The Paul Ryan Budget: Why The GOP Is Still The Party Of The Rich
On Tuesday, Rep. Paul Ryan (Wisc.) released the House GOP budget, which was greeted with no small amount of incredulity for being almost exactly the same as the economic platform that he and Mitt Romney ran on in 2012 — a platform that was roundly rejected by voters who decided to go with President Obama’s proposals instead. But Ryan, retreating into rhetorical vagueness, claims to see the matter differently. “Are a lot of these solutions very popular, and did we win these arguments in the campaign?” he said. “Some of us think so.”
As has been recounted in depth elsewhere, the Ryan budget would, in all likelihood, lead to massive cuts in aid for the poor, while dramatically reducing tax rates for the wealthy. It’s hard to say with any certainty because, as Dana Milbank at The Washington Post puts it, “There are so many blanks in Ryan’s budget that it could be a Mad Libs exercise.” However, an independent analysis last year of the Ryan-Romney plan, which is similar in structure, showed that the math doesn’t add up without draconian spending cuts and closing tax loopholes for the middle class.
The smart money is that Ryan doesn’t believe his plan has a chance of passing a Democratic-controlled Senate, let alone Obama’s desk. It changes Medicare into a voucher program, strips Medicaid of a guaranteed source of federal funding, and repeals ObamaCare. “In a real way the whole thing is a sop to rank and file conservatives who haven’t come to grips with that reality,” say Brian Beutler at Talking Points Memo.
Indeed, Ryan may have angered the right wing by including the fiscal cliff deal to raise taxes on the wealthy as part of his budget projections. “You wouldn’t know it from the media coverage,” says Joshua Green at Bloomberg Businessweek, “but some conservatives don’t agree that Ryan’s budget is a shockingly right-wing ‘lightning rod’ proposal — they think it’s too liberal. And they’re deeply disillusioned by what they view as Ryan’s breaking faith with the conservative movement.”
But even if Ryan’s budget dies in Congress, the fact of the matter is that it is out there, outlining the Republican Party’s economic and fiscal priorities. “Budgets are statements of values,” writes Jonathan Cohn at The New Republic. “And with this budget, Ryan, once again, has revealed what Republican values are: Cutting taxes, primarily to benefit the wealthy, while savaging programs on which the poorest Americans rely.”
In the end, with Ryan’s budget, it will only be that much harder for the Republican Party to shed its image as the party of the rich, a reform that several conservative commentators have argued is absolutely essential to winning back power. Indeed, the Ryan budget shows that Republican officials are gambling that a makeover on immigration and social issues may be enough to turn the tide — a theory that Democrats will surely be glad to test in the next election.
By: Ryu Spaeth, The Week, March 12, 2013
“Ryan The Redistributionist”: More Income And Wealth For The Already Well Off
“Who is going to end up making all the money in the end if Obamacare continues to be in place?” Republican National Committee chairman Reince Priebus growled Monday on Sean Hannity’s Fox News show. “It’s going to be the big corporations, right? And who gets screwed? The middle class.”
The Republican Party makeover is breathtaking. Now, suddenly, instead of accusing Democrats of being “redistributionists,” the GOP is posing as defender of the middle class against corporate America — and it’s doing so by proposing to do away with the most progressive piece of legislation in well over a decade.
Paul Ryan’s new budget purportedly gets about 40 percent of its $4.6 trillion in spending cuts over ten years by repealing Obamacare, but Ryan’s budget document doesn’t mention that such a repeal would also lower taxes on corporations and the wealthy that foot Obamacare’s bill.
According to an analysis by the non-partisan Tax Foundation, Obamacare redistributes income from the wealthy to the middle class. This is mainly because it hikes Medicare taxes on the top 2 percent (singles earning more than $200,000 and couples earning more than $250,000, including their investment income).
This year, for example, families in the top 1 percent will be paying about $52,000 more in Medicare taxes, on average, than they paid in 2012.
And where will the money go? Not to pay for the healthcare of poor families; most of them already receive Medicaid. The rich will be helping middle and lower-middle class Americans.
Obamacare also imposes some taxes and fees on insurance companies, drug makers, and manufacturers of medical devices. Here again, most of this will be borne by affluent Americans, who own most shares of stock (assuming the taxes and fees come out of corporate profits). And, again, beneficiaries are in the middle and lower-middle class.
In other words, Mr. Priebus has it exactly backwards. If Obamacare were repealed, who would end up making all the money? Big corporations and the wealthy. Who would get screwed? The middle class.
The rest of Ryan’s budget plan also runs counter to the new Republican thematic. Not only does it turn Medicare into vouchers (“premium support” in Republican-speak) whose value can’t possibly keep up with rising healthcare costs but it also dramatically reduces spending on education, infrastructure, and much else the middle class depends on.
Meanwhile, it redistributes upward, cutting the top tax rate for individuals down to 25 percent — a bigger tax cut for the top than even Mitt Romney proposed — and the corporate tax rate down to 25 percent, from 35 percent today.
