Tag Archives: Center on Budget and Policy Priorities

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BUDGET:Paul Ryan’s Path To The Poorhouse

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Repost from 2011

Writing in Rupert Murdoch’s Wall Street Journal, House Budget Committee Chairman Paul Ryan (R-WI) unveiled the Republican budget plan that he calls the “Path to Prosperity,” a plan that “would privatize Medicare for future retirees, cut spending on Medicaid and other domestic programs, and offer sharply lower tax rates to corporations and the wealthy.” Right-wing pundits in corporate media immediately offered plaudits. CNN contributor Erick Erickson praised the “Gospel” of Paul Ryan as a “solid proposal of solid reform.” New York Times columnist David Brooks says that Ryan’s “courageous” “leadership” “will set the standard of seriousness.” Reuters columnist James Pethokoukis thinks the plan is the “most important and necessary piece of economic legislation since President Ronald Reagan‘s tax cuts in 1981.” But Ryan’s plan doesn’t ask the most well-off Americans or the country’s corporate titans to make any sacrifice, instead leaving the burden of deficit and debt reduction on the middle class, seniors, and a “shrunken public sector.” “The GOP’s budget breaks the fundamental promise of this country: That if you work hard and play by the rules, you can take care of your family and retire with dignity and peace of mind,” Health Care For America Now’s Melinda Gibson says. The 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,” an analysis from the Center for Budget and Policy Priorities found.

RYAN’S MIDDLE-CLASS TAX HIKE: Ryan uses boilerplate language and topline bullet points to obscure an important fact: his plan would almost certainly raise taxes on most middle-income Americans even as it slashes taxes for the wealthiest. For Ryan to cut the top rate by nearly one-third and still keep revenue the same as it would have been under the Bush tax cuts regime, he has to raise taxes somewhere else. “And though he pointedly refuses to tell us where those tax hikes will come from, we can make an educated guess,” Michael Linden, Associate Director of Tax and Budget Policy at the Center for American Progress Action Fund, writes. “The rate cut at the top, of course, benefits only those in the top brackets (the richest two percent of Americans), but to pay for it, Ryan says he will ‘broaden the tax base.’ Broadening the tax base means removing some tax expenditures that currently benefit the middle class.” Ryan’s vagueness is probably deliberate, “since any detailed description of his ideas for tax ‘reform’ would reveal a massive tax hike for the middle class.” What about Ryan’s estimates of booming economic prosperity, including taking “unemployment rate down to 4% by 2015”? He is relying on the Heritage Foundation’s Center for Data Analysis, which used the same “megalomaniacal” methods to promise us that George W. Bush’s tax policies would lead the country into a brave new era of prosperity. Heritage claimed Bush’s tax cuts would create millions of jobs when in fact payroll employment was back down to 2001 levels in 2009, that they would boost tax revenue when in fact it led to record deficits, and they promised a surge in personal income when in fact the country got the worst income performance ever. “If you believe George W. Bush unleashed an unprecedented economic boom with great jobs performance, rising incomes, and the paying off of the national debt then you’ll find a lot to like about Rep. Ryan’s plan,” CAP’s Matt Yglesias writes.

RYAN ATTACKS SENIORS AND FAMILIES: The Ryan budget plan would, quite simply, put an end to our current healthcare system, repealing the Affordable Care Act, and replacing Medicare and Medicaid with private systems that provide less care at a higher cost. The plan’s repeal of the Obama health care legislation means 32 million people are likely to lose their health insurance coverage. The Ryan budget “phases out Medicare over 10 years,” Talking Points Memo’s Josh Marshall explains. “Ryan’s extremist plan would decimate Medicare and Medicaid and terminate the Affordable Care Act, undermining the economic security of America’s struggling middle class.” “Republicans want to roll back the clock” by “ending Medicare and screwing over seniors,” Washington Monthly’s Steve Benen writes. “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,” the CBPP explains. Ryan’s plan is a “radically ambitious plan to roll back the Great Society and fundamentally transform how the United States takes care of its poor, sick and elderly,” Salon’s Andrew Leonard summarizes. “The wealthiest Americans and corporations are getting tax breaks while healthcare for the most vulnerable Americans is under assault,” Leonard added. “Dismantling Medicare while giving bonus tax breaks to the very wealthiest in America is what may pass for bold in Washington, but in Oregon it is unacceptable,” says Sen. Jeff Merkley (D-OR). “Paul Ryan made clear that the Republican budget will protect Big Oil companies subsidies over seniors health care,” said Jesse Ferguson of the Democratic Congressional Campaign Committee. “It’s already becoming clear who will be the priority in the House Republican budget — special interests, not middle class families.”

RYAN ATTACKS EDUCATION: The budget lays out little in terms of cuts to specific programs, instead simply decreeing caps on levels of spending. But one cut is explicitly proposed in the document — a cut to the Pell Grant program, which provides college tuition assistance to low-income students. If implemented, this would be the largest reduction in Pell Grants in history, more than eight times higher than the previous record, which was a $100 reduction in the maximum award in 1994. These cuts “will reduce the number of low income students receiving Bachelor’s degrees each year by about 61,000.” “It’s obviously pretty drastic, and the impact on Pell is dire,” says Becky Timmons, assistant vice president for government relations at the American Council on Education. Pell Grants are key to the country’s economic competitiveness and to boosting an educational attainment rate that has stagnated. Cutting them in this way provides little in terms of real budgetary savings, but undermines economic competitiveness and the nation’s supply of human capital

Center for American Progress

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CONGRESS: Ryan’s Radical Vision


