“Ryan’s America”: Here’s How Much It Would Hurt To Be Poor Under Paul Ryan’s Budget
There are many different ways to talk about Paul Ryan’s Roadmap, but maybe the most useful is to imagine how his budget affects your budget.
How much more money would you keep under his broad tax plan? How much more would you have to save to pay for health care?
And for the low-income, whom—as we’ll see—bear the brunt of Ryan’s cuts: How alone would they be in Ryan’s America?
But let’s start with a bit of basic arithmetic.
There are two ways that the government’s budget can affect yours. Clearly, one is taxes. More than 80 percent of government revenues comes from individuals’ wages and income. (The rest comes from corporate taxes and things like excise taxes on gasoline, which also affects our budgets, but less directly.)
Two is spending. Although most of us might think of government as providing public goods like airports and security, $3 out of every $5 Washington spends is basically insurance—a transfer to those who are old, sick, and poor. Social Security writes checks equal to 20% of government outlays. Medicare, Medicaid and CHIP account for another 20%. Safety net programs and benefits for veterans and federal retirees account for another 20%.
So, a full accounting of how Ryan’s budget would affect your budget must consider how much he would cut our taxes and how much he would cut our transfers.
TAXES. Ryan cuts income tax rates and abolishes investment taxes to reduce government revenues by about $450 billion* per year over the next ten years. (That’s after he makes permanent the Bush/Obama tax cuts.)
We don’t know exactly how Ryan’s tax cuts would break down by family income level, but the Tax Policy Center has published an estimate based on the Ryan-inspired budget passed by the House of Representatives this year. The upshot is that the federal income tax code—the one highly-progressive part of our tax system—would become significantly less progressive. Taxes would barely change (or even rise) on the low-income Americans, and the top 1% would see a windfall from the elimination of taxes on most of their investment income.
“Those making $1 million or more would enjoy an average tax cut of $265,000 and see their after-tax income increase by 12.5 percent,” TPC found. “By contrast, half of those making between $20,000 and $30,000 would get no tax cut at all.”**
SPENDING. Ryan is most famous for his Medicare plan, but if his budget became law at midnight tomorrow, the most dramatic changes over the next ten years would be everything but Medicare. That’s because Ryan’s long-term plan to move Medicare from a defined-benefit fee-for-service system (where government is your insurance) to a defined-contribution system (where government writes you a check to help you pay somebody else for insurance) is truly a long-term plan. It wouldn’t begin to take effect until the early 2020s. The typical family might prepare for a more modest Medicare by putting more money away. They might leave more of their salaries in a savings account. They might invest in the stock market, with the understanding that any gains wouldn’t be taxed. They might use their modest income gains to buy a house, with the intention to sell at a tax-free gain later.
Ryan slashes deeply, but he spares defense and Social Security, which, together, account for 40% of the budget. That means his $4 trillion in cuts come mostly out of health care spending, income security spending, and basic government duties. By 2023, Ryan would spend 16 percent less than Obama on income security programs like unemployment benefits and food stamps. He would spend a quarter less on transportation, and 13 percent less per veteran, according to Brad Plumer.
Medicaid spending would be shaved by about a third, and the Urban Institute calculated that a similar proposal would force the states to drop between 14 million and 27 million people from Medicaid by 2021 (note: that’s an extreme prediction). It’s not clear exactly what programs would be cut, or by exactly how much. What is clear is that everything within the bundle of government responsibility—from subsidizing science research to subsidizing education to keeping up national parks and law enforcement—would come under pressure for cuts to make room for the massive and regressive cuts to taxes.
What does that budget mean for your budget? It rather depends where you fall on the income ladder. Romney is relieving the richest Americans from some of their duties to pay for the risk-protection of the poor, and he is asking some of the poorest Americans to accept less help from the government in exchange for … well, the virtue of independence from government. It is stark, but broadly accurate, to say that the less you benefit from Ryan’s tax cuts, the more you would potentially suffer from Ryan spending cuts. It is possible—and, in Ryan’s vision, duly hope for—that devolving responsibilities from the federal government to the states and the private sector will drive efficiencies. But, as the GOP likes to point out about the president, “hope is not a policy,” and it is definitely not an inevitability.
