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
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
“An Inherent Relationship”: A Primer on Class Struggle
When we study Marx in my graduate social theory course, it never fails that at least one student will say (approximately), “Class struggle didn’t escalate in the way Marx expected. In modern capitalist societies class struggle has disappeared. So isn’t it clear that Marx was wrong and his ideas are of little value today?”
I respond by challenging the premise that class struggle has disappeared. On the contrary, I say that class struggle is going on all the time in every major institution of society. One just has to learn how to recognize it.
One needn’t embrace the labor theory of value to understand that employers try to increase profits by keeping wages down and getting as much work as possible out of their employees. As the saying goes, every successful capitalist knows what a Marxist knows; they just apply the knowledge differently.
Workers’ desire for better pay and benefits, safe working conditions, and control over their own time puts them at odds with employers. Class struggle in this sense hasn’t gone away. In fact, it’s inherent in the relationship between capitalist employer and employee. What varies is how aggressively and overtly each side fights for its interests.
Where else does class struggle occur? We can find class struggle wherever three things are at stake: the balance of power between capitalists and workers, the legitimacy of capitalism, and profits.
The most important arena outside the workplace is government, because it’s here that the rules of the game are made, interpreted, and enforced. When we look at how capitalists try to use government to protect and advance their interests — and at how other groups resist — we are looking at class struggle.
Capitalists want laws that weaken and cheapen labor. This means laws that make it harder for workers to organize unions; laws that make it easier to export production to other countries; laws that make it easier to import workers from other countries; laws and fiscal policies that keep unemployment high, so that workers will feel lucky just to have jobs, even with low pay and poor benefits.
Capitalists want tax codes that allow them to pay as little tax as possible; laws that allow them to externalize the costs of production (e.g., the health damage caused by pollution); laws that allow them to swallow competitors and grow huge and more powerful; and laws that allow them to use their wealth to dominate the political process. Workers, when guided by their economic interests, generally want the opposite.
I should note that by “workers,” I mean everyone who earns a wage or a salary and does not derive wealth from controlling the labor of others. By this definition, most of us are workers, though some are more privileged than others. This definition also implies that whenever we resist the creation and enforcement of laws that give capitalists more power to exploit people and the environment, we are engaged in class struggle, whether we call it that or not.
There are many other things capitalists want from government. They want public subsidy of the infrastructure on which profitability depends; they want wealth transferred to them via military spending; they want militarily-enforced access to foreign markets, raw materials, and labor; and they want suppression of dissent when it becomes economically disruptive. So we can include popular resistance to corporate welfare, military spending, imperialist wars, and government authoritarianism as further instances of class struggle.
Class struggle goes on in other realms. In goes on in K-12 education, for example, when business tries to influence what students are taught about everything from nutrition to the virtues of free enterprise; when U.S. labor history is excluded from the required curriculum; and when teachers’ unions are blamed for problems of student achievement that are in fact consequences of the maldistribution of income and wealth in U.S. society.
It goes on in higher education when corporations lavish funds on commercially viable research; when capitalist-backed pundits attack professors for teaching students to think critically about capitalism; and when they give money in exchange for putting their names on buildings and schools. Class struggle also goes on in higher education when pro-capitalist business schools are exempted from criticism for being ideological and free-market economists are lauded as objective scientists.
In media discourse, class struggle goes on when we’re told that the criminal behavior of capitalist firms is a bad-apple problem rather than a rotten-barrel problem. It goes on when we’re told that the economy is improving when wages are stagnant, unemployment is high, and jobs continue to be moved overseas. It goes on when we’re told that U.S. wars and occupations are motivated by humanitarian rather than economic and geopolitical concerns.
Class struggle goes on in the cultural realm when books, films, and songs vaunt the myth that economic inequality is a result of natural differences in talent and motivation. It goes on when books, films, and songs celebrate militarism and violence. It also goes on when writers, filmmakers, songwriters, and other artists challenge these myths and celebrations.
It goes on, too, in the realm of religion. When economic exploitation is justified as divinely ordained, when the oppressed are appeased by promises of justice in an afterlife, and when human capacities for rational thought are stunted by superstition, capitalism is reinforced. Class struggle is also evident when religious teachings are used, antithetically to capitalism, to affirm values of equality, compassion, and cooperation.
I began with the claim that Marx’s contemporary relevance becomes clear once one learns to see the pervasiveness of class struggle. But apart from courses in social theory, reading Marx is optional. In the real world, the important thing is learning to see the myriad ways that capitalists try to advance their interests at the expense of everyone else. This doesn’t mean that everything in social life can be reduced to class struggle, but that everything in social life should be examined to see if and how it involves a playing-out of class interests.
There is fierce resistance to thinking along these lines, precisely because class analysis threatens to unite the great majority of working people who are otherwise divided in a fight over crumbs. Class analysis also threatens to break down the nationalism upon which capitalists depend to raise armies to help exploit the people and resources of other countries. Even unions, supposed agents of workers, often resist class analysis because it exposes the limits of accommodationism.
Resistance to thinking about class struggle is powerful, but the power of class analysis is hard to resist, once one grasps it. Suddenly, seemingly odd or unrelated capitalist stratagems begin to make sense. To take a current example, why would capitalists bankroll candidates and politicians to destroy public sector unions? Why do capitalists care so much about the public sector?
It’s not because they want to balance budgets, create jobs, improve government efficiency, or achieve any of the goals publicly touted by governors like Scott Walker, Chris Christie, Rick Snyder, or John Kasich. It’s because of the profit and power they can gain by destroying the last remaining organizations that fight for the interests of working people in the political sphere, and by making sure that private-sector workers can’t look to the public sector for examples of how to win better pay and benefits.
Other parts of the agenda being pursued by corporate-backed governors and other elected officials also make sense as elements of class struggle.
Selling off utilities, forests, and roads is not about saving taxpayers money. It’s about giving capitalists control of these assets so they can be used to generate profits. Cutting social services is about ensuring that workers depend on low-wage jobs for survival. Capitalists’ goal, as always, is a greater share of wealth for them and a smaller share for the rest of us. Clear away the befogging rhetoric, the rhetoric that masks class struggle, and it becomes clear that the bottom line is the bottom line.
If class struggle is hard to see, it’s not only because of mystifying ideology. It’s because the struggle has been a rout for the last thirty years. But a more visible class struggle could be at hand. The side that’s been losing has begun to fight back more aggressively, as we’ve seen most notably in Wisconsin. To see what’s at stake in this fight and what a real victory might look like, it will help to call the fight by its proper name.
By: Michael Schwalbe, Professor of Sociology, North Carolina State University, Originally Published March 31, 2011, CommonDreams.org
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
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