Republicans announced last Friday that Rep. Paul Ryan (WI), chairman of the House Budget Committee, will deliver the GOP‘s response to President Obama’s State of the Union address tomorrow. According to reports, GOP leaders chose Ryan because he is supposedly a “champion of slashing government spending.” The seven-term Wisconsin congressman gives Republicans a “chance to emphasize their core message: government spending must come down to reduce the nation’s annual deficit and long-term debt.” House Speaker John Boehner (R-OH) said Ryan — who has been given “stunning and unprecedented” power to shape the budget — is “uniquely qualified to address the state of our economy and the fiscal challenges that face our country.” Ryan is known as the GOP’s numbers guy in the House, and he laid out last year what he calls a “Roadmap” to fiscal health. But as the Washington Post’s Ezra Klein notes, “The more they elevate Ryan, the more they elevate Ryan’s Roadmap. And that document is a timebomb for them.”

PRIVATIZING ENTITLEMENTS: Ryan’s Roadmap puts Americans on the path of privatizing entitlement programs, such as Social Security. The plan boasts about “the creation of personal investment accounts for future retirees” that are “the property of the individual.” (Emphasis in the original document). “Individuals will be able to join the investor class for the first time,” the Roadmap says. The Center on Budget and Policy Priorities (CBPP) notes that “the Ryan plan proposes large cuts in Social Security benefits — roughly 16 percent for the average new retiree in 2050 and 28 percent in 2080 from price indexing alone.” It “initially diverts most of these savings to help fund private accounts rather than to restore Social Security solvency.” CBPP also notes that the Roadmap “would eliminate traditional Medicare, most of Medicaid, and all of the Children’s Health Insurance Program” by creating a private voucher system that won’t keep up with the cost of health care. By 2080, under Ryan’s plan, the Medicare program would be reduced by nearly 80 percent below its projected size under current policies. CBPP summed up Ryan’s plan: The Roadmap’s cuts “would be so severe that CBO estimates they would shrink total federal expenditures (other than on interest payments) from roughly 19 percent of GDP in recent years to just 13.8 percent of GDP by 2080. Federal spending has not equaled such a low level of GDP since 1950, when Medicare and Medicaid did not yet exist, Social Security failed to cover many workers, and close to half of the elderly people in the United States lived below the poverty line.”

MIDDLE CLASS TAX INCREASES: Citizens for Tax Justice found that Ryan’s Roadmap would raise taxes on 90 percent of taxpayers and drastically lower them for the richest Americans. The Economic Policy Institute (EPI) recently reported that the rates for the middle class would be higher than those for the rich under Ryan’s plan. “Middle-class families earning between $50,000 and $75,000 a year would see their average tax rate jump to 19.1% (from 17.7%) under this plan — an increase of $900 on average,” EPI says, while at the same time, “Millionaires would see their average tax rate drop to 12.8%, less than half of what they would pay relative to current policy.” As EPI’s Andrew Fieldhouse concluded, under the Roadmap, “a long tradition of progressive taxation would be abandoned; millionaires and Wall Street bankers would pay significantly lower tax rates than middle-class workers. … Income inequality would soar.” In another giveaway to the rich, the Roadmap calls for a total repeal of the estate and corporate taxes and would introduce a national sales tax. Citizens for Tax Justice (CTJ) said this idea “would eat up a much larger percentage of total income for poor and middle-class families than wealthy families” because the former “spend most or all of their income on consumption,” while “high-income families are able to save much more of their income.” Ryan’s plan claims federal tax revenue will be 19 percent of GDP, but the Tax Policy Center found last year that his proposal would only bring in “approximately 16 percent of GDP, which amounts to a $4 trillion revenue shortfall over ten years.”

LESS REVENUE, MORE DEBT: Despite raising taxes on 90 percent of Americans, the federal government will lose $2 trillion in revenues over the next 10 years under Ryan’s plan, according to CTJ. “It’s difficult to design a tax plan that will lose $2 trillion over a decade even while requiring 90 percent of taxpayers to pay more. But Congressman Ryan has met that daunting challenge,” CTJ wrote. Looking at the most optimistic figures, the Roadmap won’t balance the budget until at least 2063 and it won’t reduce federal debt for decades, exceeding 100 percent of GDP before starting to come down. While proposing drastic cuts to entitlement programs, Ryan said he wants to reduce discretionary spending — which includes such expenditures as education, homeland security and other defense spending — but he has no idea what programs to cut. “I can’t tell you the answer to that,” he said earlier this month. However, anticipating the plan’s unpopularity, GOP leadership isn’t publicly embracing Ryan’s plan but at the same time, it appears willing to allow it to go forward. During the midterm election campaign, the GOP dropped Ryan’s Roadmap from its “Pledge to America” scheme and as the conservative National Review noted last week, “praise for the Wisconsin Republican comes easy and often, full-scale endorsement of the roadmap less so.” But while Majority Leader Eric Cantor (R-VA) said last week that he supports only “elements” of the plan, he said yesterday on NBC’s Meet the Press that “we need to embrace” its direction. And last year, Boehner wouldn’t endorse the Roadmap, but at the same time couldn’t name any specific part he disagreed with. But if Boehner dislikes Ryan’s plan so much, it’s unclear why he made him chairman of the House Budget Committee and gave him new and unprecedented powers to unilaterally set spending limits instead of subjecting those limits to a vote on the House floor. Speaking of Ryan’s new power, Budget Committee Ranking Member Chris Van Hollen (D-MD) said, “Unfortunately, the House GOP is reverting back to the same arrogant governing style they implemented when they last held the majority and turned a surplus into a huge deficit.”