“Our Churchillian Moment”

By Paul Ryan
The Claremont Institute
Claremont, CA
Remarks as Prepared for Delivery

I feel honored tonight for a special reason. Twenty-one years ago my mentor, the late Jack Kemp, was given the very first of these awards. And he loved receiving it. He loved to quote “Sir Winston,” along with his other political heroes, Abraham Lincoln and Thomas Jefferson.

He admired these men because of their dedication to the power of ideas – especially the idea that human freedom and equality of opportunity were the greatest forces for good the world has ever known. 

Twenty-one years ago – receiving this very honor – Jack spoke of Churchill’s attachment to the Declaration of Independence – especially its moral defense of the ideas he loved.

People jokingly called Jack a bleeding-heart conservative, but he was effective precisely because he insisted on making the moral, humanitarian case for the economics of freedom.

His dedication to these ideas has inspired me, and it has guided my work as a public servant. So I hope you won’t mind my dedicating tonight’s remarks in memory of the great Jack Kemp.

We come together tonight under very different circumstances from those in which Jack received his award.

In 1990, the Cold War was drawing to a close. A great threat to America was being neutralized, thanks in part to the economic revitalization led by Jack in Congress and President Reagan in the White House. Jack’s “supply side revolution” laid the economic foundations that were critical to bringing down the Soviet empire.

Today, we face a new threat – a gathering storm, whose primary manifestation is the shadow of our ever-growing national debt.

This shadow hangs over businesses and workers, who face a struggling economy and the rising probability of greater turmoil ahead given our dire fiscal situation.

This shadow hangs over seniors, who wonder whether Washington is making empty promises to them about their retirement security.

And it hangs over parents, who wonder if they will be the first generation in American history to leave their children with fewer opportunities and a less prosperous nation than the one they inherited.

We hear rumblings of this storm coming from Europe – we hear the chanting of angry protesters, the shattering of glass, and the shouts of lawmakers as fistfights break out in European parliaments.

And the rumblings are getting louder here every day, because instead of learning from Europe’s mistakes, we are repeating them.

Europe is learning the hard way what happens when you suddenly run out of road to kick the can down. And now its citizens are paying the consequences of decades of empty promises.

Churchill himself put it this way: “There are two ways in which a gigantic debt may be spread over new decades and future generations.”

The right way, he said, would be “to make the utmost provision for amortization which prudence allows.”

The wrong way, he said, would be “to aggravate the burden of debt by fresh borrowing, to live from hand to mouth and from year to year, and to exclaim with Louis the Fourteenth, ‘After me, the deluge.’”

I don’t need to tell you which path we’re on. It’s not too late to do this the right way – to get back on the right path. But there are two components to getting this right.

The first is to follow Churchill’s advice: Prudently restrain government spending, while avoiding the kind of tax hikes that would stifle economic growth.

The second is to follow Churchill’s actions: To lead by telling people the truth; to realize that we are not the first to face these kinds of challenges; and to meet our challenges as our forefathers met theirs, with determination and faith in the righteousness of our cause.

On the fiscal side – prudent restraint without tax hikes that would hurt growth – Churchill was as clear as any pro-growth economist that overtaxing the population is too often counterproductive from a fiscal standpoint.

In his first budget speech in the House of Commons, he criticized excessive surtaxes, saying, quote, “The Super-tax at its present rate constitutes an excessive burden, both on enterprise and on the saving power of the nation… it is an impediment to the creation of that new wealth without which our present load of debt and expenditure cannot be borne.”

It’s certainly true that, if we allow taxes in this country to go as high as they would need to go to sustain the President’s expansive vision of government, it would cripple economic growth and end up moving us backwards from a fiscal standpoint.

I actually wrote a letter to the non-partisan Congressional Budget Office asking them what kind of tax rates my kids and their generation would have to pay when they’re my age to finance the government’s current spending promises.

The CBO was quite clear: The bottom tax bracket, which is now 10 percent, would have to rise to 25 percent. The middle rate would have to rise to 63 percent. And the top rate, the rate many small businesses pay, would rise to 88 percent. Then, in the next sentence, they deadpanned, “This could have some negative effects on the economy at that time.”

So even the bean-counters in Washington understand that you cannot tax your way out of government’s spending problem. More importantly, we know from experience that tax hikes without meaningful, structural entitlement reform will simply chase higher spending, until we can’t borrow another dime.

The problem is empty promises. Each year that government fails to act, the U.S. government adds to a growing pile of empty promises made to future generations, and this President has worked to expand entitlements and even create brand new ones.

The non-partisan Government Accountability Office – more bean-counters, but I use that as a term of endearment – has done the math.