Remember when Romney said he’s “not concerned about the very poor” because there’s a safety net for them? Well, there wouldn’t be the same safety net after Ryan’s plan took root. Romney doesn’t have to embrace every detail of Ryan’s plan, and he won’t. But he has embraced the philosophy of Ryan’s vision: That true freedom means freedom from government dependency, and that the poor are somehow richer, in spirit or in literalness, if they take less money from the government. Ryan believes that his budget could unlock spectacular growth and increase lower-income wages. And it might! But most of what we know about the impact of technology, emerging markets, and off-shoring suggests that gaping income inequality is a side-effect of global capitalism more than an outcome of progressive government.
This budget would have a very predictable outcome: It would make poor families poorer, and more exposed to the risks of medical or financial calamity, all under the banner of “Responsibility And Freedom.” Ryan is free to march under his banner. But don’t ask me to call it responsible.
By: Derek Thompson, The Atlantic, August 14, 2012
“Simply A Number Decreed As Necessary”: Romney’s Budget Plan Requires Even Deeper Cuts Than Ryan’s
Rep. Paul Ryan (R-WI) will hit the campaign trail today in his first week as Mitt Romney’s running mate. Deservedly, much of the attention on Ryan so far has been regarding his radical budget, which hugely shifts taxation down the income scale and guts important government investments.
But Romney’s budget also includes substantial reductions to key federal investments and the social safety net, in order to cut taxes for the wealthy and maintain sky-high defense spending. In fact, as the Center on Budget and Policy Priorities noted, Romney’s budget would require even deeper cuts to spending that Ryan’s, in order to keep defense spending at an arbitrarily set percentage of the economy:
– Under the Ryan plan, core defense spending (the defense budget other than war costs and some relatively small items such as military family housing),[11] would total about $5.7 trillion over the ten-year period 2013-2022. The Romney plan would increase core defense spending to $7.9 trillion. The Ryan plan increases core defense funding modestly relative to the existing BCA caps, but core defense would nevertheless decline to 2.6 percent of GDP by 2022. In contrast, Governor Romney would increase core defense to 4 percent of GDP.
– The Ryan plan would cut entitlement and discretionary programs (outside of core defense and net interest) by $5.2 trillion over ten years.[12] The Romney proposal would cut this spending by between $7.0 trillion and $9.6 trillion, depending upon whether the budget is balanced. Thus, Governor Romney’s ten-year cuts would range from one-third deeper than those in the Ryan budget to almost twice as deep as the Ryan cuts.
These cuts would have severe consequences for individual programs, including potentially throwing 13 million people off of the food stamp program.
As Bloomberg News noted, Ryan’s tax plan involves giving slightly more away to the wealthy than does Romney’s, but Romney more than makes up for it with his budget’s gutting of programs that aid the middle-class and low-income Americans. And he does it in order to preserve a level of defense spending that has nothing to do with defense priorities, but is simply a number that Romney decreed is necessary.
By: Pat Garofalo, Think Progress, August 13, 2012
“A Not So Distant Nightmare”: Women Will Get Pushed Off The Fiscal Cliff
Remember that time when Congress almost defaulted on our debt? It may seem like a distant nightmare, but we’re still living with repercussions from the debt ceiling showdown. In order to get Congress to lift the ceiling a year ago, President Obama struck a deal that will cut $2.4 trillion in spending over ten years and formed a Congressional committee that was supposed to recommend ways to cut another $1.5 trillion from the deficit. If the committee failed to come up with the cuts, sequestration would kick into gear, with $1 trillion in cuts evenly split between defense and non-defense spending come January 2. The latter never came to fruition, so we’re now on a collision course with the former.
These automatic cuts, known as sequestration, have (unsurprisingly) become a political hot potato. They’ve even trickled into the campaign trail. But if the cuts move forward, the pain won’t just be political. They’ll hurt everyday Americans—but not across the board. Women are going to shoulder a disproportionate amount of the burden. While the defense lobby has been loudly pushing back on the $500 million to be slashed from its budgets, the $500 million cuts from domestic programs could be devastating, especially for women.
Education will take a big hit, which impacts women in more ways than one. Immediately of concern will be the fact that 100,000 children could get bumped from Head Start’s rolls, out of a total of 962,000. That’s because the automatic cuts will take a $590 million chunk out of federal spending on the program. That comes on top of a huge decline in state financing for the program over the past decade or so—it fell 45 percent, or $122 million. While there have been concerns raised about whether Head Start’s effects actually stay with enrollees, working mothers need more childcare options when they head to their jobs, not fewer. Less than 60 percent of 3-to-5-year-olds are enrolled in an organized childcare or early education program, and just about half of low-income children are. Those numbers can only go down after these cuts take effect.
