Center for American Progress

RELEASE: House Republican Budget Threatens Middle-Class and Low-Income Americans, Offers Enormous Tax Cuts for the Rich
Press Release

RELEASE: House Republican Budget Threatens Middle-Class and Low-Income Americans, Offers Enormous Tax Cuts for the Rich

Washington, D.C. — For the third year in a row, Rep. Paul Ryan (R-WI) has offered a budget plan that asks much of middle-class and low-income families but nothing at all from those at the top, according to an analysis released today by the Center for American Progress. Authored by policy experts Michael Linden and Anna Chu, the analysis finds that just like the last two House Republican budgets, this year’s blueprint again turns traditional Medicare into a voucher system, hands out tax breaks for the rich, slashes investments that drive our economy, and favors European-style austerity over growth.

“With the release of this year’s House Republican budget, Rep. Ryan reminds everyone how little he cares about the views of the American public,” said Michael Linden, Director of Tax and Budget Policy at the Center for American Progress.This plan is virtually identical to his previous offerings, complete with the enormous tax cuts for the rich, the end to traditional Medicare and Medicaid, and the painful austerity borne exclusively by the middle class and the poor. Voters had a chance to endorse this vision when Paul Ryan’s name was on all 160 million presidential election ballots, and they declined to do so. It will come as a shock only to Rep. Ryan when Americans once again reject this approach.”

Turning traditional Medicare into a voucher system: One key element of both of the past two House Republican budgets offered by Rep. Ryan is an end to traditional Medicare. This budget is no different. Once again, the budget ends Medicare’s promise of guaranteed benefits and replaces it with vouchers to purchase private insurance or Medicare. As insurance companies cherry picked the healthiest seniors to join their plans, traditional Medicare would be left with the sickest, most expensive patients, leading to a downward death spiral for traditional Medicare. At the same time, the value of the vouchers would not keep up with the rising cost of health care, allowing insurance companies to reap big profits as seniors would be forced to pay more for the same benefits they have now. This issue was extensively litigated during the 2012 election, and the American people rejected Rep. Ryan’s and the Republicans’ approach.

Handing out tax breaks for the rich: There was probably no single topic discussed as comprehensively during the 2012 presidential campaign as the issue of taxes. Rep. Ryan and his running mate, former Massachusetts Gov. Mitt Romney, promised dramatically lower marginal tax rates paid for by the reform of tax expenditures. But Gov. Romney and Rep. Ryan famously refused to detail exactly how that plan would actually add up.

The current House Republican budget runs the same play again. They’ve promised lower rates, no revenue loss, and no way to make the numbers work. And just like the Romney tax plan, there are only two possible outcomes with the Ryan plan: a tax hike on the middle class or a massive increase in the debt. Either way, the plan offers enormous tax breaks for the rich—and either way, the American people were very clear that this was not the direction in which they wanted to go.

Slashing investments that drive our economy: At a time when our economy is recovering and when the unemployment rate is at its lowest level in four years, the House Republican budget threatens to turn the clock back on our economic recovery. The House Republican budget would cut hundreds of billions of dollars from middle-class investments in areas such as education, science, and infrastructure. These are investments that create jobs and boost economic growth in the short term while strengthening our long-term economic competitiveness. By dramatically cutting these critical investments, the House Republican budget would undo the gains made during the past few years and rob Americans of future economic opportunities.

Favoring European austerity instead of growth: The 2012 presidential election isn’t the only important event that should have had some impact on Rep. Ryan’s thinking in the months between his previous budget plan and now. Over the past year, austerity has pushed the euro zone back into recession, and the United Kingdom is on the verge of a triple-dip recession of its own. One might expect that the failure of European-style austerity economics would prompt Rep. Ryan and his colleagues to re-evaluate their commitment to massive spending cuts and enormous immediate deficit reduction. One would be wrong.

Read the full analysis: Third Time’s Not a Charm by Michael Linden and Anna Chu

Additional analysis from CAP:

  • Rep. Paul Ryan’s Fantasy Budget by Michael Linden
    The newly released House Republican budget plan claims to balance the budget in 10 years, but that’s only true if you ignore the $7 trillion tax hole created by the proposal and the utterly unrealistic cuts to nondefense discretionary spending, which is already set to decline to historic lows. Without these gimmicks, Rep. Ryan’s plan not only fails to balance the budget by 2023 but would actually dramatically increase the deficit and debt.
  • The United States’ Long-Term Debt Problem Isn’t as Bad as You Thought by Michael Linden and Sasha Post
    As House and Senate leadership unveil budget proposals this week to map out their fiscal priorities, a new CAP analysis reveals that our nation’s long term fiscal landscape is not as grim as projected. The analysis reveals that much of the expected run up in America’s long-term debt is derived not from out-of-control entitlement spending but rather from the assumption that future Congresses will make our budget challenges much worse by enacting new tax cuts and new spending increases without paying for them. Take that assumption away, add in the deficit reduction we’ve already enacted, and factor in the recent slowdown in the growth of health care costs, and the debt projection falls by more than 100 percentage points of GDP.
  • For additional CAP resources and analysis about the House Republican budget, click here.

Related posts from CAP Action’s ThinkProgress:

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