A Bold, Brave Plan to Take from the Poor and Give to the Rich

Jacob Weisberg calls Rep. Paul Ryan’s proposed budget plan “brave, radical, and smart.

This dynamic of political evasion and reality-denial may have undergone a fundamental shift today with the release of Rep. Paul Ryan’s 2012 budget resolution. The Wisconsin Republican’s genuinely radical plan goes where Ronald Reagan and Newt Gingrich never did by terminating the entitlement status of Medicare and Medicaid. (It doesn’t touch the third major entitlement, Social Security, though Ryan has elsewhere argued for extending its life by gradually raising the retirement age to 70.) Ryan changes Medicare into a voucher, which would be used to purchase private health insurance. He turns Medicaid into a block grant for states to spend as they choose. Though his budget committee isn’t responsible for taxes, Ryan includes the boldest tax reform proposal since the 1980s, proposing to lower top individual and corporate rates to 25 percent and end deductions. While he’s at it, Ryan caps domestic spending, repeals Obamacare, slashes farm subsidies, and more.

If the GOP gets behind his proposals in a serious way, it will become for the first time in modern memory an intellectually serious party—one with a coherent vision to match its rhetoric of limited government. Democrats are within their rights to point out the negative effects of Ryan’s proposed cuts on future retirees, working families, and the poor. He was not specific about many of his cuts, and Democrats have a political opportunity in filling in the blanks. But the ball is now in their court, and it will be hard to take them seriously if they don’t respond with their own alternative path to debt reduction and long-term solvency.

Well, it will be nigh impossible for Democrats to “respond” with any plan that does more to hurt the poor. The Ryan plan pretty much has that covered. Robert Greenstein of the Center on Budget and Policy Priorities presents a chart that tells the story, and it’s an ugly one. Fully two-thirds of Ryan’s proposed budget cuts come from low-income Americans:

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.

The chart is linked from The Daily Dish (or just The Dish, as it’s now called in its new home at The Daily Beast), and IndyGuy in District TMV pointed me to that link.

The Center for Economic and Policy Research has an analysis of the Ryan plan to make you heartsick (if you have a heart, that is). Under the title “Representative Ryan Proposes Medicare Plan Under Which Seniors Would Pay Most of Their Income for Health Care,” the article begins:

That is what headlines would look like if the United States had an independent press. After all, this is one of the main take aways of the Congressional Budget Office’s (CBO) analysis of the plan proposed by Representative Paul Ryan, the Republican chairman of the House Budget Committee. Representative Ryan would replace the current Medicare program with a voucher for people who turn age 65 in 2022 and later. This voucher would be worth $8,000 in for someone turning age 65 in that year. It would rise in step with with the consumer price index and also as people age. (Health care expenses are higher for people age 75 than age 65.)

According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit (Figure 1). This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan’s plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)

Jim Tankersley and Katie O’Donnell at The National Journal write that the Ryan plan takes optimism to places no man has ever gone before:

If Rep. Paul Ryan’s newly unveiled 2012 budget is signed into law, this is what Ryan’s economic forecasters say will happen: The unemployment rate will plunge by 2.5 percentage points. The still-sinking housing market will roar back in a brand new boom. The federal government will collect $100 billion more in income tax revenues than it otherwise would have.

And that’s just in the first year. By 2015, the forecasters say, unemployment will fall to 4 percent. By 2021, it will be a nearly unprecedented 2.8 percent.

The tax and spending roadmap put forth Tuesday morning by Ryan, the Wisconsin Republican who heads the House Budget Committee, is backed by a set of extremely optimistic assumptions about how the budget would stimulate private investment, hiring, and broad economic growth.

Where would that spectacular growth come from? Based on an analysis provided to Ryan by the Heritage Foundation, a conservative think tank, it would come from the liberating effects of lower taxes and less government debt.

But the forecasted growth is so high that it falls on the outer edge of what most economists say is plausible—or even desirable—for the next decade.

In other words, the Land of Rainbows and Ponies.

Isabel Sawhill, who directs the Budgeting for National Priorities project as well as the Center for Children and Families — both at the Brookings Institution — calls the Ryan plan “Voodoo Economics Redux.”

On Tuesday morning, Republican Representative Paul Ryan released a budget plan that would slash spending over the next few decades with no increase in taxes and very limited cuts to defense programs. It’s like a stool with only one leg. It will not stand.Although it’s a wobbly stool—in both political and in policy terms—it will have a big impact on the debate. David Brooks calls it “a moment of truth,” noting that despite a presidential commission that has issued a bold plan for getting our fiscal house in order, the President failed to endorse its work.

How should the President and other progressives respond? For starters, progressives should be unabashed in labeling the Ryan plan for what it is: an ideological manifesto for a Tea-Party-dominated Republican Party.

That’s just the first three paragraphs of a much longer article that is well worth reading in full.

Lots more commentary at Memeorandum.

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Author: KATHY KATTENBURG