

• Reducing spending: This budget proposes to bring spending on domestic government agencies to below 2008 levels, and it freezes this category of spending for five years. The savings proposals are numerous, and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates’s plan to target inefficiencies at the Pentagon.

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This Thursday, April 7, Senator Corker of Tennessee will be the opening speaker at the Cato Institute’s conference on “The Economic Impact of Government Spending” (an event that is free and open to the public, so register here if you want to attend).

The Senator will be discussing his proposal to cap and then gradually reduce the burden of government spending, measured as a share of gross domestic product. With federal outlays currently consuming about 25 percent of economic output, excessive federal spending is America’s main fiscal problem.

Corker’s proposal would put federal spending on a 10-year glide path so that it eventually shrinks to 20.6 percent of GDP. This chart, from the Senator’s upcoming presentation, shows that government will grow at a much slower pace as a result of this restraint. Indeed, total savings over the 10-year period, measured against a baseline that assumes the federal government is left on auto-pilot, would exceed $5 trillion.

There are two things to admire about Senator Corker’s CAP plan.

First, he correctly understands that the problem is the size of government. As explained in this video, spending is the problem and deficits are a symptom of that problem.

Unfortunately, many policy makers focus on the budget deficit, which often makes them susceptible to misguided policies such as higher taxes. At best, such an approach merely substitutes one bad way of financing federal spending with another bad way of financing federal spending. And it’s much more likely that higher taxes will simply lead to more spending, thus exacerbating the real problem.

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The Chairman of the House Budget Committee, Congressman Paul Ryan of Wisconsin, will be unveiling his FY2012 budget tomorrow. Not all the details are public information, but what we do know is very encouraging.

Ryan’s plan is a broad reform package, including limits on so-called discretionary spending, limits on excessive pay for federal bureaucrats, and steep reductions in corporate welfare.

But the two most exciting parts are entitlement reform and tax reform. Ryan’s proposals would simultaneously address the long-run threat of bloated government and put in place tax policies that will boost growth and improve competitiveness.

1. The long-run fiscal threat to America is entitlement spending. Ryan’s plan will address this crisis by block-granting Medicaid to the states (repeating the success of the welfare reform legislation of the 1990s) and transforming Medicare for future retirees into a “premium-support” plan (similar to what was proposed as part of the bipartisan Domenici-Rivlin Debt Reduction Task Force).

2. America’s tax system is a complicated disgrace that manages to both undermine growth and promote corruption. The answer is a simple and fair flat tax, and Ryan’s plan will take an important step in that direction with lower tax rates, less double taxation of saving and investment, and fewer distorting loopholes.

One potential criticism is that the plan reportedly will not balance the budget within 10 years, at least based on the antiquated and inaccurate scoring systems used by the Congressional Budget Office and Joint Committee on Taxation. While I would prefer more spending reductions, I’m not overly fixated on getting to balance with 10 years.

What matters most is “bending the cost curve” of government.

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A new study from the Adam Smith Institute in the United Kingdom provides overwhelming evidence that class-warfare tax policy is grossly misguided and self-destructive. The authors examine the likely impact of the 10-percentage point increase in the top income tax rate, which was imposed as an election-year stunt by former  Gordon Brown and then kept in place by his feckless successor, David Cameron.

They find that boosting the top tax rate to 50 percent will slow economic performance. And because of both macroeconomic and microeconomic responses, tax revenues over the next 10 years are likely to drop by the equivalent of more than $550 billion. Here’s a key paragraph from the executive summary of the new study.

The country is suffering from a 50%-­plus marginal tax rate which even its architect admits was imposed without economic purpose. Now our analysis shows that the policy is set for failure: at best leading to flat growth for a decade and £350bn of lost revenue. The Chancellor should seize the occasion of the 2011 budget to reverse this disaster promptly, for the benefit of public revenues, economic growth, the government’s standing with domestic wealth-creators, and the UK’s reputation with world business.

The authors urge Prime Minister Cameron to reverse this disastrous policy, but the odds of that happening are very slight. I hope I’m wrong, but I have repeatedly noted that Cameron almost always makes the wrong choice when deciding between liberty and statism.

President Obama wants to impose similar policies in the United States and there is every reason to expect similarly poor results. I’ve already posted evidence from IRS data showing that the rich paid much more tax following the Reagan tax cuts, so it shouldn’t shock anybody when the reverse happens if Obama is successful in moving America back toward a 1970s-style tax system.

To emphasize these critical points, let’s close with two videos. This first video explains the Laffer Curve and why politicians are foolish if they assume that there is a fixed linear relationship between tax rates and tax revenue.

This second video debunks the notion of class-warfare tax policy.

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The Kabuki theater that is the debate over the federal budget took a weird turn this afternoon. The GOP-led House of Representatives passed HR 1255, the “Government Shutdown Prevention Act.” The measure is largely symbolic…it states that if the Democrat-led Senate and President Obama don’t act on $61 billion in cuts passed earlier this year by the House, those cuts would be ‘law of the land.’ Which, obviously, doesn’t hold any water. This isn’t too far away from when Democrats proposed “deeming” ObamaCare passed.

The House GOP Leadership, however, did add something to their legislation that should give pause to all conservatives. They grafted onto their bill a Democrat proposal to suspend pay for members of Congress if there is a government shutdown. So, if members believe that the budget cuts “negotiated” by GOP Leadership are too small or think we should finally face up to the inevitable tough choices, they potentially could lose their pay.

I think Rep. McCotter summed it up best:

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