By Jon Perr
Back in the 1990s, the CEO of my former company had a simple way of questioning the wisdom of some of our more dubious business strategies. "Are we," he would ask, "smoking the drapes?" By that standard, House Budget Committee Chairman Paul Ryan must be dropping acid. Because as a quick glance at his job-killing, Medicare-rationing, health care-gutting, tax cut windfall for the wealthy-giving and hopelessly unbalanced budget shows, Ryan was apparently hallucinating when he wrote it.
Here are 10 signs that suggest Paul Ryan is now following Timothy Leary as well as Ayn Rand.
- Two Million Jobs Lost in 2014 Alone
- $5.7 Trillion Tax Cut, Mostly for the Wealthy
- Zero Tax Breaks Ended
- Tax Hikes for the Middle Class
- Medicare Rationing Boosts Annual Premiums for Seniors by $2,200 in 2030
- 38 Million More Uninsured
- Slashing Medicare and Medicaid Benefits, But Keeping the Tax Revenue
- Non-Defense Discretionary Spending at Lowest Level in Decades
- Two Trillion Dollar Flip-Flop on Defense Spending
- Cutting Historically Small Federal Workforce by 10 Percent
The entire point of the "fiscal cliff" showdown in December wasn't that the triple of whammy of tax increases, termination of the payroll tax holiday and the automatic spending cuts from the sequester would increase the national debt, but instead reduce it too quickly and thus deal a body blow to the economy. The nonpartisan CBO warned that "going over the cliff" could have reduced gross domestic product by 2.9 percent and driven the unemployment rate to 9.1 percent by the end of this year.
But while that result was largely averted, Paul Ryan's House GOP budget for fiscal year 2014 could prove even more painful. An assessment by the Economic Policy Institute (EPI) found that Ryan's blueprint would cut spending by $121 billion in FY 2014 and by another $343 billion in 2015. The result?
On net, we estimate that the Ryan budget would decrease gross domestic product (GDP) by 1.7 percent and decrease nonfarm payroll employment by 2.0 million jobs in calendar year 2014 relative to current policy. We estimate that the Ryan budget would increase the unemployment rate by between 0.6 percentage points and 0.8 percentage points.
Over the next decade, the Ryan “Path to Prosperity” cuts spending by $4.6 trillion (or about 10 percent) compared to current projections. But thanks to its call for the largest tax cut in U.S. history, the Ryan budget creates an even larger, multi-trillion dollar hole for the U.S. Treasury.
According to the nonpartisan Tax Policy Center, Ryan’s plan to reduce the top tax rate from 39.6 to 25 percent, to shift from seven income brackets to two (10 and 25 percent), to cut the corporate tax from 35 to 25 percent and other changes will cost Uncle Sam $5.7 trillion over the next 10 years. Last year, the Center on Budget and Policy Priorities (CBPP) forecast that Ryan’s payday for the gilded class would slash the average tax bill for millionaires by $265,000 (12 percent) a year.
As TPC’s Howard Gleickman put it this week:
The tax cuts described in Ryan’s budget would generate a huge windfall for high-income taxpayers. On average, households would get a cut of $3,000. But those in the top 0.1 percent of income, who make $3.3 million or more, would get a whopping $1.2 million on average–a 20 percent increase in their after-tax income.
And Ryan wants to do all of this, it turns out, after years of the total federal tax bite as a share of the U.S. economy hitting its lowest level since the early 1950's and income inequality at its highest since 1929.
As with every “roadmap” he’s authored since 2010, Paul Ryan has promised to deliver a “revenue-neutral” budget. To make up the trillions he gives away in new tax cuts, Ryan as ever promises to close some of the loopholes, breaks and other “tax expenditures” that now drain over $1 trillion a year from the U.S. Treasury. (That figure is forecast to hit $1.8 trillion by 2017.) But in three years, Paul Ryan predictably hasn’t had the courage to name a single loophole he would close in order to find almost $6 trillion in new revenue he needs to offset his gargantuan tax cut giveaway. As Dana Milbank summed it up, Ryan's magical budget is more like a Mad Lib:
The former Republican vice presidential candidate's budget eliminates _ loopholes in the tax code, cutting the _ and the __ deductions.
Will the self-proclaimed "courageous" Paul Ryan call for ending the Earned Income Tax Credit? The mortgage interest deduction? The supposed tax reformer won't say, so we won't know. As he's been insisting for over a year, "That's what the Ways & Means Committee is supposed to do. That's not the job of the Budget Committee." Unless and until he fills in those blanks, Americans can only assume Paul Ryan's will deliver trillions more in red ink over the next decade:
Paul Ryan's silence on the trillion-dollar question of tax breaks doesn't just mean his budget blueprint has no hope of balancing by 2023. As Greg Sargent warned Thursday, Ryan's "Path to Prosperity" almost certainly means higher tax bills for middle and lower income Americans. The reason, as we learned during the 2012 campaign, is simple enough: there simply aren't enough tax expenditures that only affect the rich.