In 2009, they put the government’s unfunded liabilities – promises made to Americans for which the government has no means to pay – at $62.9 trillion. Last year it was up to $76.4 trillion. This year it is up to $99.4 trillion. The gap is growing by trillions of dollars every year.

If government doesn’t act soon to put our budget on a path to balance and the economy on a path to prosperity, we will find ourselves breaking promises to current retirees.

That’s the situation Europe finds itself in today. But we can avoid that outcome – if we have the courage to give the American people a true choice in which path they want to take.

Today we need to take new inspiration from Churchill the leader, who saw what was at stake in the choices the people of his country had to make.

For we are in our own “Churchillian moment” – threatened, not by foreign aggression, but by a titanic fiscal imbalance that has the potential to crush America’s prosperity and diminish its capacity to lead the world.

Addressing this threat starts with being honest about the perilous position our nation finds itself in.

The thing I’ve learned, talking to the men and women I work for in Southern Wisconsin, is that Americans know we’re in trouble, and they’re ready to be talked to like adults, not pandered to like children.

Churchill had a great faith in the good sense of the British people. This was the source of his ability to inspire all who heard him – he didn’t merely believe in his words, but also in those he was speaking to.

His optimism helped the English people take on the aggressors abroad, confident that they would prevail. In the “darkest hours” of World War II, he urged the British to “Deserve Victory!”

If the people kept working courageously year-round, success might not be guaranteed – but if it did come, it would be earned.

He knew the people could be relied upon to make the right choices once they knew the facts … no matter how somber the facts were.

If there is such a thing as an unforgivable sin in politics, for Churchill that sin was the refusal to tell the people the facts they need in order to act against an impending threat.

A quick Churchill story: In the mid-1930s, Tory Prime Minister Stanley Baldwin admitted that he had deliberately withheld the truth about Germany’s building up of arms.

He did this because the British people were so “pacifist” that Baldwin thought his party would lose the election to the pacifist opposition if he were to warn of the growing military threat.

Churchill was indignant… not just about the lie, but about the insult to the people.

For Baldwin to fail in his, quote, “duty in regard to national safety because he was afraid of losing the election,” Churchill said, “was an incident without parallel in our Parliamentary history. This was less than justice to the spirit of the British people.”

In that same spirit, it is less than justice to the American people to paper over the profound choice we face about the direction of our country.

One path leads to debt, doubt, and decline. Unfortunately, this is the path we are currently on. We have piled spending upon spending, bureaucracy upon bureaucracy, regulation upon regulation, until the burden has smothered our economy’s vitality.

The result is not only a sluggish economy but a government debt growing at breakneck speed. To compound our imprudence, we are funding the debt by borrowing from nations that do not admire our democracy or our freedom.

In the early 1930s, Churchill filled his warnings on the growing threat from Nazi Germany with facts and figures which the Baldwin government disputed. Churchill was ignored and dismissed, but he did not relent, and he was proved right. So let me give you facts and figures on our own “gathering storm.”

There is no question the President inherited a difficult situation, and this problem has been building for decades. But the great disappointment is that his policies have made things worse.

  • The unemployment rate has risen from 7.8 to 9 percent.

  • There are 2 million more jobless Americans now than in January 2009.

  • There are more than 6 million Americans who have been out of work for over 6 months.

  • 6.3 million people fell below the poverty level in the President’s first two years.

  • More people are below the poverty line today than in the 52 years that we’ve tracked it.

At the very time when economic stagnation is causing revenues to shrink, Washington is spending dollars it doesn’t have on programs that don’t work.

Between January 2009 and January 2011, spending for government bureaucracies went up 24 percent. When you add the failed stimulus on top of that, total spending jumped to 84 percent. And earlier this year, the President’s budget called for government to spend over $46 trillion in the next ten years.

$2.4 trillion of that spending explosion is for his new health care law. The law sets up 159 new boards, agencies, and bureaucracies. One of these new boards consists of 15 unelected bureaucrats who have the power to put price controls in Medicare that will lead to denied access to care for seniors.

The new board’s recommendations would become law unless a supermajority voted affirmatively to replace them – a high hurdle that raises constitutional questions about whether Congress can legitimately grant this much lawmaking power to unelected bureaucrats. 

This new law has become a poster child for the rule of man triumphing over the rule of law – the Obama Administration has granted over 1,400 waivers to those large corporations and unions that had the connections to lobby for them.

The powerful discretion assumed by HHS to play judge in determining these stays of execution does tremendous damage to the rule of law.

Churchill once said: “If you make ten thousand regulations, you destroy all respect for the law.”

