Republican Policies Don’t Care About Poor People
I’m not saying that congressional Republicans don’t care about poor people. But they really care about rich people. So far, the policy agenda they’ve pushed has been a mixture of very expensive tax cuts for the very wealthy and very deep cuts to a lot of programs that focus on the very poor. It’s . . . curious.
Think back to the tax deal. The GOP’s demands were: 1) the extension of the Bush tax cuts for high-earners; and 2) a massive cut in the estate tax. Put together, the two items will increase the deficit by close to a trillion dollars over 10 years. If the GOP had wanted, they could’ve used that money for more tax cuts for the poor, or even the middle class. The Obama administration would’ve happily signed onto that compromise. But Republicans did not want that. If we were going to increase the deficit, we were going to do it on behalf of the wealthy.
Now they’ve moved onto deficit reduction, or at least spending cuts, and their priorities in the 2011 budget are telling. Their cuts are coming from non-defense discretionary spending. That’s a category of spending, as you can see here, that tends to focus on services to the poor, the jobless and children. Among other cuts, they’ve proposed slicing more than $1 billion off Head Start, $1.1 billion off the Public Housing Capital Fund, $752 million from the Special Supplemental Nutrition Program for Women, Infants and Children, or WIC, and $5.7 billion from Pell Grants. I could, of course, go on. Democrats have tried to widen the cuts out to other categories so their impact falls less heavily on the disadvantaged, but so far, Republicans have refused. If we’re going to cut spending, we’re going to do it on the backs of the poor.
As for the 2012 budget, we know Social Security is being left alone, and we know Medicaid — which is to say, health care for poor people — is taking a $1 trillion cut. If we’re going to reform entitlements, it seems, we’re going to start with the one that serves the poor.
It’s very difficult to argue that these programs are the most wasteful in the federal government. The Pentagon is burning through a lot more cash than Head Start. Medicare spends much more for health services than Medicaid. The mortgage-interest tax deduction is regressive, as is the deduction for employer-based health care, but as of yet, Republicans haven’t proposed reforming either. Again, I’m not saying Republicans don’t care about poor people. But so far, their policy proposals don’t. And you can’t chalk it up to an appetite for sacrifice, because for all that the GOP is asking from the poor, they’ve fought hard to protect the rich from having to make any sacrifices. So far, it’s been program cuts for the poor and tax cuts for the rich. It’s a disappointing set of priorities.
By: Ezra Klein, The Washington Post, April 1, 2011
The GOP’s Penny-wise, Pound-Foolish Spending Cuts
Let’s say that for every dollar you gave me, I gave you a crisp $10 bill in return. Good deal, right? Almost too good. But before you start to ask questions, I’ll remind you that this is my thought experiment. Perhaps I just love dollar bills. Or perhaps I just love you. At any rate, there are no strings attached, and you can take advantage of it more than once.
Now let’s say that you’re in debt and you need to get your finances in order. Do you start handing me more dollar bills? Or fewer?
If you’ve got any sense, you’ll give me more. Converting dollar bills into $10 bills is an excellent way to pay off your credit card. Except, it seems, if you’re a House Republican.
On March 1, House Republicans voted to cut $600 million from the budget of the Internal Revenue Service for the remainder of 2011, and they want even deeper cuts in 2012. Perhaps that doesn’t surprise you: Republicans don’t like spending — at least when they’re not in power — and they don’t like taxes. Why would they fund the IRS?
Well, as the Associated Press reported, “every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency’s budget.” It’s an easy way to reduce the deficit: You don’t have to cut heating oil for the poor or Pell grants for students. You just have to make people pay what they owe.
But deficit reduction is not the GOP’s top priority. It’s a bit lower on the list, somewhere between “get Styrofoam cups back into Congress” — an actual push the Republicans took up to thumb their nose at Nancy Pelosi’s environmental policies — and make “Sesame Street” beg for money. In fact, if you listen to Speaker John Boehner, he’ll tell you himself. “The American people want us to focus on creating jobs and cutting spending,” he has said. And that comment wasn’t a one-off: “Our goal is to cut spending,” he said in another speech.
Cutting spending is related to, but in important ways different from, cutting deficits. For one, it rules out tax increases. That’s how Republicans can lobby to make the Bush tax cuts permanent, at a cost of $4 trillion over 10 years, and yet say they’re fulfilling their campaign promises by making much smaller cuts to non-defense discretionary spending. If you add up what Republicans have offered since the election, the policies they’ve endorsed would increase deficits but also decrease spending, at least in the short term. The IRS example shows that spending cuts don’t always reduce the deficit. But it’s worse even than that: Spending cuts don’t always reduce government spending.
There are three categories of spending in which cuts lead to more, rather than less, spending down the line, says Alice Rivlin, former director of both the Congressional Budget Office and the Office of Management and Budget. Inspection, enforcement and maintenance. The GOP is trying to cut all three.
