How the House Budget Sides with the Wealthy Over Everyone Else—Even Republican Voters
The fiscal year 2017 House budget introduced by Republican leaders in March 2016 calls for massive spending cuts that would devastate working families while protecting the wealthiest Americans and big corporations from any tax increases. This approach is deeply unpopular with the American people—including a majority of Republican voters—but it is popular among wealthy Republican donors.
Large majorities of voters across party lines reject the cuts that Congress would have to make in order to address long-term fiscal challenges without any tax increases—particularly with regard to Social Security and Medicare. The wealthiest Americans, however, support these cuts. While the House budget attempts to avoid this tension by proposing a combination of unspecified and extreme cuts to other programs designed to benefit low-income Americans, Republican leaders in Congress have made clear that they are ultimately willing to side with the wealthy in cutting programs that otherwise enjoy broad public support.
Republican voters do not support deficit reduction through only spending cuts
An October 2015 poll from The New York Times and CBS News showed that 58 percent of registered Republican voters agreed that deficit reduction should consist of both spending cuts and tax increases. A 2013 Pew Research Center poll, however, found very few areas in which more than 50 percent of Republican respondents supported cuts. In fact, the share of Republicans supporting increases in funding for Social Security and Medicare exceeded the share of Republicans supporting cuts to those programs, which was also true for education, disaster relief, agriculture, infrastructure, crime, national defense, and veterans benefits.
On the tax side of the budget, a large majority of self-identified Republicans, 74 percent, told pollsters in 2015 that they were bothered “a lot” or “some” by the “feeling that some corporations don’t pay their fair share.” Additionally, 67 percent of Republicans reported being bothered by the “feeling that some wealthy people don’t pay their fair share.” A March 2016 poll designed by political scientists Alan Abramowitz, Ronald Rapoport, and Walter Stone found that 56 percent of Republican primary voters support tax increases for households making more than $250,000 per year.
To be clear, unlike Democrats and independents, self-identified Republicans do not support increasing taxes on the wealthy and corporations in order to reduce income inequality—but they are open to increasing taxes in order to reduce the deficit. In fact, some of the most popular specific proposals to reduce deficits involve tax fairness. In a 2012 Pew Research Center poll that offered 12 commonly discussed options to cut spending or raise taxes, 61 percent of Republicans supported limiting tax deductions—the most popular deficit reduction option among Republicans.
Wealthy Republican donors are more anti-tax than other Republicans
The choice of House Republican leaders to push for extreme spending cuts in their budget without raising any taxes on the wealthy hews closer to the preferences of the Republican donor class than Republican voters overall. Because data on the preferences of the wealthy or donors to political campaigns are hard to come by, the Cooperative Congressional Election Study, or CCES—which includes a large number of respondents and information on political donations and income—is an invaluable resource for determining donor preferences.
Researchers Didi Kuo and Nolan McCarty used results from the 2012 CCES to examine the differences in opinion between donors and nondonors. At the time of this survey, leaders of both political parties disagreed on whether to extend the Bush tax cuts for households with incomes exceeding $250,000. Kuo and McCarty found that a majority of Republican donors supported extending the Bush tax cuts for everyone, including the wealthiest Americans, while a majority of Republican nondonors did not. Similarly, Sean McElwee of Demos Action used 2012 CCES data to show that higher-income Republicans were more likely to support tax cuts for the wealthy, as well as the House budget authored in 2011 by Rep. Paul Ryan (R-WI). This proposal followed a similar approach to the latest House budget: severe spending cuts without any tax increases for the wealthy or corporations.
CAP’s analysis of the 2012 CCES looks at donations and incomes together and reveals that lower taxes for the wealthy and the Ryan budget were especially popular among the elite subset of Republicans who make political contributions and have family incomes exceeding $250,000 per year. Eighty percent of Republican donors making more than $250,000 supported extending the Bush tax cuts for all incomes, compared with 62 percent of all Republican donors, 42 percent of all Republicans, and only 25 percent of the general public. Similarly, only 19 percent of the general public supported the Ryan budget, compared with 32 percent of all Republicans, 41 percent of Republican donors, and 72 percent of Republican donors with incomes more than $250,000.