Ryan would pay for these tax cuts by “closing tax loopholes,” but — where did we hear this before? — his budget doesn’t say which loopholes, or even hint at what it would do with rates on capital gains and dividends. Like Romney’s plan, it leaves all the heavy lifting to Congress.
The reality, of course, is that the only possible way Ryan could pay for his proposed tax cuts for the wealthy and corporations would be to raise taxes on the middle class.
Don’t expect the Chairman of the Republican National Committee, or other Republicans reading from the same talking points, to admit any of this.
But if you look at what they’re proposing rather than what they’re saying, the GOP isn’t really interested in balancing the budget at all. It’s out to redistribute income and wealth — to the best-off Americans, from everyone else.
If any party is into redistribution, it’s the Republicans. And Paul Ryan is leading the charge.
By: Robert Reich, The Robert Reich Blog, March 12, 2013
“When Used For The Right Purpose”: Was Cheney Right That “Deficits Don’t Matter”?
After the Republicans gained control of the US Senate in the 2002 election, giving them across-the-board dominance of the legislative and executive branches of the federal government, the key players in the administration of President George W. Bush gathered to discuss fiscal policy.
Vice President Dick Cheney wanted to cut taxes for the rich.
Treasury Secretary Paul O’Neill was skeptical. According to his recounting of the incident in Ron Suskind’s brilliant book, The Price of Loyalty, O’Neill expressed concern that a trillion dollars worth of tax cuts had already been enacted. O’Neill was no liberal. He liked tax cuts. But with the country rebuilding from the economic slowdown after the 9/11 attacks, and with a war being fought in Afghanistan and another on the horizon in Iraq, O’Neill noted that the budget deficit was increasing. And he argued against Cheney’s position, suggesting that another tax cut was unnecessary and unwise.
“You know, Paul, Reagan proved that deficits don’t matter,” said the vice president. “We won the mid-term elections, this is our due.”
O’Neill was, according to Suskind, left speechless.
But Cheney wasn’t done. He and the Bush-Cheney administration that he served as CEO piled up deficits and debts. Indeed, as The New York Times has well noted, “Under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn’t foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Mr. Obama’s policies, taken out to 2017, add to deficits, but not by nearly as much.”
Now, a decade later, Cheney’s party is arguing that deficits matter. A lot. House Republicans are so fretful that they are willing to steer the country toward chaos by refusing the compromises that would avert across-the-board sequester cuts. Other Republicans uncomfortable with sequestration are pushing an austerity agenda that’s better organized than the sequester, but potentially even more painful.
So was Cheney right in 2002? Or is he right, now, when he cheers on Republican attacks on Obama’s spending and says, “I worship the ground Paul Ryan walks on”?
The fact is that deficits are relevant.
So are debts.
Nations must treat them seriously.
But nations do not have to fear deficits, any more than Dick Cheney did on that day in the fall of 2002. And in that sense Cheney was right: deficits don’t matter if they are employed for a purpose. Cheney’s purpose—cutting taxes for the rich—was dubious. But stimulating the economy, expanding access to healthcare, funding state and local governments and protecting seniors on Social Security… these are good, and necessary, purposes.
Spending has value, especially when it is needed. As Bob Borosage of the Campaign for America’s Future reminds us: “The U.S. has witnessed slow growth since coming out of the Great Recession in 2009. The result has been a deficit that has come down from over 10 percent of gross domestic product to a projected 5.3 percent of GDP this year (slightly higher if Congress is sensible enough to repeal the sequester) and a projected 2.4 percent in 2015 (if congressional austerity bombs don’t blow up the weak recovery).”
For Cheney’s political heirs to claim now that the United States is in crisis, or at a “tipping point,” is absurd. For them to refuse to govern until they get their way, throwing one tantrum after another, is irresponsible. For them to see value in sequester cuts that impose real pain on real people is not just crude, it’s economically senseless—and dangerous to the long-term prospects for economic renewal and growth.
President Obama needs to push back against the deficit fabulists. He does not have to echo Cheney’s glib “deficits don’t matter” talk. But he should explain, as economist Dean Baker does, that the ranting and raving about deficits and debts by groups such as Pete Peterson’s Fix the Debt campaign and its co-chairs, Erskine Bowles and Alan Simpson, is “the great distraction.”
America should be focused on the economic challenges that have slowed our economy, and that have caused our government to run up deficits and debts. We need to be focused on putting people to work and growing the economy, not playing sequester games that result in real job losses and create an equally real threat of recession.
When the Fix the Debt crew gather, as Baker has noted, “many of the people most responsible for the current downturn come together to tell us why we should be worried about the deficit at a time when 25 million people are unemployed, underemployed or have given up looking for work altogether and millions face the prospect of losing their homes.”
Our concern as a country should be with shaping the policies and making the investments that find work for the jobless and create the robust economic growth that creates surpluses. That’s far more vital than the focus on fiscal issues and the deficits that Dick Cheney explained—back when he was in power—“don’t matter.”
