Ludicrous and Cruel: America Is Being Punked By GOP Voodoo Economics
Many commentators swooned earlier this week after House Republicans, led by the Budget Committee chairman, Paul Ryan, unveiled their budget proposals. They lavished praise on Mr. Ryan, asserting that his plan set a new standard of fiscal seriousness.
Well, they should have waited until people who know how to read budget numbers had a chance to study the proposal. For the G.O.P. plan turns out not to be serious at all. Instead, it’s simultaneously ridiculous and heartless.
How ridiculous is it? Let me count the ways — or rather a few of the ways, because there are more howlers in the plan than I can cover in one column.
First, Republicans have once again gone all in for voodoo economics — the claim, refuted by experience, that tax cuts pay for themselves.
Specifically, the Ryan proposal trumpets the results of an economic projection from the Heritage Foundation, which claims that the plan’s tax cuts would set off a gigantic boom. Indeed, the foundation initially predicted that the G.O.P. plan would bring the unemployment rate down to 2.8 percent — a number we haven’t achieved since the Korean War. After widespread jeering, the unemployment projection vanished from the Heritage Foundation’s Web site, but voodoo still permeates the rest of the analysis.
In particular, the original voodoo proposition — the claim that lower taxes mean higher revenue — is still very much there. The Heritage Foundation projection has large tax cuts actually increasing revenue by almost $600 billion over the next 10 years.
A more sober assessment from the nonpartisan Congressional Budget Office tells a different story. It finds that a large part of the supposed savings from spending cuts would go, not to reduce the deficit, but to pay for tax cuts. In fact, the budget office finds that over the next decade the plan would lead to bigger deficits and more debt than current law.
And about those spending cuts: leave health care on one side for a moment and focus on the rest of the proposal. It turns out that Mr. Ryan and his colleagues are assuming drastic cuts in nonhealth spending without explaining how that is supposed to happen.
How drastic? According to the budget office, which analyzed the plan using assumptions dictated by House Republicans, the proposal calls for spending on items other than Social Security, Medicare and Medicaid — but including defense — to fall from 12 percent of G.D.P. last year to 6 percent of G.D.P. in 2022, and just 3.5 percent of G.D.P. in the long run.
That last number is less than we currently spend on defense alone; it’s not much bigger than federal spending when Calvin Coolidge was president, and the United States, among other things, had only a tiny military establishment. How could such a drastic shrinking of government take place without crippling essential public functions? The plan doesn’t say.
And then there’s the much-ballyhooed proposal to abolish Medicare and replace it with vouchers that can be used to buy private health insurance.
The point here is that privatizing Medicare does nothing, in itself, to limit health-care costs. In fact, it almost surely raises them by adding a layer of middlemen. Yet the House plan assumes that we can cut health-care spending as a percentage of G.D.P. despite an aging population and rising health care costs.
The only way that can happen is if those vouchers are worth much less than the cost of health insurance. In fact, the Congressional Budget Office estimates that by 2030 the value of a voucher would cover only a third of the cost of a private insurance policy equivalent to Medicare as we know it. So the plan would deprive many and probably most seniors of adequate health care.
And that neither should nor will happen. Mr. Ryan and his colleagues can write down whatever numbers they like, but seniors vote. And when they find that their health-care vouchers are grossly inadequate, they’ll demand and get bigger vouchers — wiping out the plan’s supposed savings.
In short, this plan isn’t remotely serious; on the contrary, it’s ludicrous.
And it’s also cruel.
In the past, Mr. Ryan has talked a good game about taking care of those in need. But as the Center on Budget and Policy Priorities points out, of the $4 trillion in spending cuts he proposes over the next decade, two-thirds involve cutting programs that mainly serve low-income Americans. And by repealing last year’s health reform, without any replacement, the plan would also deprive an estimated 34 million nonelderly Americans of health insurance.
So the pundits who praised this proposal when it was released were punked. The G.O.P. budget plan isn’t a good-faith effort to put America’s fiscal house in order; it’s voodoo economics, with an extra dose of fantasy, and a large helping of mean-spiritedness.
By: Paul Krugman, Op-Ed Columnist, The New York Times, April 7, 2011
Government Shutdown: It’s Not Really About Spending
If the federal government shuts down at midnight on Friday — which seems likely unless negotiations take a sudden turn toward rationality — it will not be because of disagreements over spending. It will be because Republicans are refusing to budge on these ideological demands:
• No federal financing for Planned Parenthood because it performs abortions. Instead, state administration of federal family planning funds, which means that Republican governors and legislatures will not spend them.
• No local financing for abortion services in the District of Columbia.