Well, we’re there. This administration imposed 3,503 new regulations in 2009, and 3,573 in 2010 – 68 a week. And this year there are 4,257 more regulations under review.

Two-hundred and nineteen of these have been estimated as impacting the economy by over $100 million – each.

Look, when an economy isn’t growing enough to create jobs for workers, why would government make things harder for job creators? And it’s not just new regulations – the lower tax rates enacted in the early 2000s are scheduled to expire soon, at which point we will face major tax hikes across the board, on personal and business income.

The top marginal federal tax rate that many small businesses pay is set to rise to 44.8 percent just 14 months from now. And the President and Democrats in the Senate are seeking to impose a surtax that would raise that top rate to over 50 percent.

Meanwhile, overseas – and in Wisconsin, that often means Lake Superior – countries such as Canada are actually cutting their business taxes; in Canada’s case, to 15 percent.

At a time when exports are one of the few bright spots in our economy, why are we making it harder for our businesses to compete?

Instead of changing his failed policies, the President has turned to the politics of division. Instead of appealing to the hope and optimism that were hallmarks of his first campaign, he has launched his second campaign by preying on the emotions of fear, envy, and resentment.

This has the potential to be just as damaging as his misguided policies. Sowing social unrest and class resentment makes America weaker, not stronger. Pitting one group against another only distracts us from the true sources of inequity in this country – corporate welfare and cronyism that enrich the powerful, and empty promises that betray the powerless.

It’s disappointing, but it seems that the President is using the politics of division to distract from his record of inaction on our nation’s most pressing fiscal challenges:

  • He still has not put forward a credible plan to tackle the threat of ever-rising spending and debt.

  • He’s deferred the task of solving these challenges to one commission after another, only to ignore their recommendations…

  •  … and it’s been over 900 days since his party even bothered to pass a budget in the Senate.

The reason seems simple enough: The President and his party’s leaders do not and cannot publicly commit to the kinds of tax increases required to pay for their spending promises, which they refuse to back down from.

This failure to give the country the debate it deserves couldn’t come at a worse time. The federal debt has grown faster than expected because of the economic slowdown.

In about 10 years, debt held by the public will be equal to the entire economic production of the United States. By the time my kids are my age, CBO projects that number will be twice the size of GDP.

I asked the CBO to model the economy going forward under so much debt. Beyond 2029, the computer models used by CBO crash because they can’t conceive of any way the U.S. economy can continue under such a massive debt burden.

This is an enormous challenge – but it is not without precedent. When Churchill began to ring alarms about the growing threat from Germany, others did not see the danger. Britain’s situation deteriorated year by year. The government’s response was half-hearted … and its feckless delays made the war that much harder to win.

He was summoned to save the country… the one man the British would trust. France had fallen. America had not yet stepped forth. And Hitler turned his whole fury on the island nation.

In that moment, Churchill roused his people to stand up against the threat and look to the future – a time when “all Europe may be freed, and the life of the world may move forward into broad, sunlit uplands.”

For us, nothing is more predictable than the danger rushing upon us from the oncoming fiscal train wreck. There is still time to take the actions needed to reduce spending, reform our tax code, take control of the debt, restore economic growth, and repeal and replace the President’s health care law.

The budget passed by the House, The Path to Prosperity, initiated these reforms… but we lack a partner willing to meet our proposals with equally honest alternatives. 

The biggest problem is timidity, lack of political will, fear of losing the next election for speaking truth. What would Churchill think of those who remain in denial at this moment? What would he think of those who believe the American people lack the character to save our country from collapse?

Congresses are elected to promote the common good of our country. And Congress has the power to take control of our nation’s fate, and to reclaim popular trust in government.

We face a choice of two futures in this country. But I am optimistic that if we give Americans a clear choice, they will do the right thing. As Churchill put it, “Americans can always be counted on to do the right thing… but only after they have exhausted all other possibilities.”

Look, Republicans didn’t always get it right as a party ourselves. But if there ever was a time to gather our political courage and reclaim our ideas, it is now. The country is facing a very precarious moment.

Your leaders owe you a real choice. Do you want the President’s path of debt, doubt and decline, where government goes from promoting equal opportunity to equalizing the results of our lives?

Or do you want the American idea: the opportunity society with the safety net, dedicated to liberty, equality of opportunity, and upward mobility?

It is our moral obligation, as elected representatives, to give the American people this choice.

And if we do our jobs right, then we will soon have the duty, and the privilege, to make that vision a reality.

Let it be said of us, as Churchill said of his people in their most difficult hour: “We ought to rejoice at the responsibilities with which destiny has honored us… and be proud that we are guardians of our country in an age when her life is at stake.”

Thank you.