By: John Nichols, The Nation, March 1, 2013
“Interfering With Primaries”: GOP Thieves Staging A Phony Fight To Help Each Other Raise Money
Even before the howls of rage have subsided in the wake of Karl Rove’s expressed intention to intervene in Republican Senate primaries to keep stone losers from gaining nominations, one of the chief howlers, the Club for Growth, has announced its own “purge” initiative aimed at House GOP “moderates.” For starters, they’ve identified nine House incumbents at a new website called PrimaryMyCongressman.com who need to be taken out:
“Big government liberals inhabit the Democratic Party, but they are far too common within the Republican Party as well,” said Club for Growth President Chris Chocola in a statement announcing the site. “The Republicans helped pass billions of dollars in tax increases and they have repeatedly voted against efforts by fiscal conservatives to limit government. PrimaryMyCongressman.com will serve as a tool to hold opponents of economic freedom and limited government accountable for their actions.”
This is the same Chris Chocola who earlier this month attacked Rove for his arrogant national interference with the sovereign discretion of primary voters:
“It’s those pesky voters,” Mr. Chocola said in an interview. “They get to decide who the nominee is.”
So why is it an outrage for Rove’s Texas gazillionaires to meddle with Republican primaries but AOK for the Club’s (or the Koch Brothers’) plutocrats to do exactly the same thing? Well, because the latter are “true conservatives,” while the former are trimmers and hedgers, if not actual RINOs. It’s part and parcel of the belief, which I noted a couple of weeks ago in discussing the implications of the “Buckley Rule,” that there’s really no such thing as being “too conservative” unless it means losing a general election, while any even vague step towards moderation is inherently immoral and must be justified by unimpeachable evidence that’s it is necessary. So Rove and company are “interfering” with local voters, while Chocola and company are vindicating their obvious interests.
Now it’s also entirely possible that Rove and Chocola are thick as thieves and are simply staging a phony fight to help each other raise money. But anyway you slice it, the Club’s hypocrisy is pretty amazing.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, February 27, 2013
“GOP Reversion To Form”: When Did “Tax Reform” Become A Tax Hike?
One of the issues baffling non-conservatives in assessing the latest stage of the fiscal conflict in Washington is that Republicans are treating Democratic demands for loophole-closing on the wealthy exactly like it’s a tax rate increase. That’s odd, since it’s Republicans who have continuously injected loophole-closing–or as they usually call it, “tax reform”–into the debate. For years they’ve discussed it as a possible way to finance a revenue-neutral tax rate cut. Paul Ryan made it (or at least a very vague version of it) central to the math and marketing of his various budget proposals. During most of the 2012 campaign, Mitt Romney touted “tax reform” in the more traditional way, as a magic asterisk that would both limit revenue losses from the tax rate cuts he was proposing, and would also (even less plausibly) prevent his overall plan from changing the distribution of the tax burden. After the election, “tax reform” became part of the package Republicans supported as a “fiscal cliff” measure to maintain all the Bush tax rate cuts.
But Republicans have always been reluctant to talk about tax reform if it’s used for any purpose other than reducing tax rates or avoiding higher tax rates, even though conservative economists tend to support loophole-closing as an efficiency measure worth taking in isolation from rate changes.
So once the battle over tax rates ended (temporarily) with the so-called “fiscal cliff” agreement, Republicans quickly declared not just tax rates but any additional revenues as off-limits in future agreements. So even though you’d think they’d be at least as open to a tax-reform-for-entitlement-reform deal as they were for a tax-rates-for-entitlement-reform deal last year, that has not been the case. It’s tax rates that continue to drive GOP tax policies, even in the absence of any real chance that they will soon be raised or lowered.
Here’s how Jonathan Chait explains what he calls this “reversion to form:”
The answer to this piece of the mystery is clear enough: Republicans in Congress never actually wanted to raise revenue by tax reform. The temporary support for tax reform was just a hand-wavy way of deflecting Obama’s popular campaign plan to expire the Bush tax cuts for the rich. Conservative economists in academia may care about the distinction between marginal tax rates and effective tax rates. But Republicans in Congress just want rich people to pay less, period. I can state this rule confidently because there is literally not a single example since 1990 of any meaningful bloc of Republicans defying it.
What has aided the easy reversion to form, with low taxes for the rich dominating all other considerations, is the pent-up rage and betrayal John Boehner has engendered among his most conservative members. Almost nothing Boehner has done since taking over as speaker has endeared him to his ultras. Every subsequent compromise creates more embitterment, and the last few moves have provoked simmering rage.
Conservatives had to swallow a tax hike, and then swallow an increase in the debt ceiling. Boehner has, incredibly, had to promise his members that he will not enter private negotiations with Obama.
The pressure for confrontation as a method has built up to the point where seemingly no deal Boehner could reach would leave him safe.
So Republicans aren’t open to the tax reforms they’ve supported in the past, or to entitlement reforms they’ve been demanding for years (though this particular issue is complicated by the fact that they only want “entitlement reforms” if they significantly reduce actual benefits; anything else can’t possibly be a “reform”). They have truly painted themselves into a corner this time, and that’s why we are going to have a sequester followed quite possibly by a government shutdown if Democrats resist making the domestic spending part of the sequester permanent.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal. February 26, 2013
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