“Massive Tax Breaks For The Rich”: GOP Budget Plan To Reduce The Debt Actually Makes The Debt Worse
House Budget Committee Chairman Paul Ryan (R-WI) released the GOP’s new budget this morning, and in doing so, he touted it as a plan to make America’s level of debt more sustainable. “We’ve shared with Americans a specific plan of action that cuts spending, pays off the debt and gets our economy back on the path to prosperity,” Ryan said.
The problem with Ryan’s rhetoric is that his plan fails to match it. By giving massive tax breaks to corporations and the top one percent and preserving unsustainable levels of defense spending, the House GOP’s plan to reduce the debt would fail to reduce the debt. In fact, because it assumes levels of revenue that are pure fantasy under his tax proposals, the plan would actually increase the debt, according to an analysis by Center for American Progress Tax and Budget Policy Director Michael Linden:
But the House budget’s entire claim to deficit reduction is built on the foundation of those fantasy revenue levels. Without them, the debt goes up, not down. In fact, with all the House budget’s tax cuts properly accounted for, revenue would average just 15.3 percent of GDP from 2013 through 2022, not 18.3 percent. The result: deficits would never drop below 4.4 percent of GDP, and would rise to more than 5 percent of GDP by 2022.
The national debt, measured as a share of GDP, would never decline, surpassing 80 percent by 2014, and 90 percent by 2022. By comparison, President Barack Obama’s budget proposal, released in February, would stabilize the debt by 2015, and bring it down to 76 percent by 2022.
As Linden notes, the GOP’s “debt reduction” isn’t just based on fantasy levels of revenue — it’s based on “massive, unrealistic” spending cuts as well. Medicaid would face $1 trillion cuts in the first decade, while education and workforce training programs would get cut in half and transportation funding would be reduced by nearly 25 percent. The plan, which also ignores previous deals and increases defense spending, would also require deep cuts in other vital domestic programs.
“If you agree it’s morally wrong to ignore the most predictable crisis in U.S. history, this is your budget,” Ryan tweeted yesterday. Apparently, though, it seems Ryan and his Republican colleagues got so wrapped up in creating a budget that benefits the top one percent, they forgot to actually reduce the debt.
By: Travis Waldron, Think Progress, March 20, 2012
“Groundhog Day”: The 5 Worst Things About The House GOP’s Budget
After his last attempt at a budget went down in flames last year, House Budget Committee Chairman Paul Ryan (R-WI) unveiled the House GOP’s new budget this morning, painting it as a sensible plan to reform the nation’s tax code and reduce the debt while maintaining entitlement programs like Social Security, Medicare, and Medicaid. Yet again, however, Ryan and the GOP have the social safety net and Medicare in their sights, and yet again, they’re attempting to pass the cost of massive tax breaks for corporations and the rich off to middle and lower-income Americans.
Here are the five worst things about Ryan’s budget:
1. SENIORS WOULD PAY MORE FOR HEALTH CARE: Beginning 2023, the guaranteed Medicare benefit would be transformed into a government-financed “premium support” system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or traditional fee-for-service Medicare. But the budget does not take sufficient precautions to prevent insurers from cherry-picking the the healthiest beneficiaries from traditional Medicare and leaving sicker applicants to the government. As a result, traditional Medicare costs could skyrocket, forcing even more seniors out of the government program. The budget also adopts a per capita cost cap of GDP growth plus 0.5 percent, without specifying how it would enforce it. This makes it likely that the cap would limit the government contribution provided to beneficiaries and since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $1,200 more by 2030 and more than $5,900 more by 2050. Finally, the budget would also raise Medicare’s age of eligibility to 67. Some seniors who would no longer be eligible for Medicare would pick up employer coverage—but they would pay more in premiums and cost sharing. And since the budget would scale back or eliminate other coverage options, hundreds of thousands of seniors would become uninsured.
2. ELDERLY AND DISABLED WOULD LOSE MEDICAID COVERAGE: The budget would eliminate the exiting matching-grant financing structure of Medicaid and would instead give each state a pre-determined block grant that does not keep up with actual health care spending. This would shift some of the burden of Medicaid’s growing costs to the states, forcing them to — in the words of the CBO — make cutbacks that “involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost sharing by beneficiaries—all of which would reduce access to care.” The block grants would reduce federal Medicaid spending by $810 billion over 10 years, decreasing federal Medicaid spending by more than 35 percent over the decade. As a result, states could reduce enrollment by more than 14 million people, or almost 20 percent—even if they are were able to slow the growth in health care costs substantially.