A year ago, Ryan claimed his budget would "stop subsidizing the wealthy" [and] close the tax shelters and loopholes that are disproportionately used by the wealthy so that we can get more tax revenue by having a broader tax base with lower rates." His running mate Mitt Romney boasted of his own, similar tax scheme that "we make sure that the top 1 percent keeps paying the current share they're paying or more."
But as the CBPP and the Tax Policy Center found in reviewing last year's similar Ryan and Romney proposals, not so much. Even after assuming the closure of tax loopholes and deductions which disproportionately favor the rich, TPC forecast that a President Romney would cut taxes for the richest five percent of earners while increasing the tax bill for the other 95 percent of Americans. As CBPP found in its analysis of the 2012 edition of Ryan's budget, there's no way to cut the needed $500 billion a year in tax breaks without helping the rich and hurting everyone else, especially if further raising capital gains and dividend tax rates is off the table:
It's no wonder Ezra Klein concluded last year that "'broadening the base and lowering the rates' is anti-family tax reform." And that's why it's even less surprising that Ryan got weak in the knees and tried to skirt the issue in his new budget. As Sargent explained:
But the key here is that the plan does not say definitively that the top rate would be 25 percent; it only says that this is a "goal." What's more, the plan says nothing about what it would do with rates on capital gains and dividends. During the campaign, Mitt Romney and Ryan suggested they would not raise rates on those. The new Ryan plan doesn't specify one way or the other.
For years, the centerpiece of Paul Ryan's "Roadmap for America" has been the privatization of the Medicare system now serving almost 50 million American seniors. But even in its latest incarnation keeping traditional government-run Medicare as a "public option," Ryan's "premium support" scheme still dramatically shifts costs to seniors as the value of his voucher invariably fails to keep pace with inflation and increasing prices from private insurers. As ThinkProgress summarized the CBO's April 2012 assessment of Ryan's little-changed plan:
Beginning in 2023, the guaranteed Medicare benefit would be transformed into a government-financed "premium support" system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or--unlike Ryan's original budget--traditional fee-for-service Medicare...But the budget does not take sufficient precautions to prevent insurers from cherry-picking the healthiest beneficiaries from traditional Medicare and leaving sicker applicants to the government. As a result, traditional Medicare costs could skyrocket, forcing even more seniors out of the government program. The budget also adopts a per capita cost cap of GDP growth plus 0.5 percent, without specifying how it would enforce it. This makes it likely that the cap would limit the government contribution provided to beneficiaries and since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $2,200 more by 2030 and up to $8,000 more by 2050.
Back in 2010, Rep. Ryan protested when his plan was rightly described as rationing. "Rationing happens today!" Ryan protested, "The question is who will do it? The government? Or you, your doctor and your family?" But then as now, he omits the real culprit: private insurers who can deny coverage, jack up premiums and cherry-pick healthier customers. Three years, three budget plans and two name changes later, Paul Ryan's Medicare privatization scheme will still lead to de facto rationing of health care for tens of millions of future elderly Americans.
Despite the Republicans' twin defeats by American voters and the U.S. Supreme Court, Paul Ryan is nevertheless still calling for the repeal of Obamacare. Ryan's budget slashes Medicaid by 44 percent over the next decade and hands over the funds as block grants to the states. By undoing both Uncle Sam's subsidies for Americans purchasing insurance in the private health care exchanges and the Medicaid expansion increasingly supported by many Republican governors, the House GOP plan would leave an estimated 38 million more people without health coverage.
That figure is even larger than the 27 million Americans forecast to gain insurance by 2020 as a result of Obamacare. The reason is straightforward: states will continue to reduce eligibility and slash benefits for the $350 billion a year Medicaid program that currently serves 60 million Americans. As the CBO warned, state block grants that won't keep up with the growing cost of health care would invariably lead to cutbacks that "involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost sharing by beneficiaries—all of which would reduce access to care." The result, as Huffington Post reported this week:
According to one evaluation of the budget Ryan introduced last year, his block-grant plan would reduce Medicaid enrollment by half. Combined with his proposed repeal of Obamacare, that would mean 37.5 million fewer people would have Medicaid coverage were Ryan's 2012 proposals made law, the Urban Institute and the Henry J. Kaiser Family Foundation concluded last October. The Medicaid cut in Ryan's new budget plan is $54 billion smaller than the proposal analyzed in the 2012 report.
All of which means Paul Ryan's supposed "patient-centered" health care philosophy will have a real life body count. As one Harvard Medical School study revealed, an estimated 45,000 people die each year due to lack of health insurance.
From the beginning, Republican opponents of the Affordable Care Act have lied to the American people about its deficit-cutting benefits. When the nonpartisan CBO reported that the Obamacare would not only pay for itself but in fact reduce the national debt, House Majority Leader Eric Cantordecried the agency's "budget gimmickry." But with Paul Ryan's new budget, the House GOP is tacitly acknowledging the savings Obamacare will produce.
For starters, Ryan once again is pocketing the $760 billion in Medicare savings from the Affordable Care Act to help pay for his gilded-class tax cut windfall. But the House Budget boss doesn't stop there. His budget keeps the new Medicare payroll and capital gains tax surcharges for households earning over $250,000 a year. In addition, the GOP plan also maintains the $600 billion in new tax revenue from the recently concluded "fiscal cliff" deal. All told, Ryan's Republicans are counting on roughly $2.2 trillion in funding they opposed.