• No foreign aid to countries that might use the money for abortion or family planning. And no aid to the United Nations Population Fund, which supports family-planning services.
• No regulation of greenhouse gases by the Environmental Protection Agency.
• No funds for health care reform or the new consumer protection bureau established in the wake of the financial collapse.
Abortion. Environmental protection. Health care. Nothing to do with jobs or the economy; instead, all the hoary greatest hits of the Republican Party, only this time it has the power to wreak national havoc: furloughing 800,000 federal workers, suspending paychecks for soldiers and punishing millions of Americans who will have to wait for tax refunds, Social Security applications, small-business loans, and even most city services in Washington. The damage to a brittle economy will be substantial.
Democrats have already gone much too far in giving in to the House demands for spending cuts. The $33 billion that they have agreed to cut will pull an enormous amount of money from the economy at exactly the wrong time, and will damage dozens of vital programs.
But it turns out that all those excessive cuts they volunteered were worth far less to the Republicans than the policy riders that are the real holdup to a deal. After President Obama appeared on television late Wednesday night to urge the two sides to keep talking, negotiators say, the issue of the spending cuts barely even came up. All the talk was about the abortion demands and the other issues.
Democrats in the White House and the Senate say they will not give in to this policy extortion, and we hope they do not weaken. These issues have no place in a stopgap spending bill a few minutes from midnight.
A measure to prohibit the Environmental Protection Agency from regulating greenhouse gas emissions came up for a Senate vote on Wednesday and failed. If Republicans want to have yet another legislative debate about abortion and family planning, let them try to pass a separate bill containing their restrictions. But that bill would fail, too, and they know it, so they have chosen extortion.
The lack of seriousness in the House is reflected in the taunting bill it passed on Thursday to keep the government open for another week at an absurdly high cost of $12 billion in cuts and the ban on District of Columbia abortion financing. The Senate and the White House said it was a nonstarter. Many of the same House members who earlier had said they would refuse to approve another short-term spending bill voted for this one, clearly hoping they could use its inevitable failure in the Senate to blame the Democrats for the shutdown. What could be more cynical?
The public is not going to be fooled once it sees what the Republicans, pushed by Tea Party members, were really holding out for. There are a few hours left to stop this dangerous game, and for the Republicans to start doing their job, which, if they’ve forgotten, is to serve the American people.
By: Editorial, The New York Times, April 8, 2011
How Small Differences Could Lead To A Government Shutdown
We’re hours away from a shutdown, yet there’s still no deal. The negotiations have become slightly reminiscent of Max Baucus’s Gang of Six: a group of people in a room who desperately want to agree on something but can’t figure out how to get the people outside the room to sign off on it. You can tell that Reid and Boehner want to come to an agreement. But having taken Democrats past the Republican leadership’s opening offer of $32 billion in cuts, Boehner can’t take them much further. But so far as the Tea Party is concerned, Boehner still has not taken them far enough.
Boehner and Reid say they’ve “narrowed the issues.” That means they’re very close on total spending cuts (somewhere around $35 billion) and very clear on what’s left to negotiate. The problem, however, is that as small as a policy rider over federal funding for Planned Parenthood might be, the distance between the two parties on the underlying issue is great. Democrats were appalled yesterday when Republicans made a one-week stopgap contingent on a rider barring Washington, DC from using its own money to fund abortion for low-income women (so much for home rule). The stop gap went nowhere, even though the issue of how DC can use its own funds is, in the national context, small.
And the problem isn’t just the policy. What the two parties are trying to prove about themselves, and about their relationship going forward, is very big. John Boehner is trying to convince Republicans in the House and Republicans in the country that they can trust him, that he’s conservative enough and steely enough to represent their interests in negotiations with the Democrats. And Democrats are trying to show that they will not be rolled over in negotiations simply because the Tea Party is unwilling to compromise, that they still control the Senate and the White House and they plan to act like it. These negotiations are really about the next negotiations, and the negotiations after that. Both parties worry that if they compromise now, they only embolden the other side later. And later is when the stakes get really high.
For that reason, more than a few observers and participants have suggested to me that perhaps a shutdown tonight would be healthy. Better, they say, that Democrats and Republicans test what happens if they refuse to compromise now, when the consequences can be contained, than later, when the fight will be over the debt ceiling and the consequences could be catastrophic. That they may be right is a depressing commentary on the forces buffeting our political system right now, and the very real, very large risks they pose to the country.