3. THIRTY MILLION AMERICANS WOULD LOSE HEALTH COVERAGE: The budget repeals the Affordable Care Act’s requirement to purchase health insurance coverage, the establishment of health insurance exchanges and the provision of subsidies for lower-income Americans, the expansion of the Medicaid program, tax credits for small businesses that provide insurance coverage. As a result, more than 30 million Americans would lose coverage and the budget would eliminate the new law’s consumer protections, which have already benefited tens of millions of Americans.
4. CORPORATIONS AND THE RICH WOULD GET A $3 TRILLION TAX CUT: By repealing the Alternative Minimum Tax and the investment taxes in the Affordable Care Act and lowering the top income tax rate to 25 percent, the Ryan budget provides the wealthiest Americans with $2 trillion in tax breaks. By lowering the top corporate tax rate and allowing corporations to return profits made overseas to the United States at no cost, he gives corporations more than $1 trillion in tax breaks. Ryan insists his plan will be revenue neutral — he just won’t say how. The CBO’s scoring of the plan, meanwhile, is based on Ryan’s own assertions that the plan would maintain or increase revenue.
5. DEFENSE BUDGET WOULD GET A BOOST, WHILE THE SAFETY NET IS CUT: The Ryan budget protects defense spending from automatic cuts agreed to in last year’s debt deal, then boosts defense spending to $554 billion in 2013 — $8 billion more than agreed upon in the deal. At the same time, it asks six Congressional committees to find $261 billion in cuts. That includes $33.2 billion from the Agriculture Committee, meaning food stamps and other social safety net programs are likely to face cuts, all while the Pentagon remains untouched.
By: Igor Volsky and Travis Waldron, Think Progress, March 20, 2012
“A Platform To Revitalize America”: An Idiotic Wish List Of Conservative Senate Tea Party Caucus Policies
When Bill Clinton left the White House just 12 years ago, the federal budget deficit was quite literally gone, and the nation was running a surplus for the first time in a generation. After Republicans approved two massive tax breaks, expanded Medicare, put two wars on the national credit card, and crashed the economy, the fiscal mess Clinton had cleaned up was back.
We’ve seen some modest progress on this front, but even under the most optimistic of scenarios, a balanced budget is nowhere in sight.
That is, unless we adopt a new plan from three far-right senators, who’ve mapped out a way to get us back to 2001 figures in a hurry.
Members of the Senate Tea Party Caucus on Thursday announced a plan to balance the budget in five years, cutting spending by nearly $11 trillion compared to President Obama’s budget.
The plan, dubbed “A Platform to Revitalize America,” is a wish list of conservative policies, none of which have any chance of passing the Democratic-controlled Senate or being signed into law by a liberal Democratic president.
The ambitious blueprint would achieve a $111 billion surplus in fiscal year 2017.
“The whole point here is to show we can reasonably balance the budget within a five-year period,” said Sen. Jim DeMint (R-S.C.), one of the sponsors of the plan.
Well, “reasonably” is a subjective term.
The plan, also endorsed by Sens. Rand Paul (R-Ky.) and Mike Lee (R-Utah), would produce a surplus by 2017 by effectively repealing most of the 20th century.
The “Platform to Revitalize America” has it all figured out: Medicare would be privatized out of existence; Social Security eligibility would be restricted; while Medicaid, the State Children’s Health Insurance Program, food stamps, and child nutrition programs would all be gutted through state block grants.
The federal departments of Commerce, Education, Energy, and Housing and Urban Development would also all be eliminated. Pentagon spending, by the way, would not be touched.
See how easy it is to balance the federal budget in hardly any time at all?
By: Steve Benen, The Maddow Blog, March 9, 2012
“Scratching Their Heads”: A Bad Week For John Boehner And House Republican Leadership
Speaker John Boehner is having a bad week. First, his members weren’t able to agree on a budget. For a time, it didn’t look like they would be able to agree on a budget. They would have to join the Senate Democrats in simply skipping the budget process. And now, it looks like the only way to pass a budget is to propose one that undercuts the spending levels agreed to in the debt-ceiling deal — a deal that Boehner signed onto, and a reversal that sets up an unnecessary and likely unwinnable battle with the Senate.
