Originally published in The Philadelphia Inquirer
Both houses of the Republican-led Congress recently passed budget changes that cut benefits for low- and middle-income Americans, including cuts to Medicaid, student loans, food stamps, and enforcement of child support. The impacts of these cuts include an estimated 70,000 people who would lose health-care coverage; $8 billion in new charges to student borrowers and their families; and an estimated 225,000 people who would lose food stamps.
These budget choices are being sold in the name of fiscal responsibility, and the right wing of Congress claims that this must be done for the good of the economy and the federal budget. They ask: "What's wrong with a little belt-tightening, especially in a time of crisis?"
The sham is, of course, that these particular cuts are not necessary. We have other options, other choices. As a nation, we do not need to abandon long-held values that demand at least minimal supports for our most needy, who cannot tighten their belts any further. Members of both political parties need to broaden the debate and offer more and different alternatives to the current status quo in Washington, and to move beyond the "cut vs. no cut" debate.
Whatever your opinion of specific budget cuts, these packages are not fiscally responsible. Two basic facts are unavoidable.
First, these spending cuts are coupled with tax changes that will cost at least $60 billion. By separating the spending and tax changes into two separate bills – and putting a couple of weeks between votes – Republican leaders in Congress are betting that the rest of us won't put two and (minus) two together. When coupled with this latest round of tax changes, the deficit situation will actually worsen by between $10 and $25 billion.
Second, by way of contrast, the annual federal deficit is more than $300 billion – Congress is looking to cut between $35 and $50 billion over five years – or about $7 billion to $10 billion per year on average. In other words, it would take 30 to 40 more of these spending cuts to eliminate the deficit.
So what is the alternative?
Above all else, it should be said that we need a more effective government. It's not just about adequately supporting national priorities: It is also about making effective use of scarce dollars. Without competent, accountable leadership and effective systems, more and more money will be wasted. And an efficient government could accomplish more with less. The incompetent federal preparation and response to Hurricane Katrina vividly highlighted this need.
But we must also acknowledge that we have a fundamental imbalance between federal spending and revenues.
At minimum, Congress cannot allow more spending on new tax breaks for the wealthiest. The tax cuts are the single largest contributor to the record run-up of deficits in the last four years and we should not continue to spend billions of dollars in tax breaks for Americans who are already well off. Ultimately, we should undertake a comprehensive review of the tax code to ensure adequate revenue is raised as fairly as possible. And this will mean reversing many of the tax cuts for those with high incomes.
Reversing provisions in the recently enacted energy bill and the tax giveaways in the 2004 corporate tax law would raise tens of billions more.
On the spending side of the ledger, budget cuts should strike first and foremost at corporate subsidies and congressional earmarks that have been the hallmark of the last four years. While President Bush has not vetoed a spending or tax cut bill since he became President, he has enacted historic giveaways to drug, energy, and any number of other corporations. Revisiting the nearly $5 billion highway earmarks in the recent transportation bill is an obvious first step.
As usual, budget cuts for the poor are being sold as necessary to reduce the deficit. But in reality they are used simply to finance both new and already enacted tax cuts for the wealthy. Those who do not believe that government is a bad word should attack the deficit problem with calls for real government accountability, balanced tax reform, and real fiscal discipline.
John S. Irons is director of tax and budget policy at the Center for American Progress in Washington.
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