Speaking of childcare, working mothers who rely on options other than Head Start will also suffer. Assistance for 80,000 kids will dry up after the cuts take effect. The recession has already hammered this spending at the state level. While federal funds had flowed in to support these programs through the stimulus, by the end of 2010 the money had dried up. That meant that thirty-seven states pulled back on assistance in one form or another last year, making families worse off than a decade ago, according to analysis by the National Women’s Law Center.
Women will also, of course, share some of the pain from cuts to other programs like AIDS drug assistance and substance abuse treatment programs. And while these cuts sound bad now, they could actually get worse down the road. While there’s now a “firewall” between defense and non-defense spending to make sure both are equally cut, that disappears after two years. NWLC has warned that this could mean a bigger share of the cuts fall on the non-security programs at that point.
The spending cuts will trickle down in other ways. It’s not just mothers who will find their struggles increasing. Women are the majority of the public sector workforce—and they’ve lost more than their share of those jobs as federal and state spending has been slashed during the recovery. These cuts will only push that trend along. Cuts to Head Start alone will eliminate 30,000 teacher, aide and administrative positions.
Other public sector workers could be hit. If (and when) federal spending is cut from state and local budgets, many may have to eye even more government layoffs. Just after the debt ceiling deal was announced, mayors and governors were already bracing for the cuts to impact their budgets. Budget restrictions at the federal level also mean many agencies will likely have to turn to furloughs, hiring freezes and layoffs.
The sequestration cuts may have morphed into an election-year football, but they have real consequences for Americans who are already struggling to get by. And women, who have really suffered from the sluggish recovery, are going to be hit fastest and hardest. While figures in the millions and billions are hurled like insults from side of the aisle to the other, it’s worth keeping in mind how drastic the real-life consequences will be and who will feel them.
By: Bryce Covert, The Nation, July 30, 2012
“Typical Of Cowards”: Romney Blames Obama For GOP Defense Cuts
For the last two weeks Mitt Romney’s campaign has incessantly attacked President Obama for the cuts to defense spending mandated by the agreement he made with Congress to lift the debt ceiling last year. Romney and his surrogates blame Obama, instead of their fellow Republicans in Congress, for this turn of events, and claim it will damage America’s national security. They are also playing hypocritical politics, and violating their own supposed principles, by complaining that the cuts will cost jobs in swing states such as Virginia. Here’s a sampling of their statements:
§ Mitt Romney, in his speech Tuesday to the VFW: “We are just months away from an arbitrary, across-the-board budget reduction that would saddle the military with a trillion dollars in cuts, severely shrink our force structure, and impair our ability to meet and deter threats.”
§ Senator Jim Talent (R-MO) on a Romney campaign conference call: “They’re planning to cut 200,000 troops. Given the state of the economy, it’s equivalent to laying them off and the military is sending them to the unemployment lines.… at a time when Iran is making progress towards a nuclear weapon, Syria is in the middle of a civil war, Chinese power is surging, we have men and women fighting and putting their lives at risk in the field in Afghanistan. So in all my years in and around Washington, it’s the most irresponsible thing a Commander-in-Chief has done.”
§ Tea Party hero and Virginia Attorney General Ken Cuccinelli in a Romney campaign statement: “For President Obama to play budgetary Russian roulette with national defense is shameful. The damage to our local economy here in Virginia will be enormous. But the damage to our national security is what really counts.”
§ Representative Scott Rigell (R-VA), in a statement for the Romney campaign: “The President must address—directly and decisively—the massive, violent reduction in defense spending that is headed our way. Pink slips are looming, Virginia will be reeling come January, and our Commander in Chief is eerily silent on this issue. That, in my opinion, is a breach of his duty as head of our armed forces.
§ Romney surrogate Governor Bob McDonnell (R-VA) said on CNN: “I’m worried not only about jobs in Virginia, but I’m worried about the security of the United States of America.”
As conservative Ramesh Ponnuru points out in a Bloomberg View column, Republicans are making a big-government Keynesian argument for defense spending, that it’s a necessary public employment program. They utterly reject this logic if applied to, say, retaining public school teachers or police officers. “The Republican position on federal spending could not be clearer: It doesn’t create jobs. Except when it goes to defense contractors,” writes Ponnuru.