By Ezra Klein, The Washington Post, April 8, 2011
No, Rep Paul Ryan’s Budget Proposal Is Not Brave
Prominent opinion writers have spent the last few days fawning over Rep. Paul Ryan’s budget plan, which would essentially abolish Medicare and Medicaid while lowering taxes on top earners, and many of them have deployed a litany of superlatives usually reserved for costumed superheroes. Commentators like David Brooks and Jacob Weisberg have described Ryan’s plan as “brave,” and “bold,” and the word “courageous” has been ubiquitous.
But the closer people look at Ryan’s plan, the clearer it becomes that the plan isn’t all that brave. Let’s take stock of all the recent revelations about it.
Ryan’s plan included a laughably implausible unemployment analysis from Heritage predicting it would bring unemployment down to 4 percent by 2015 and 2.8 percent by 2012 — an analysis Heritage then quitely retracted by attempting to disappear it from the internet. Ryan’s plan claims to save money while repealing the Affordable Care Act, even though the CBO has said repealing the ACA will increase the deficit. Ryan implied that his plan was supported by President Bill Clinton’s former OMB Director Alice Rivlin, even though it isn’t. It cuts taxes on top earners, when the easiest way to reduce the deficit is to let the Bush tax cuts expire.
Ryan’s misleading claims aren’t the only thing that isn’t particularly brave about his plan. After accusing Democrats of “raiding” Medicare with the Affordable Care Act, Ryan spares the elderly voters who supported Republicans in 2010 by making sure only he guts medical care for future seniors (he still calls it “saving Medicare,” however). And as the Center for Budget and Policy Priorities noted, 2.9 trillion in Ryan’s budget comes from cuts in programs focused on low-income Americans. It doesn’t touch defense spending.
In other words, it focuses on cuts to programs that benefit those most likely to vote Democratic, while preserving programs that serve those more likely to vote Republican.Rewarding your constituencies while punishing the other side’s is how partisan politics usually works, but there’s nothing particularly brave about it.
Ryan himself said during the rollout that his plan isn’t so much a budget as a “cause.” As Steve Benen wrote yesterday, the cause here is destroying the modern welfare state so that rich people have to pay less in taxes. The only reason so many people think Ryan’s plan is “brave” is because they agree with this cause.
When we call a person brave, what we usually mean is that his or her “bravery” is being employed towards an end we agree with. In this case, those who are hailing Ryan’s proposal as brave are doing so because they agree with its goal, which — no matter how many times people insist otherwise — is not deficit reduction. It’s destroying the social safety net. It just so happens that’s a cause a lot of wealthy people with a disproportionate influence on our political discourse happen to believe in. So they think it’s brave, even if the numbers are phony and even if it disproportionately punishes the poor. But there’s nothing at all brave about it.
By: Adam Serwer, The Washington Post, April 7, 2011
The Budget Battles: Republicans Maneuver Toward A Shutdown
The House Republicans on Tuesday made it clear to anyone who had missed it that they are not interested in a deal on the current federal budget. In a meeting at the White House, they rejected a deal to get through the next six months. President Obama, silent for too long on this fight, emerged from the meeting to say that he would tolerate no more ideological gamesmanship. But the Republicans, if anything, only increased their demands, and a government shutdown seemed likely to begin on Friday.
That the Republicans are not interested simply in reducing the deficit was made clear when the House Budget Committee chairman, Paul Ryan, released his budget plan for 2012 on the same day as the talks to finish the 2011 budget were falling apart. It was less a budget-balancing effort than a press release for the 2012 elections. Similarly, the party’s refusal to accept Mr. Obama’s overly generous budget offer for this year makes clear that its leaders prefer a shutdown to abandoning their ideological crusade to abolish their least favorite government programs.
If their goal was to reduce spending, they would have accepted the Democrats’ offer to cut $33 billion out of the budget for the next six months — the same amount as Republican leaders had originally requested before Tea Party members forced them to double it earlier this year. As the president noted, that offer constitutes the largest cut to domestic discretionary spending in history.
But Speaker John Boehner and his negotiating team have continually moved the end zone. They spurned the specific cuts proposed by the Democrats because they did not end the programs reviled by the Republicans, including education improvements, health care reform and infrastructure rebuilding. They now want a total of $40 billion, a target that just emerged on Tuesday.
After meeting with the Republicans, Mr. Obama suggested with some bitterness that they were still trying to score political points, demanding victories on abortion or gutting environmental regulation to keep the government open. He made it clear that that was not acceptable, and neither are demands to cut 60,000 Head Start teaching positions, or medical research, or other items that are vital to many Americans and the fragile economic recovery.
There will still be a few more meetings before the shutdown deadline, but leaders on both sides say they are more pessimistic about reaching agreement. The public may need to rely on the pain of an actual shutdown to bring radical House lawmakers back to reality.
By: Editorial, The New York Times, April 5, 2011
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