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
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
“Eat The Future”: The GOP And Federal Spending
On Friday, House Republicans unveiled their proposal for immediate cuts in federal spending. Uncharacteristically, they failed to accompany the release with a catchy slogan. So I’d like to propose one: Eat the Future.
I’ll explain in a minute. First, let’s talk about the dilemma the G.O.P. faces.
Republican leaders like to claim that the midterms gave them a mandate for sharp cuts in government spending. Some of us believe that the elections were less about spending than they were about persistent high unemployment, but whatever. The key point to understand is that while many voters say that they want lower spending, press the issue a bit further and it turns out that they only want to cut spending on other people.
That’s the lesson from a new survey by the Pew Research Center, in which Americans were asked whether they favored higher or lower spending in a variety of areas. It turns out that they want more, not less, spending on most things, including education and Medicare. They’re evenly divided about spending on aid to the unemployed and — surprise — defense.
The only thing they clearly want to cut is foreign aid, which most Americans believe, wrongly, accounts for a large share of the federal budget.
Pew also asked people how they would like to see states close their budget deficits. Do they favor cuts in either education or health care, the main expenses states face? No. Do they favor tax increases? No. The only deficit-reduction measure with significant support was cuts in public-employee pensions — and even there the public was evenly divided.
The moral is clear. Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.
How can voters be so ill informed? In their defense, bear in mind that they have jobs, children to raise, parents to take care of. They don’t have the time or the incentive to study the federal budget, let alone state budgets (which are by and large incomprehensible). So they rely on what they hear from seemingly authoritative figures.
And what they’ve been hearing ever since Ronald Reagan is that their hard-earned dollars are going to waste, paying for vast armies of useless bureaucrats (payroll is only 5 percent of federal spending) and welfare queens driving Cadillacs. How can we expect voters to appreciate fiscal reality when politicians consistently misrepresent that reality?
Which brings me back to the Republican dilemma. The new House majority promised to deliver $100 billion in spending cuts — and its members face the prospect of Tea Party primary challenges if they fail to deliver big cuts. Yet the public opposes cuts in programs it likes — and it likes almost everything. What’s a politician to do?
The answer, once you think about it, is obvious: sacrifice the future. Focus the cuts on programs whose benefits aren’t immediate; basically, eat America’s seed corn. There will be a huge price to pay, eventually — but for now, you can keep the base happy.
If you didn’t understand that logic, you might be puzzled by many items in the House G.O.P. proposal. Why cut a billion dollars from a highly successful program that provides supplemental nutrition to pregnant mothers, infants, and young children? Why cut $648 million from nuclear nonproliferation activities? (One terrorist nuke, assembled from stray ex-Soviet fissile material, can ruin your whole day.) Why cut $578 million from the I.R.S. enforcement budget? (Letting tax cheats run wild doesn’t exactly serve the cause of deficit reduction.)
Once you understand the imperatives Republicans face, however, it all makes sense. By slashing future-oriented programs, they can deliver the instant spending cuts Tea Partiers demand, without imposing too much immediate pain on voters. And as for the future costs — a population damaged by childhood malnutrition, an increased chance of terrorist attacks, a revenue system undermined by widespread tax evasion — well, tomorrow is another day.
In a better world, politicians would talk to voters as if they were adults. They would explain that discretionary spending has little to do with the long-run imbalance between spending and revenues. They would then explain that solving that long-run problem requires two main things: reining in health-care costs and, realistically, increasing taxes to pay for the programs that Americans really want.
But Republican leaders can’t do that, of course: they refuse to admit that taxes ever need to rise, and they spent much of the last two years screaming “death panels!” in response to even the most modest, sensible efforts to ensure that Medicare dollars are well spent.
And so they had to produce something like Friday’s proposal, a plan that would save remarkably little money but would do a remarkably large amount of harm.
By: Paul Krugman, Op-Ed Columnist, The New York Times-February 13, 2011
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