Let’s begin with the costs of cutting inspection — for example, the Food and Drug Administration and the Agriculture Department. Together, the agencies are charged with ensuring that the nation’s food is safe. That’s increasingly crucial as our interconnected, industrialized system makes contaminated food a national crisis rather than a local problem. In recent years, we’ve seen massive recalls stemming from E. coli in spinach, salmonella in peanut butter and melamine in pet food. Each required the recall of thousands of tons of food and alerts to consumers who, in many cases, were screened or treated.
The problem was bad enough — and the people and pets sick enough— that Congress passed a bipartisan food-safety bill during last year’s lame-duck session. But now Republicans want big cuts in the agencies’ budgets, meaning fewer inspectors and a higher chance of outbreaks and food-borne illness. And those don’t come cheap. They show up in our health-care costs, disability insurance and tax revenue, not to mention in the pain and suffering and even death they cause.
Next up: enforcement. As any budget wonk will tell you, cracking down on “waste, fraud and abuse” won’t cure all our fiscal ills. But waste, fraud and abuse do happen, particularly in Medicare and Medicaid, where they can be costly. Republicans are looking for big reductions in the Department of Health and Human Services, meaning fewer agents to conduct due diligence on health-care transactions. Costs will go up, not down.
Then there’s deferred maintenance. In 2009, the Society of Civil Engineers gave America’s existing infrastructure a grade of D. They estimated that simply maintaining America’s existing stock would require up to $2.2 trillion in investment. But Republicans have been cool to Obama’s calls to increase infrastructure investment. Just “another tax-and-spend proposal,” Rep. John Mica (R-Fla.) said when the initiative was announced. But a dollar in maintenance delayed — or cut — isn’t a dollar saved. It’s a dollar that needs to be spent later. And waiting can be costly. It’s cheaper to strengthen a bridge that’s standing than repair one that’s fallen down.
And there are plenty of examples beyond that. Republicans have proposed massive cuts to the Securities and Exchange Commission, which would make another financial crisis that much likelier. They’ve proposed cuts to the National Oceanic and Atmospheric Administration, which conducts tsunami monitoring. In their zeal to cut spending, they’re also cutting the spending that’s there to prevent overspending. Just as you have to spend money to make money, you also have to spend money to save money — at least sometimes.
There are all sorts of reasons Republicans are being penny-wise and pound-foolish. Cutting $100 billion in spending in one year sounded good on the campaign trail but turned out to be tough in practice. Curtailing the IRS and cutting the Department of Health and Human Services — and, particularly, its ability to implement health-care reform — is a long-term ideological objective for Republicans.
Whatever the reason, the effect will be the same: a higher likelihood of pricey disasters, an easier time for fraudsters, and bigger price tags when we have to rebuild what we could’ve just repaired.
By: Ezra Klein, The Washington Post, March 15, 2011
Social Security Hysteria Rebutted, Yet again
The WaPo editorial board apparently despises old people as much as Alan Simpson, given what they’re willing to put on their op-ed pages. Unfortunately, though, Charles Krauthammer doesn’t disintegrate into quite the degree of gibberish as Simpson, though he’s a liar. He particularly attacks OMB director Jacob Lew, and Lew’s assertion that Social Security is solvent until 2037 and doesn’t add to the deficit. Krauthammer’s argument: the Treasury bonds Social Security funds are invested in are “worthless” and Lew’s arguing otherwise is “a breathtaking fraud” because the “Social Security trust fund is a fiction.”
Dean Baker refutes.
It’s nice that Mr. Krauthammer thinks that government bonds are worthless…. While he is welcome to believe anything he wants, the bonds held by the Social Security trust fund are backed by the full faith and credit of the U.S. government. Krauthammer may want to default on bonds that belong to the nation’s workers, but his desires are not the same as reality.Selling these bonds to fund Social Security no more raises the deficit than the decision of a rich person to sell bonds to finance their consumption raises the deficit. The deficit was incurred when the money was lent to the Social Security trust fund in the first place.
The size of the deficit, including the money borrowed from Social Security — the on-budget deficit — is reported in every budget document put out by the government (e.g. here and here). Krauthammer might try to learn a bit about how the budget works before he goes off ranting about Jack Lew and Social Security….
In reality, the projected shortfall in the program is relatively distant and minor. The country has far more urgent concerns, like putting 25 million unemployed or under-employed people back to work. This should be the focus of our political leaders right now.
And Jacob Lew defends his, and Social Security’s honor:
Krauthammer is correct when he writes that there is no “lockbox” that keeps the money sent in by workers for until they retire. By design, when more taxes are collected than are needed to pay benefits, funds are invested in Treasury bonds and are held in reserve for when revenue collected is not enough to pay the benefits due. Yet these Treasury bonds are backed by the full faith and credit of the U.S. government in the same way that all other U.S. Treasury bonds are, making them anything but ”worthless IOUs” as Krauthammer suggests. The government has just as much obligation to pay back the bonds in the Social Security trust fund as we do to any other bondholders.Responsibly honoring that obligation – one that we planned for and always knew was there –entails undertaking fiscal policies that would make it easier, not harder, to meet these obligations. When I last was OMB Director at the end of the Clinton Administration, the Congressional Budget Office estimated $5.6 trillion in budget surpluses over the next decade because of fiscally responsible measures that Democrats and Republicans, working together, had taken….
