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The Ryan Budget Is a Broken Record of Failed Trickle-Down Economics

Rep. Paul Ryan

SOURCE: AP/J. Scott Applewhite

House Budget Committee Chairman Paul Ryan (R-WI) listens during a hearing on February 5, 2014.

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For the past three years, House Budget Committee Chairman Paul Ryan (R-WI) has been trotting out the same conservative, top-down policies that have failed the nation’s middle- and working-class families, seniors, and the economy. The House Republican budget is built around the tenet that nearly everyone else must sacrifice in order to continue to give billions of dollars in tax breaks to millionaires, big corporations, and Big Oil. At every turn, the House Republican budget reveals its vision of an economy and government that only works for the wealthiest individuals and special corporate interests at the cost of everyone else.

Now for the fourth consecutive year, the House Republican budget proposes dismantling traditional Medicare and slashing investments that drive our economy, all while cutting taxes for the rich and protecting taxpayer subsidies for big businesses and oil companies. The American people have seen this before, and we know how it ends—with millionaires, big corporations, and Big Oil as the only ones who are better off. Everyone else gets left behind, and our economy only gets weaker.

The same old trickle-down playbook

The House Republican budget focuses its economic strategy on the wealthy and corporations instead of middle- and working-class families. In this budget, Rep. Ryan advocates cutting the tax rate for the wealthiest Americans from 39.6 percent to 25 percent and the tax rate for big corporations from 35 percent to 25 percent. He does this even though corporate revenue makes up only 10 percent of all federal revenue today, down from 30 percent in the 1950s. His budget would also protect $45 billion in tax subsidies over 10 years to oil companies, the top five of which are already reaping $93 billion in profits from 2013 alone.

At the same time that it would give tax cuts to those who need them least, Rep. Ryan’s budget would raise taxes for middle- and working-class families. A Tax Policy Center analysis of identical tax proposals in last year’s House Republican budget found that they cost nearly $6 trillion over 10 years. Rep. Ryan claimed that this will not increase the deficit because his policies will be included in a larger “tax reform” that includes offsetting revenue increases. House Ways and Means Committee Chairman Dave Camp’s (R-MI) tax reform legislation already revealed this to be a fantasy—as the Center for American Progress said last year—meaning there is no way to enact Rep. Ryan’s tax policies in a deficit-neutral tax reform without including big tax increases for low- and middle-income taxpayers.  

Pulling the rug out from under working-class families

As in the past, Rep. Ryan’s budget dramatically slashes the social safety net, including critical programs that support seniors and working families. Similar to previous years, Rep. Ryan repeals the Medicaid expansion in the Affordable Care Act and proposes block grants for Medicaid, slashing about $1.5 trillion over 10 years from a critical program that supports low-income families and seniors. He is undermining a cornerstone of our health care system, one that covered more than 67 million peoplein 2012, including 32 million children, 6 million seniors, and 11 million people with disabilities. Such dramatic cuts from Medicaid would also affect states’ ability to provide long-term care to seniors because Medicaid is seniors’ primary payer of long-term care.

Rep. Ryan does not stop there. Instead, he goes further and attacks programs that help struggling families put food on the table, cutting $125 billion from the Supplemental Nutrition Assistance Program, or SNAP, over 10 years. Rep. Ryan bases his destructive proposals on shoddy research about safety net programs discouraging work and a fundamental misunderstanding of the economic benefits of SNAP, which expand automatically in tough times and contract as the economy recovers. The fact is that SNAP is already designed to encourage beneficiaries to work—which many do—and it prevented 4.9 million Americans from falling into poverty in 2012.

On top of these draconian cuts to nutrition and health, Rep. Ryan’s budget systematically cuts or dismantles key supports that provide economic security and mobility for struggling families. He restricts the Pell Grants that help low- and moderate-income students attend college, eliminates an important source of state funding for services such as child care and child welfare, and makes big cuts to programs that serve individuals with disabilities and their families.

Forcing seniors to pay more by radically altering Medicare

One of the central tenets of all of Rep. Ryan’s budgets has been a proposal to tear down traditional Medicare and replace it with a voucher system, forcing seniors to use these vouchers to buy either Medicare or a plan in the private market. The budget offered this year once again guts traditional Medicare. The House Republican budget abandons the pledge Republicans made to protect anyone age 55 or older from their Medicare cuts. While last year’s plan allowed those age 55 and older to remain in traditional Medicare once they became eligible, this year’s plan forces 55-year-olds into a new voucher system.

While Rep. Ryan uses a different formula than in past budgets to set the value of the voucher, it would still make traditional Medicare increasingly unaffordable for senior citizens. Higher out-of-pocket premiums for traditional Medicare would force seniors into private plans, where they may not have access to the doctors they want to see. The Congressional Budget Office, or CBO, previously found that under a premium support plan, premiums would increase by 50 percent for traditional Medicare. Despite all of the outrage from House Republicans about the changes made by the Affordable Care Act, their budget would mean that many seniors would not get to keep their same insurance and doctors.

Sacrificing our future through misguided austerity

Austerity has already made our economic problems worse, but the latest House Republican budget ignores that failure and doubles down on this discredited approach. Instead of investing in sectors such as infrastructure, science, and education, the House Republican budget calls for enormous cuts to these critical middle-class investments. Those cuts are on top of the enormous cuts Congress has already made and would go beyond even the economically destructive levels imposed by sequestration. These crucial investments are already projected to fall to historically low levels under current law, but Rep. Ryan targets them for huge cuts anyway. This yields short-term deficit reduction that looks good on a few of Rep. Ryan’s charts but sacrifices our nation’s economic future.

Conclusion

The nation faces significant economic challenges, including income inequality, slow recovery, and long-term unemployment. Right now, the economy is simply not working for most Americans. Income inequality is currently the highest it has been in nearly a century. Middle-class families are struggling to recover from the Great Recession, and the long-term unemployed have lost the support they need to pick themselves back up.

The House Republican budget does nothing to address these challenges. Instead, it merely continues the failed conservative policies that keep the economy working only for the wealthiest people and special corporate interests. Congress should shelve this failed playbook and focus instead on building an economy that works for everyone.

Anna Chu is the CAP War Room Policy Director at the Center for American Progress. Harry Stein is the Associate Director of Fiscal Policy at the Center.

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