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Top 10 Ways the Ryan Budget Hurts the Middle Class

It Favors the Wealthy While Ending Medicare as We Know It

SOURCE: AP/Jacquelyn Martin

House Budget Committee Chairman Paul Ryan (R-WI), left, speaks about his budget plan during a news conference on Capitol Hill in Washington.

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The latest House Republican budget plan asks low-income and middle-class Americans to shoulder the entire burden of deficit reduction while simultaneously delivering massive tax breaks to the richest 1 percent and preserving huge giveaways to Big Oil. It’s a recipe for repeating the mistakes of the Bush administration, during which middle-class incomes stagnated and only the privileged few enjoyed enormous gains.

Each component of the new House Republican budget threatens the middle class while doing nothing to add jobs or grow our economy. It ends the guarantee of decent insurance for senior citizens, breaking Medicare’s bedrock promise. It slashes investments in education, infrastructure, and basic research, all of which are key drivers of economic growth and mobility. And it cuts taxes for those at the top, asking the middle class to pick up the tab. It’s a budget designed to benefit the top 1 percent at everyone else’s expense.

The top budget official in the U.S. House of Representatives yesterday released his latest proposal to hurt the American middle class. Here are the top 10 problems with the new budget plan introduced by House Budget Committee Chairman Paul Ryan (R-WI).

1. It caters to the 1 percent.

The budget plan is deliberately vague, but it does make one thing clear: Conservatives are determined that the rich pay fewer taxes. The plan doesn’t identify any tax loopholes to close, leaving the middle class to pick up the tab for the 1 percent. Ryan’s proposed tax cuts for the rich are larger than the windfall they received from former President George W. Bush.

2. It ends Medicare as we know it.

The budget would move toward a privatization of Medicare, proposing that those currently in the health program get vouchers for private insurance. To stick with Medicare and retain access to their current doctors, many seniors would get stuck with markedly higher premium costs, and anyone new to the Medicare program could see costs rise by nearly $6,000 by 2050.

3. It eliminates the health care safety net.

The budget would cost 47 million people their health insurance benefits over the next decade. Tens of millions of people would be stripped of necessary consumer protections. And states would have to slash eligibility and benefits for Medicaid, a program that provides for the poor and disabled.

4. It increases unemployment.

The House budget seeks to balance the deficit on the backs of unemployed Americans, whose ranks would increase under the new House plan. Even though more and more Americans have been finding jobs, almost 1 in 10 Americans are still out of work.

Ryan “is wrong that deficit reduction and putting the economy on a stronger footing are opposing goals,” writes CAP Senior Economist Heather Boushey. “The federal deficit cannot be closed while our economy remains so far below full employment. Sustained high unemployment has caused revenues to fall sharply over the past two years, even as expenditures have become more necessary.”

5. It threatens our economic competitiveness.

The House budget plan slashes $871 billion from government investments in education, job training, scientific research, and transportation infrastructure over the next decade.

Government investment paves the way for business investment, and we need to catch up with global competitors. Our investment rate tumbled from 18 percent of total economic output in 2000 to 13 percent in 2011. China’s investment rate skyrocketed from 35 percent to 49 percent of GDP over the same decade.

“Investment is the cornerstone of job creation, economic growth, and long-term prosperity for middle-class families and our country as a whole,” write CAP Economist Adam Hersh and Researcher Sarah Ayres. “Investments … contribute to growth by putting new technologies to work, lowering costs for businesses, and increasing the productivity and competitiveness of American workers.”

6. It showers money on Big Oil.

The House budget would continue to shower oil companies with $40 billion in tax breaks over 10 years. This at a time when oil companies are already enjoying record profits while middle-class Americans wonder how they’ll be able to fill up their gas tanks.

7. It devastates Social Security.

The House budget would cut Social Security benefits for most recipients, while giving the wealthy a windfall. Ryan’s blueprint justifies this by painting a misleading picture of the retirement program’s financial health. In reality, this bedrock program could be shored up with minor adjustments that don’t threaten the retirement security of the middle class.

8. It shortchanges K–12 education.

The budget proposal lumps spending on education, social programs, and training into a category targeted with a 20 percent cut. That means we would see dramatic cuts in K–12 education spending, perhaps to the lowest levels in years, at a time when the country desperately needs a well-educated workforce to compete internationally.

9. It shortchanges higher education.

Colleges and universities won’t be spared either. Low-income and middle-class students, who can only afford to enroll in higher education thanks to Pell Grants, may find it harder to get financial aid: The budget proposes big cuts to the Pell Grant program.

The budget stresses the need to only give grants to the “truly needy.” But around 74 percent of 2010–2011 Pell Grant students either came from a family who earned or by themselves earned $30,000 a year—at most.

10. It ignores the wishes of the American people.

About two-thirds of Americans think the rich should pay higher taxes. And 70 percent believe Medicare should continue operating as it does currently.

The House budget plan ignores the will of the people, favoring the wealthy while ending Medicare as we know it. This is a budget that has no respect for the middle class’s essential role as a key driver of economic growth. It eviscerates benefits and programs that ordinary Americans depend on in order to shower even more privileges on the wealthiest few.

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