Then, there was the push to bring Rep. Jeff Fortenberry’s “Respect for Rights of Conscience Act” to the floor. This legislation was the House version of the Blunt Amendment, and it would have amended the Affordable Care Act to permit any health-care plan, whether religious or not, to refuse to cover birth control. More than half the House had already signed on to co-sponsor the bill. It looked like an easy slam dunk. At least, it did before the Senate defeated the Blunt amendment, and Rush Limbaugh said something dumb, and the politics of this issue turned sharply against the GOP. Now the bill looks like an ugly distraction from jobs, jobs, jobs. It’s currently on ice in the Energy and Commerce Committee.
Which brings us, of course, to the Energy and Commerce Committee, site of Boehner’s most frustrating struggle. It was months ago now that he shepherded the Energy and Infrastructure Jobs Act — better known as his highway bill — through five committees. His office put muscle behind the legislation, blasting out a constant stream of press releases on its many virtues, and Boehner himself delivered a speech endorsing the bill when it came to the House floor.
But the legislation has languished. Some Republicans don’t like the spending. Others don’t like the changes to mass transit funding. Some want the ability to add earmarks. Another group doubts the highway bill is the place to expand offshore oil drilling. Transportation Secretary Ray LaHood — a former Republican congressman from Illinois — told Politico it was “the worst transportation bill I’ve ever seen during 35 years of public service.”
On Wednesday, in a closed-door meeting, Boehner tried to persuade his colleagues to save the bill. “Even the Senate — the do-nothing Democratic Senate — is going to pass something,” he said. But while Boehner’s speech might have helped a little, Jake Sherman reports that “GOP lawmakers are still opposing the measure in alarmingly high numbers,” leaving “Boehner and the Republican leadership scratching their heads about what went wrong.”
They must be doing that a lot lately.
By: Ezra Klein, The Washington Post, March 8, 2012
“Deficit-Exploding”: Mitt Romney’s Fantasy Tax Cuts
Let’s take a trip back to 1992. Then-Gov. Bill Clinton, in his campaign manifesto, said: “Middle-class taxpayers will have a choice between a children’s tax credit or a significant reduction in their income tax rate.”
By February 1993, President Clinton’s position on a middle class tax cut had morphed into this:
Before I ask the middle class to pay, I’m going to ask the wealthiest Americans and companies, who made money in the ’80s and had their taxes cut, to pay their fair share. And I’m going to cut more government spending. But I cannot tell you that I won’t ask you to make any contribution to the changes we have to make.
To justify the reversal, Clinton cited a budget deficit that was $50 billion larger than what he thought it was before the election. Fast forward to today.
Former Gov. Mitt Romney has pledged to cut income tax rates by 20 percent for every American, not just the middle class. He has also embraced Rep. Paul Ryan’s Medicare reform plan, which would convert the program from a defined benefit to a defined contribution scheme.
Romney emerges from Michigan committed not only to the Ryan plan, but also to a 20 percent cut in tax rates, above and beyond his prior commitment to making the Bush tax cuts permanent. …That’s not the race I’m sure Romney intended to run. But it will be hard to change now.
Yes, hard to change now—and impossible to realize once in office.
Such deficit-exploding tax cuts will never become law. Romney—a sane man—already knows this. There will be no need for Clintonian “evolution.” And, especially if the Senate remains under Democratic control, the odds for which increased with Sen. Olympia Snowe’s surprise retirement announcement, the Ryan plan stands little chance of even reaching President Romney’s desk.
To review: Mitt Romney has set himself up to (ahem) severely disappoint conservatives who already suspect his ideological convictions.
As I see it, Romney could blunt this backlash-in-the-making by picking up the pieces of last year’s aborted Grand Bargain. There is a solid left-right consensus on raising badly-needed federal revenue by reigning in the billions we spend through the tax code. Pair reduction in tax expenditures with modest entitlement reforms and you can see at least the lineaments of restored budget sanity.
This is probably the best outcome our political system can manage these days.
The question is, as president, would Mitt Romney be able to sell it to conservatives who don’t trust him?
By: Scott Galupo, U. S. News and World Report, February 29, 2012
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