The Budget Battles: Prosperity for Whom?
If the House Republican budget blueprint released on Tuesday is the “path to prosperity” that its title claims, it is hard to imagine what ruin would look like.
The plan would condemn millions to the ranks of the uninsured, raise health costs for seniors and renege on the obligation to keep poor children fed. It envisions lower taxes for the wealthy than even George W. Bush imagined: a permanent extension for his tax cuts, plus large permanent estate-tax cuts, a new business tax cut and a lower top income tax rate for the richest taxpayers.
Compared to current projections, spending on government programs would be cut by $4.3 trillion over 10 years, while tax revenues would go down by $4.2 trillion. So spending would be eviscerated, mainly to make room for continued tax cuts.
The deficit would be smaller, but at an unacceptable cost. Health care would be hardest hit, followed by nonsecurity discretionary spending — the sliver of the budget that encompasses annually appropriated programs. Those include education, scientific research, environmental preservation, investor protection, disease control, food safety, federal law enforcement and other areas that bear directly on the quality of Americans’ daily lives. The proposed cuts in such programs are $923 billion deeper than President Obama called for in his 2012 budget, which pushed the edge of what is politically possible.
Another big cut — $715 billion over 10 years — comes from mandatory spending other than Social Security and the big health care programs, a category that includes food stamps and federal retirement.
The blueprint does not call for any specific changes to Social Security, but, without explanation, it assumes a reduction of $1 trillion over 10 years in the program’s surplus. That would weaken the program by hastening the insolvency of Social Security.
When he unveiled this plan, Paul Ryan, a Republican of Wisconsin and the chairman of the House Budget Committee, declared, “This isn’t a budget. This is a cause.”
There is much truth in that. The blueprint is not a serious deficit reduction exercise for many reasons, the most important of which is that serious deficit reduction requires everything to be on the table, including tax increases. The plan released at the end of last year by the Obama deficit commission was one-third tax increases and two-thirds spending cuts. President Obama’s budget calls for a mix of tax cuts and tax increases, among the latter, letting high-end Bush tax cuts expire at the end of 2012. The Republican plan calls only for tax simplification. It would get rid of loopholes and reduce rates in a way that would not raise overall revenues but would invariably cut the tax bill of wealthy taxpayers for whom lower rates are more valuable than assorted loopholes.
The deficit is a serious problem, but the Ryan plan is not a serious answer. With its tax cuts above all, and spending cuts no matter the consequences, it is a recipe for more loud talk about the deficit but no real action.
By: Editorial, The New York Times, April 5, 2011
Chairman Ryan Gets Roughly Two-Thirds of His Huge Budget Cuts From Programs For Lower-Income Americans
House Budget Committee Chairman Paul Ryan’s budget plan would get about two-thirds of its more than $4 trillion in budget cuts over 10 years from programs that serve people of limited means, which violates basic principles of fairness and stands a core principle of President Obama’s fiscal commission on its head.
The plan of Erskine Bowles and Alan Simpson, who co-chaired President Obama’s National Commission on Fiscal Responsibility and Reform, established, as a basic principle, that deficit reduction should not increase poverty or inequality or hurt the disadvantaged. The Ryan plan, which the chairman unveiled in a news conference, speech, and Wall Street Journal op-ed today, charts a different course, turning its biggest cannons on these people.
This finding emerges from a Center on Budget and Policy Priorities analysis of the Ryan plan. Table S-4 of the plan shows that it proposes net program cuts of $4.3 trillion over ten years. The plan shows a $5.8 trillion cut in outlays from the Congressional Budget Office baseline, but $446 billion of that is interest savings and another $1.04 trillion is simply an assumption that the Iraq and Afghanistan wars will phase down on the Obama Administration’s timetable. Actual program cuts produce net savings of $4.322 trillion.
Cuts in low-income programs appear likely to account for at least $2.9 trillion — or about two-thirds — of this amount. The $2.9 trillion includes the following three categories of cuts:
- $2.17 trillion in reductions from Medicaid and related health care. The plan shows Medicaid cuts of $771 billion, plus savings of $1.4 trillion from repealing the health reform law’s Medicaid expansion and its subsidies to help low- and moderate-income people purchase health insurance.
- $350 billion in cuts in mandatory programs serving low-income Americans (other than Medicaid). The budget documents that Chairman Ryan issued today show that he is proposing $715 billion in cuts in mandatory programs other than Medicare, Medicaid, and Social Security, but do not specify how much will be cut from various programs (although they imply that cuts in the food stamp program will be large). In this analysis, we make the conservative assumption that savings from low-income mandatory programs (other than Medicaid) would be proportionate to their share of spending in this category. Thus, we derive the $350 billion figure from the fact that about half of mandatory spending other than for Medicare, Medicaid, and Social Security goes for programs for low- and moderate-income individuals and families. This likely substantially understates the cuts that the plan would make in low-income programs. The Ryan documents show that $380 billion in cuts would come from programs in the income security portion of the budget (function 600), and the overwhelming bulk of the mandatory spending in that category goes for low-income programs. The documents also show $126 billion in mandatory cuts in the education, training, employment, and social services portion of the budget (function 500), which, based on the discussion in those documents, would likely come mainly from cuts in the mandatory portion of the Pell Grant program for low-income students.
- $400 billion in cuts in low-income discretionary programs. The Ryan budget documents show that he is proposing $1.6 trillion in cuts in non-security discretionary programs, but again do not provide details about the size of cuts to specific programs. (The documents do identify some major low-income program areas, including Pell Grants and low-income housing, as prime targets for cuts.) Here, too, we make the conservative assumption that low-income programs in this category would bear a proportionate share of the cuts. Thus, we derive the $400 billion figure from the fact that about a quarter of non-security discretionary spending goes for programs for low- and moderate-income individuals and families.
Our numerical assumptions are conservative in another way as well. That’s because, when faced with the choice of which specific programs to cut, policymakers are unlikely to cut much from a number of non-low-income programs in these budget categories that are popular, such as veterans’ disability compensation and the FBI. That means that other programs — including low-income programs — would have to be cut by more than their proportionate share.
By: Robert Greenstein, Center on Budget and Policy Priorities, April 5, 2011
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