This is the most important point: the problem is not with Social Security, but in the near term the mismatch between what we take in and what we spend in the rest of the budget. Working people had payroll taxes taken from their salaries to pay for future benefits, and instead the money was used to pay for tax cuts and other initiatives. It is hardly fair now to say that those working people caused the problem just when they are ready to collect benefits.
Krauthammer’s argument is inside out. We should not blame Social Security for our current fiscal problems when it is the irresponsible fiscal behavior of the past that has presented the country with future challenges to fund our commitments, including Social Security over the next two decades.
That irresponsible fiscal behavior was unfortunately extended by the tax-cut deal and intensifed by the payroll tax holiday, making it even easier for Social Security to be the target of deficit peacocks and the Very Serious People who believe “shared sacrifice” means everybody but the rich and corporations sacrifice. That aside, Lew is absolutely correct. Social Security is not the problem. Massive tax cuts for the rich and two unsustainable wars are the problem.
By: Joan McCarter, Daily Kos, March 12, 2011
Deficit Hawks and The Games They Play
For 30 years, conservative ideologues have played moderate deficit hawks for suckers.
You’d think this might endow those middle-of-the-road deficit-busters with a touch of humility. Fat chance. They stick with their self-righteous moralism, pretending to be bipartisan and beyond ideology. In fact, they make the problem they want to solve worse by continuing to empower the tax-cuts-in-every-season conservatives.
It’s thus satisfying to see President Obama ignore the willfully naive who are wailing over deficits. He knows that new revenue will have to play a big role in deficit reduction. He also knows that House Republicans are pretending we can cut our way out of this mess and would demagogue any general tax increases.
So he has proposed some serious spending cuts and some modest revenue increases to keep things stable as he embarks on a long struggle to move our dysfunctional budget politics to a better place. This annoys his deficit-obsessed critics, by which I mean just about everyone who says he should simply embrace the proposals of the Bowles-Simpson commission. Obama should smile, let them rage and go about his business.
Let’s look at history. When Ronald Reagan took office in 1981, he won big tax cuts coupled with big increases in military spending. The tax cuts and a severe recession tanked government revenue.
Unlike today’s conservatives, Reagan at least acknowledged mathematical reality and signed some tax increases. But these were insufficient, and it fell first to George H.W. Bush – the last truly fiscally responsible Republican – and then to Bill Clinton to restore budgetary sanity.
But the conservatives who dug the hole did nothing to get us out of it. On the contrary, they denounced the first President Bush for raising taxes, and every Republican voted against Clinton’s economic plan. For their bravery in supporting tax increases in 1993, Democrats lost control of Congress in 1994.
By the end of the Clinton years, we had a handsome surplus. In came the second President Bush who, with Republicans in Congress, declared the surplus too big. It was one problem they worked very hard to solve. Two tax cuts and two wars later, we were plunged into deficits – again. And the economic downturn that started on Bush 43’s watch made everything worse, cutting revenue and requiring more deficit spending to get the economy moving.
Where were the moderate deficit hawks in all this? They have a very bad habit. When conservatives blow up our fiscal position with their tax cuts, the deficit hawks are silent – or, at best, mumble a few words of mild reproach to have something on the record – and let the budget wreckage happen. Quite a few in their ranks (yes, including some Democrats) actually supported the Bush tax cuts.
But when it’s the progressives’ turn in power, the deficit hawks become ferocious. They denounce liberals if they do not move immediately to address the shortfall left by conservatives. Thus, conservatives get to govern as they wish. Liberals are labeled as irresponsible unless they abandon their own agenda and devote their every moment in power to cutting the deficit.
It’s a game for chumps. The conservatives play it brilliantly. By winning their tax cuts and slashing government revenue, they constrain what liberals can do whenever they get back into power.
How do we know our difficulties stem primarily from a shortage of revenue? Consider what would happen if we allowed all the tax cuts scheduled to expire in 2012, including the ones enacted under Bush, to go away. That would produce nearly as much deficit reduction over the next decade – roughly $4 trillion – as all the maneuvers of the Bowles-Simpson commission put together. If you want to be serious about closing the deficit, ending the Bush tax cuts is a good place to start.
The commission’s work showed just how effective conservatives have been. By saying they will never, ever, ever raise taxes, conservatives intimidate moderates into making concession after concession.
In the end, the Senate conservatives on the commission – but not the House conservatives – supported some mild tax increases. But Bowles-Simpson proposed about twice as much in spending cuts as in revenue increases. You would think that moderates could at least hold out for a 50-50 split. But no, they’ll do anything to win over a few conservatives.
As a result, any conservative who supports even the smallest tax increase is hailed as courageous. Any liberal who proposes moderate spending cuts is condemned as a gutless coward unless he or she also supports slashing Social Security and Medicare. What’s “moderate” or “balanced” about this?
I hope Obama has the spine to keep calling the bluff of the deficit hawks until they get serious about changing the politics of deficit reduction. We can’t afford another 30 years of fiscal evasion.
By: E. J. Dionne, Jr-Op-Ed Columnist, The Washington Post, originally posted February 17, 2011
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