Anti-tax ideology will force cuts to Social Security and Medicare that only the wealthiest Americans support
The House Budget Committee claims that its plan would balance the federal budget without raising taxes, requiring severe spending cuts. Rather than focusing these cuts on Social Security and Medicare, the House budget disproportionately slashes other programs for low-income Americans, particularly for health care. The House budget would cut Social Security and Medicare by $463 billion over 10 years, while cutting Medicaid and other health programs by $1.028 trillion, not including the Affordable Care Act. These Medicaid cuts, combined with repealing the Affordable Care Act, are similar to the policies in last year’s House budget that would have eliminated health insurance coverage for tens of millions of Americans and potentially doubled the uninsured population.
While the House budget would devastate struggling families through huge cuts to low-income programs, it still does not present a realistic plan to balance the budget. First, the budget only balances under an unrealistic dynamic score that assumes the budget will generate additional deficit reduction due to higher economic growth. The House budget also claims massive savings by turning Medicaid into a block grant but leaves the implementation of these enormous cuts to the states. In addition, it relies on other large amounts of unspecified and unrealistic cuts. For example, this year’s budget cuts $887 billion over 10 years from the overall spending caps for nondefense programs that Congress funds each year through appropriations bills, such as medical research, affordable housing, Head Start, and law enforcement. But in 2013, Congress demonstrated that it could not actually implement these types of cuts when the appropriations process broke down on the House floor; lawmakers balked at specific cuts to transportation and housing programs that the House Appropriations Committee tried to make in order to comply with the House-passed budget.
Since the cuts in their budget are not a realistic solution for the nation’s long-term budget challenges, House Republican leaders will eventually have to decide whether to accept the need for more revenue or push for deeper cuts to the two largest federal programs: Social Security and Medicare.
Cutting these two programs is deeply unpopular across the political spectrum. In a December 2013 Pew Research Center survey, 62 percent of Republicans said that “keeping Social Security and Medicare benefits as they are” is more important than “taking steps to reduce the budget deficit”; 66 percent of independents and 79 percent of Democrats shared this view.
Cutting Social Security and Medicare is, however, popular among the wealthiest Americans, according to a ground-breaking study by Benjamin Page, Larry Bartels, and Jason Seawright. The authors interviewed individuals with an average wealth of about $14 million, who favored cutting Social Security over expanding it by a margin of 33 percentage points. Likewise, 58 percent of this population supported cutting Medicare and other domestic programs to reduce deficits.
House Republican leaders implicitly acknowledge that deep cuts to Social Security and Medicare are a necessary part of their agenda—meaning they are prepared to side with the preferences of the wealthiest Americans over everyone else. The House budget contemplates turning Medicare into a voucher program but keeps the actual consequences abstract by shielding retirees and those near retirement from this radical change. Moreover, House leaders are already advocating cuts to Social Security and Medicare that are not in their official budget. For example, House Speaker Paul Ryan has a long history of pushing for dramatic cuts to Social Security and Medicare. And Rep. Tom Price (R-GA), chairman of the House Budget Committee, advocates raising the retirement age for Social Security, which has the same effect as a benefit cut.
If House Republican leaders gain the political power to implement their agenda, they are prepared to side against the general public and a majority of Republican voters in order to pay back the wealthiest Americans and special interests that donate to their campaigns. Proposing draconian spending cuts while pledging to oppose any tax increase may curry favor with wealthy Republican donors, but Republican voters and the general public do not support this tactic.
A more balanced approach would boost federal investment in the economy, increase revenue by ensuring that the wealthy and corporations pay their fair share, and make targeted cuts and reforms to government programs. This framework recognizes that sustainable economic growth comes from strengthening and growing the middle class. It also more closely matches the preferences of Republican, Democratic, and independent voters rather than the priorities of a small number of wealthy Republican donors.
Harry Stein is the Director of Fiscal Policy at the Center for American Progress. Alex Rowell is a Research Assistant with the Economic Policy team at the Center.
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Director, Fiscal Policy