On Thursday, House Appropriations Committee Chairman Hal Rogers (R-KY) acknowledged he would vote for Ryan's budget even though "it's not to my liking."
"It cuts too much spending, frankly, from the discretionary side of the budget. Most people don't realize that we only appropriate 1/3 of federal spending ... and we've cut that by $100 billion over the last two years."
Rogers' is a case study in understatement. Non-defense discretionary spending (that is, the part of the budget outside of the Pentagon, Medicare, Medicaid, Social Security and the interest on the national debt) is smaller now than in 2008. And the Center on Budget Policy and Priorities explained, Ryan's roadmap would reduce combined education, R&D, infrastructure, food stamps, college loans and discretionary domestic programs to levels not seen in decades. (Last year, CBPP found that 62 percent of Ryan's $5 trillion in spending cuts comes from programs for lower income Americans.)) With over $700 billion in cuts in addition to the sequester reductions, "funding for those programs will shrink by 2017 to its lowest level on record as a share of the economy, in data that go back to 1962, and fall further thereafter."
This chart of Ryan's previous budget proposal from the Economic Policy Institute tells the tale:
To put that in perspective, Jed Graham took us back to 1948:
By 2023, under Paul Ryan's budget, the entirety of federal spending outside of Social Security and interest on the debt (16.4% of GDP in 2012) would shrink to 11.2% of GDP, a level not seen since 1948 -- before ObamaCare, Medicare, Medicaid, NASA, the interstate highway system and almost before the first baby boomers were born.
Americans may claim that they want government spending cut. As it turns out, just not on any of the programs facing Paul Ryan's budget ax.
Paul Ryan's flip-flop on Obamcare's Medicare savings (he was for it before he was against before he was for it again) isn't the only one contained in the latest version of his budget encyclical. He is now calling for caps on defense spending in keeping with the 2011 Budget Control Act. As the Wall Street Journal pointed out, that's a complete turnaround from the platform of GOP vice presidential candidate Paul Ryan just six months ago:
The House Budget Committee chairman's proposal marks a significant reversal for the GOP since just last fall. Mitt Romney, the party's 2012 presidential nominee, who made Mr. Ryan his running mate, campaigned on a plan to markedly increase the Pentagon budget, saying it should represent no less than 4% of gross domestic product.Mr. Ryan's budget calls for $560.2 billion in defense spending in 2014, roughly $100 billion less than the 4% formula. Over 10 years, he would spend at least $2.3 trillion less on defense than he and Mr. Romney advocated.
Like his running mate Mitt Romney, Paul Ryan is targeting federal government workers in his new budget. He not only wants to slash the ranks of the workforce by 10 percent through attribution, but wants to freeze their pay as well. As his budget document states:
"Immune from the effects of the recession, federal employees have received regular salary bumps regardless of productivity or economic realities."
In reality, federal workers have had their pay frozen for two years. But more importantly, as a percentage of the U.S. population Uncle Sam's workforce is near the lowest level in 50 years:
As Ezra Klein explained the OMB chart above two years ago:
The long view is that federal employees are plummeting as a total share of the workforce. "In 1953, there was one Federal worker for every 78 residents. In 1989, there was one Federal employee for every 110 residents. By 2009, the ratio had dropped to one Federal employee for every 147 residents." You can see that in the graph atop this post, which comes from the same report.The personnel gains that are happening are happening on the "security" side -- which includes, in this data, the Departments of Treasury, State and Justice, in addition to Veterans Affairs and the Department of Defense. According to OMB, "Overall, security agency employment grew by 22 percent from 2001 to 2010. During the same period, employment in non-security agencies as a percent of population fell by 4 percent."
As a quick glance at the numbers from the Office of Personnel Management show, total executive branch employment was slightly higher in 2011 under President Obama (2.76 million workers) than in 2008 (2.70 million). But the federal workforce contracted significantly under the Clinton-Gore "reinventing government" initiatives in 1990's, declining from its Reagan-Bush peak of almost 3.1 million.
(It should be noted that while federal employment has been basically flat during President Obama's tenure, state and local governments have shed over 600,000 workers just since the summer of 2009. Those jobs losses and the loss of consumer spending power they entail undermined U.S. economic growth while adding a full point to the American unemployment rate.)
Speaking to an adoring audience at the Conservative Political Action Conference (CPAC) on Friday, Congressman Paul Ryan warned that the national debt is a "moral failure" that could also lead to interest rates quadrupling. Warning that "chaos is fertile soil for liberalism," Ryan tried to poke fun at President Obama and his Democratic allies:
"The Vatican is not the only place blowing smoke this week."
Of course, the joke should be on him. After all, anyone who reads Paul Ryan's budget and believes its claims that it will balance the budget, help the middle class, preserve the social safety net and drive economic growth must be smoking something, all right. Then again, Ryan must have been dropping acid when he wrote it.