Quantcast

The Ryan Budget: Who It Helps and Who It Hurts | The Nation

  •  
George Zornick

George Zornick

Action and dysfunction in the Beltway swamp. E-mail tips to george@thenation.com

The Ryan Budget: Who It Helps and Who It Hurts


House Budget Committee Chairman Representative Paul Ryan, R-WI, speaks about his budget plan on Tuesday, March 20, 2012, during a news conference on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)

In the Wall Street Journal this morning, Representative Paul Ryan gets halfway to being honest about this year’s House GOP budget: he writes that “the contrast with our budget [and the president’s] couldn't be clearer: We put our trust in citizens, not government. Our budget returns power to individuals, families and communities.”

That’s an honest admission by Ryan that the GOP budget is a philosophical, political document: it seeks to radically alter the relationship between Americans and the federal government. Never mind that his numbers are fuzzy to the point of fantasy, nor that despite all the bombast about addressing the debt crisis, Ryan’s plan wouldn’t restore a federal surplus for nearly three decades, if it ever does—that’s all besides the point. This budget is an ideological proposition that proposes help for some and sacrifice for others in the name of a different society.

Where he’s dishonest, of course, is the “returning power to individuals” bit. That’s a common conservative trope for simply cutting government benefits—one might gain some perverse interpretation of empowerment, but practically speaking, just have less money for healthcare.

When you pick apart the House GOP budget—who gets helped, and who is asked to make sacrifices—the philosophy Ryan is advocating emerges. And it’s not pretty.

Whom the Ryan Budget Helps

A shorter version of this section might simply read “the top 1 percent.” High earners and corporations are lavished with giveaways under the Ryan plan, and the military and health insurance companies don’t do so bad either.

The very wealthy. Ryan proposes repealing the alternative minimum tax along with the investment taxes proposed under healthcare reform. Then he replaces the current six income brackets with two—and the top bracket pays only 25 percent on their income, as opposed to 35 percent now. That’s a $2 trillion gift for America’s top earners over the next ten years.

Corporations. The budget proposal also slashes the top corporate tax rate, also from 35 percent to 25 percent. (Ryan proposes also closing some loopholes that might, possibly, maybe affect corporations—but, as was true last year, he refuses to say which loopholes he would close.) For good measure, he would also allow corporations to bring massive amounts of money, earned and stored overseas, back to America tax-free. On balance, this is a $1 trillion gift to corporations over the next ten years.

The Pentagon. Paul Ryan may be a deficit hawk, but he’s apparently a military hawk first. His budget plan protects the military from planned cuts under the debt ceiling deal and ensuing sequestration, and then increases military spending $8 billion in 2013. Over ten years, the Ryan budget would spend $6.2 trillion on defense, compared to $5.97 trillion level in spending under the Budget Control Act.

Health insurance companies. While Ryan isn’t proposing a complete privatization of Medicare, as he did last year, his revised proposal is possibly even more helpful to the health insurance industry. Like last year, Ryan proposes a voucher for seniors to use for health insurance, capped at a harshly low rate—but, unlike last year, the proposal would leave Medicare in place as one option seniors could choose. This would allow health insurance companies to siphon seniors off Medicare and onto their private plans, with the help of a government subsidy—but, presumably, they’d only be interested in taking the healthy ones. The sicker seniors would then be left to Medicare, which would undoubtedly see its per capita costs skyrocket even further. This is ironically perhaps a better deal for the health insurance industry than total privatization—they don’t have to deal with the expensive, unhealthy elderly folks.

Also, on top of all this, the House GOP budget repeals many features of healthcare reform, including the establishment of health exchanges—the primary venue for the government to require that health insurance plans carry certain features, like for instance mammogram tests or birth control.

Who Sacrifices Under the Ryan Plan

Multitrillion-dollar giveaways to the wealthy and to corporations have to be paid for somehow, even in a budget that, as noted, doesn’t erase the federal deficit for another thirty years. So who has to pony up?

The poor. The House GOP budget moves Medicaid away from the current matching-grant financing structure to one that just block-grants money to states, and those block grants are not designed to keep up with increasing health care costs. In total, federal spending on Medicaid would be reduced by $810 billion over ten years. This would obviously come from health care benefits to the poor (along with the disabled and some elderly people)—the Congressional Budget Office noted that states would have to make cutbacks that “involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost sharing by beneficiaries—all of which would reduce access to care.” Estimates show that 14 million people, mainly low-income, could lose coverage under this plan.

But that’s not all. To help find money, Ryan directs six Congressional committees to find deep budget savings—including the Agriculture Committee, which is tasked with finding over $30 billion in reductions. Given that it has food stamps in its purview, that program would no doubt be in for some deep cuts.

The elderly. As noted, under the Ryan budget, elderly Americans would have a voucher that they could take to either a private health insurance company or Medicare. The caps on the voucher levels are very stingy, and CBO estimates that seniors could pay up to $1,200 more by 2030 and more than $5,900 more by 2050, above current estimates. Beyond that, the Ryan plan would raise eligibility from 65 to 67—so that’s an extra two years waiting for your paltry voucher anyhow. Seniors who already retired by 65 would have to go to Medicaid for the intervening years—and we’ve just gone over the cuts there.

The disabled. Medicaid is by far the primary health insurance provider for the disabled in the United States, and they would too be subject to whatever reductions came from over $800 billion in cuts over ten years.

The middle class: In several different ways, the House GOP budget targets federal spending that’s critical to the middle class. First off, consider the social safety net cuts that have already been described. Then the budget slashes education spending by an astonishing 45 percent, and infrastructure spending by 24 percent—both of these are crucial to the employment and advancement needs of the middle class.

In addition, the middle class would almost surely pay higher taxes under the Ryan plan. We know the very wealthy and corporations get a $3 trillion break—so who pays for the revenue goal of 18 percent laid out by Ryan? That’s $5 trillion in new revenue needed, and it’s simply inconceivable that everyone else would end up paying for those top-earners’ tax reductions. “The reality is that the only way to pay for such huge tax cuts for the 1 percent is to make the 99 percent pick up the tab,” writes Michael Linden at the Center for American Progress.

Before commenting, please read our Community Guidelines.