As Dave Weigel notes in Slate, Romney and his supporters have taken to audaciously referring to “President Obama’s Massive Defense Cuts,” as if they were his alone. In fact, they are not Obama’s at all. Obama, of course, was perfectly happy to let Congress raise the debt ceiling as it always had in the past without attaching any conditions. Republicans insisted that only massive spending cuts, and no additional revenue, would have to accompany any such vote. They held the economy—which would have collapsed from a governmental debt default—hostage. So Obama gave in and agreed to spending cuts. The only concession he won in exchange for cuts to domestic spending was cuts to defense as well. But the defense cuts would have been avoided if Republicans had not been so irresponsible in the first place.
Where did Romney figure into all of this? As is typical of the coward who wants to lead the free world, he hid out, saying as little as possible. When the deal was finally reached, he simultaneously condemned it for not going far enough and for cutting defense spending. “As president, my plan would have produced a budget that was cut, capped and balanced—not one that opens the door to higher taxes and puts defense cuts on the table,” he said.
How one balances the budget without cutting defense spending remains a mystery no Republican has actually solved. Defense spending accounts for 24 percent of our total federal budget. Most of the rest is taken up by mandatory spending on entitlement programs and interest on our debt.
Republicans such as Romney make no effort to actually prove that the sequestration cuts will damage the military. They just assert it.
Any look at the statistics will demonstrate the absurdity of their claims. In 2011 the United States spent $698 billion on defense. That is 43 percent of the world’s share. China was number two, at $119 billion. Every other country in the top ten military spenders, except for Russia, was an ally. Russia and China combined, at $178 billion, spent vastly less than the United States. So which enemy is challenging us for global supremacy? How could the sequestration cuts of $500 billion over ten years, as we wind down the wars in Afghanistan and Iraq, possibly make us unable to defend ourselves?
Romney doesn’t say, because he does not have an answer. Rather, he is simply flailing, looking for ways to attack President Obama on national security, when polls show Obama is more trusted on the issue. The American public is hardly known for its deep knowledge of global affairs, but they do know who killed Osama bin Laden and decimated Al Qaeda’s top leadership, and it wasn’t Mitt Romney.
By: Ben Adler, The Nation, July 26, 2012
“Pin The Tail On The Donkey”: Mitt Romney Should Put Up Or Shut Up On Syria
It’s time for Mitt Romney to put up or shut up.
It’s irresponsible for Romney to criticize President Obama for not being aggressive enough with Syria and then fail to tell Americans how he would handle the crisis if he became president.
It’s time for Americans to pin the tail on Romney and make him accountable for his bellicose statements.
Romney is all hat and no cattle on national security problems. The last time we elected a governor without foreign policy experience, George W. Bush lied about weapons of mass destruction in Iraq to lead us into a tragic war that cost Americans dearly.
Romney has only two things on his thin foreign policy resume. He has millions of dollars stashed in bank accounts in the Cayman Islands and Switzerland. And he sent American jobs overseas while he ran Bain Capital.
Romney’s demonstrated that he was clueless when the former governor and former liberal identified Russia as our number one geopolitical enemy. The party boys in China must have had a hearty laugh when they heard that. My guess is they chuckled in Moscow, too. The commissars in the Kremlin know better than anyone that Russia has as much control over international politics as Charlie Sheen has over his temper.
Romney is clearly out of touch with Americans on defense spending. Thanks to President Obama, we are out of Iraq and close to an exit in Afghanistan. But the former moderate and current conservative GOP presidential candidate wants to increase defense spending. Americans are tired of spending hundreds of billions of dollars on wasted wars and overpriced weapons systems. Defense contractors love Romney as much as bankers, billionaires, and oil company executives do. The military industrial complex is alive and well in Romneyworld.
National surveys indicate that Americans give Barack Obama good grades as commander in chief of the armed forces. Americans credit the president for his handling of national security problems because he has an impressive record.
Barack Obama was able to do something in two years (kill Osama bin Laden) that President Bush couldn’t get done in eight. The former president sacrificed the lives of more than 4,500 brave young Americans and spent hundreds of billions of dollars to depose Saddam Hussein.
The current commander in chief built an international coalition which drove Muammar Qadhafi out of power without the loss of a single American life. The would-be president might want to think about the current president’s success with Libya before he gets the United States into another drawn out and costly war.
The United States is playing high stakes poker in the world and Mitt Romney would show up at the game without cards and without a clue.
By: Brad Bannon, U.S. News and World Report, May 31, 2012
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