Starving The Beast

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The Goal: Massive Cuts in Federal Programs

In the spring of 2011, Rep. Paul Ryan introduced the Republican budget proposal and it was passed the House of Representatives with enthusiastic GOP support. It proposed unprecedented and drastic cuts to a wide variety of government programs – reducing spending by $4.5 trillion (that’s $4,500,000,000,000) over the next decade. In essence, this proposal amounted to nothing less than fundamental effort to dismantle the basic programs of the social welfare state that were established in the New Deal of the 1930s and the Great Society of the 1960s. For example, the Republicans wanted to end Medicare and Medicaid as we know them. The successful Medicare program would be phased out and instead the elderly would be issued limited vouchers to help them buy increasingly expensive private health insurance. As the years went by, the vouchers would have paid for less and less of the cost of medical care. It has been estimated that by 2030, the vouchers would have covered only a third of the cost of health care currently provided by Medicare.12 So once again, seniors would have to make tragic decisions about whether to spend money on health care, rent or food.

The plan also called for Medicaid spending to be capped and handed off to state governments, whose chronic budget problems would encourage them to cut spending on this program. It is estimated that Medicaid spending would be cut in half by 2030, thus ripping a huge hole in the medical safety net for poor Americans who are least able to deal with the large and rising costs of medical care.13

These attacks on Medicare and Medicaid were just the tip of the iceberg. The Ryan budget plan also required massive cuts to virtually all social and regulatory programs. Take, for example, the Environmental Protection Agency. The Republicans wanted to reduce funding for the EPA by a third – $3 billion – in 2012 alone. This would have crippled the ability of this agency to enforce pollution regulations. Polluters would have been able to flout regulations needed to protect the quality of our air and water. The agency would also have been unable to fund needed projects like replacing broken and ineffective water treatment facilities. Illnesses and deaths caused by pollution would have inevitably risen. In a similar vein, the Republican plan also called for tens of billions of cuts to other regulatory agencies whose job it is to protect workers, consumers, and investors.

The Republican budget plan also mandated severe reductions in public investment efforts in the United States – cutting them by $1.4 trillion in the next ten years. A report by the Center for American Progress found that the plan would have cut money for education and job training by 53%, transportation infrastructure by 37%, and science and technology research and development by 28%.14 These kinds of public investments are important for economic growth. They create a more talented workforce, spur technological advances, cut costs for businesses, and increase productivity. If we want a healthy economy we need to be investing hundreds of billions of dollars into improving education, replacing and improving our infrastructure system, encouraging clean energy technologies, etc. The Republican plan would have sharply reduced these crucial investments at a time when we needed to be increasing them.

A look at some numbers reveals just how extreme this proposal to shrink government really was. A study of the Republican budget plan by the non-partisan Congressional Budget Office found that it would have reduced government spending to 20% of gross domestic product by 2015 and to 14.75% of GDP by 2050 – a level not seen since 1951, before the existence of Medicare and Medicaid.15 The CBO pointed out that the amount allocated for spending in 2050 would only be enough to fund Social Security, health care programs, and defense spending – and nothing else. Virtually all other federal programs would have to disappear! Could it be that the Republicans had simply failed to accurately forecast the dire long range consequences of their radical budget cutting plan? Hardly. Consider this: along with the Ryan budget, the Republicans introduced a Constitutional amendment to balance the budget that was just as radical. As a New York Times editorial described it:

The amendment would hold annual spending to 18 percent of the previous year’s gross domestic product, a formula that works out to about 16.7 percent in the proposals early years, according to the Center on Budget and Policy Priorities. This is a level last seen in 1956 – a time before Medicare, before the interstate highways, when many baby boomers were not yet born, never mind aging into retirement.16

“This is not a budget,” said Rep. Ryan when he introduced his plan, “This is a cause.”  No truer words were ever spoken. His plan made clear the radical ideological cause lurking under the GOP budget proposals: to defund and dismantle large parts of our basic social safety net programs and public regulatory protections. For many in the anti-government movement, this is the eventual goal of their crusade, and they see the political struggles over budgets and deficits as the ultimate battleground in this war on government.

Reducing Government as a Form of Class Warfare

This starving the beast plan to radically reduce government is also extremely unfair and regressive. It is designed to make the rich richer and the poor poorer. For example, a report by the Center for Budget and Policy priorities found that the Ryan budget cuts targeted those Americans would could least afford them. Two-thirds of the $4.5 trillion in cuts over the next ten years would have come from programs aimed at helping people of limited means: Medicaid, food stamps, low income housing, Pell grants for poor students, etc.17 Food stamps alone would have been reduced by $128 billion, inevitably increasing hunger and malnutrition among the poor.

Even worse, the Republican plan would have handed out trillions of dollars to the richest Americans. One trillion in tax breaks would have gone to the wealthiest 2% of Americans. Tax rates for the rich would have been reduced to their lowest rates since the 1930s. Taxes for corporations would have been greatly reduced as well. In short, the Republican budget was a plan to transfers trillions in wealth from the poorest of Americans to the richest. As budget expert Robert Greenstein described it:

[Ryan’s budget plan] proposes a dramatic reverse-Robin-Hood approach that gets the lion’s share of its budget cuts from programs for low-income Americans – the politically and economically weakest group in America and the politically safest group for Ryan to target – even as it bestows extremely large tax cuts on the wealthiest Americans. Taken together, its proposals would produce the largest redistribution of income from the bottom to the top in modern U.S. history, while increasing poverty and inequality more than any measure in recent times and possibly in the nation’s history.18

In essence, the Ryan plan was a form of class warfare – a blatant and unconscionable attack on the interests of the less well-off in our society. And the tax cut portion of the Republican budget plan also made it clear that they cared more about helping wealthy Americans than about deficit reduction. A CBO analysis revealed that because of these tax giveaways to the rich, this plan would have actually increased the deficits and debt over the next ten years.19

As another article, “The Deficit Scare: Myth vs. Reality,” will make clear, our deficit and debt situation is not nearly as dire as Republicans would have us believe. And there are ways to address these financial issues without putting our social safety net programs in jeopardy. But unfortunately, many policymakers, including some Democrats, have fallen for these deficit scare tactics and have been insisting on severely reining in domestic spending.

Part of any responsible approach to the deficit and debt problem must involve abolishing the Bush tax cuts and actually raising taxes to pay for needed programs. Most other countries have acknowledged that tax increases must play a role in deficit reduction. Germany’s current deficit reduction plan, for instance, includes 60% spending cuts and 40% tax increases. But the Republicans are committed to blocking any and all tax increases and many Democrats do not seem to have the stomach to insist on raising revenues.

Fortunately, the Ryan budget proposal did not pass. But in the summer of 2011, the situation took a turn for the worse. The House Republicans insisted that massive budget cuts must be made or they would refuse to raise the federal debt limit and create financial chaos in an already weakened economy. The Democrats gave into this irresponsible threat and agreed to $2.5 trillion in budget reductions over the next ten years, $1.5 trillion of which would be decided by a joint House and Senate committee. Under discussion were large cuts to Medicare, Medicaid and Social Security. Other likely targets included environmental protection, student aid programs, education programs, scientific research, and infrastructure investment. And this may just be the beginning. Republicans said that they would again take the country hostage and insist on even more budget cuts every time the debt limit must be raised. If this ruthless tactic works, the Republicans may actually succeed in their goal of crippling regulatory agencies and shredding our social safety net.

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