George Zornick | The Nation

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.

When the federal government wants some information under Section 215 of the Patriot Act—which allows agents to access “tangible things” like business records—it goes to the Foreign Intelligence Surveillance Court. This much we know.

What we don’t know is how broadly FISA interprets Section 215—what information it allows federal agents to access, and to what extent the government must prove “relevance” to a terrorism investigation.

Two men who do know, however—Senators Mark Udall and Ron Wyden of the Senate Intelligence Committee—have consistently sounded alarms about what FISA is allowing under Section 215. While unable to reveal specifically what they have learned, the two Senators have repeatedly said that the public would be shocked if it knew what information was being collected with the help of FISA and the Patriot Act.

This week, Udall and Wyden wrote to Attorney General Eric Holder asking him to address this issue (emphasis is theirs):

We believe most Americans would be stunned to learn the details of how these secret court opinions have interpreted section 215 of the Patriot Act. As we see it, there is now a significant gap between what most Americans think the law allows and what the government secretly claims the law allows. This is a problem, because it is impossible to have an informed public debate about what the law should say when the public doesn't know what its government thinks the law says.

The two senators were spurred to write after learning the Justice Department wants to dismiss lawsuits filed by the American Civil Liberties Union and the New York Times that seek to find out exactly how the government is interpreting Section 215.

But it’s not the first time they’ve raised the issue, to Holder nor publicly—we’ve flagged it before here, and Wyden gave a dramatic speech on the Senate floor about this last year:

In 2009, the administration promised it would establish a process for “reviewing, redacting and releasing significant opinions” of FISA, but as the letter from Udall and Wyden notes, this hasn’t happened once.

One has to assume Udall and Wyden are legitimately disturbed by what they know—it’s extremely unusual for two senators to go so public about secret information they are privy to, and especially to prod a president (and former Senate colleague) from their own party. Will we ever know what has alarmed them?

A (now) former Goldman Sachs executive penned a much-discussed opinion piece in the New York Times this morning explaining that he’s resigning from Goldman because the environment inside the company “is as toxic and destructive as I have ever seen it.” Greg Smith, who spent twelve years at the firm, said it dramatically prioritizes profits over clients, whom are often mocked as suckers (or “muppets,” in company parlance). “It makes me ill how callously people talk about ripping their clients off,” he wrote.

At The Atlantic’s “US Economy Summit” in downtown this morning, Former Federal Reserve Chairman Paul Volcker gave the keynote remarks and sat for an interview with the magazine’s Washington editor at large, Steve Clemons. Volcker said he read the piece and that he trusted Smith’s diagnosis. “It is a reflection of a changing market mentality,” he said.

Moreover, Volcker suggested the mentality problem is one that can be solved by enacting the Volcker Rule, which would ban commercial banks from making speculative, proprietary trades.

Volcker recalled the period in the 1990s where commercial banks were allowed to buy and incorporate trading firms into their business, and diagnosed this as toxic not only to the culture at places like Goldman but to the country as a whole.

“[Trading] is a business that leads to a lot of conflicts of interest. You’re promised compensation when you’re doing well, and that’s very attractive to young people. All these firms can attract the best of American graduates, whether they’re philosophy majors or financial engineers, it didn’t make any difference,” Volcker said.

“A lot of that talent was siphoned off onto Wall Street. But now we have the question of how much of that activity is really constructive, in terms of improving productivity in the GDP,” Volcker said. “These were brilliant years for Wall Street by one perspective, but were they brilliant years for the economy? There’s no evidence of that. The rate of economic growth did not pick up, the rate of productivity did not pick up, the average household had no increase in their income over this period, or virtually no increase.”

Volcker noted that commercial banks hold the money of average Americans, and are insured by the federal government. “Should the government be subsidizing or protecting institutions that…are essentially engaged in speculative activities, often at the expense of customer relations?”

This is exactly what Smith described—it was known inside Goldman as hunting elephants. “In English [this means]: get your clients—some of whom are sophisticated, and some of whom aren’t—to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them.”

Regulators are likely to delay implementation of the Volcker Rule past the July deadline; the financial sector has been lobbying intensely on virtually every aspect and potentiality of the rule. Smith’s op-ed is a good pressure point towards a stronger rule.

Tonight’s primaries in Alabama and Mississippi certainly have implications for Mitt Romney in the long term, but they will be decisive for another powerful Republican: Alabama Representative Spencer Bachus, who is currently chairman of the House Financial Services Committee.

He is facing a strong primary challenge from state Senator Scott Beason, a virulent anti-immigrant grandstander and author of Alabama’s draconian H.B. 56, which caused thousands of Hispanics to flee the state. But Bachus is also being battered by ads from the Texas-based, anti-incumbent Campaign for Primary Accountability Super PAC—the same group credited with helping to oust Representatives Dennis Kucinich and Jean Schmidt in Ohio last week.

The Super PAC is pummeling Bachus for his massive Wall Street contributions—he’s received nearly half of his donations this cycle from the financial sector—and for an ongoing ethics investigation into whether Bachus profited from insider knowledge in the run-up to the financial crisis. (60 Minutes nailed Bachus on this late last year, in the same piece that led to the pending passage of the STOCK Act.) Advertisements like this one have been running in Alabama for weeks:

That ad hits Bachus for financial sector donations, but then it gets fuzzy by portraying a quid pro quo when Bachus voted for the financial sector bailout. The bailout is certainly unpopular in deeply conservative areas, but Bachus has done much more insidious tasks for Wall Street than supporting a basically necessary rescue plan.

As Pat Garofalo at ThinkProgress notes, in recent years Bachus sought to weaken the Dodd-Frank financial reforms, including gutting the Consumer Financial Protection Bureau; he’s sought to dramatically weaken the budget of financial regulators and has also sought to undermine foreclosure prevention programs. (He notoriously said before taking the chairmanship that the job of regulators is to “serve the banks.”)

Wall Street loves the guy, which is why Bachus has received funding for a final push in the past few days from Citigroup, Barclay’s and RBS, among others. He’s mounting a $1.5 million advertising counteroffensive portraying himself as a consistent opponent of the Obama administration and in particular the healthcare reform bill.

It’s going to be a nerve-wracking night for Bachus, with the race expected to be very close. Wall Street would lose a key ally in Bachus if he goes down, but let’s also be realistic—the next Republican in line on Financial Services will be lavished with the same donations, and will likely carry out the same agenda. Still, Bachus’s skill, experience and contacts will be missed by the Street.