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Ryan's Path to Poverty

Ilana Novick

Paul Ryan is known for his devotion to cutting spending, but even compared to his previous attempts, his latest plan, with its promise to balance the budget by 2023, is remarkable for its severity. It's also notable for how blantantly it renegs on the core principle of the Simpson-Bowles Commission agreements which promised that deficit reduction should not come at the expense of the poor or increase economic inequality. As happens all too often, those who have nearly run out of sacrifices to make would bear the brunt of the proposed cuts, particularly when it comes to healthcare, education, childcare, and food assistance. 

According to an analysis from the Center on Budget and Policy Priorities, cuts to programs for low-income Americans account for 66% of the proposed cuts, totalling at least $3.3 trillion. This comes on top of years of already severe cuts, from the Budget Control Act of 2011, to the fiscal cliff deal to the sequester. 

That $3.3 trillion includes $2.6 trillion cut from various healthcare programs. Much of these savings depend on repealing the Patient Protection and Affordable Care Act's already hard-won expansions of programs like Medicaid and the Child Health Insurance Program. The proposal also calls for $135 billion in cuts to SNAP benefits, which like Medicaid, Ryan would like to see turned into block grants, and an additional $325 billion in cuts for non-Medicaid and SNAP benefits. CBPP notes that $163 billion of these cuts will affect civil service pensions and farm programs, though the proposal provides few details as to where the other $800 billion in cuts would come from, although they do specify that veterans’ benefits and services (function 700) are protected from cuts.

So where will the extra $800 billion come from? Lest more moderate income Americans think they're spared, CBPP's guesses include cuts to the Pell Grant program, farm subsidy cuts, increased federal employee retirement contributions, and the winding down of Fannie Mae and Freddie Mac. 

Both the CBPP and a similar analysis from the Committee for a Responsible Federal Budget note that Ryan's budget makes these calculations from a baseline that builds in certain savings: permanent sequestration, steep cuts in Medicare payments to doctors under the Sustainable Growth Rate (SGR) formula, and the expiration of refundable tax credit provisions after 2017. Basically, the plan hopes that the sequestration cuts, which are already causing pain for many Americans, will become the norm. 

As tough as Ryan's plan is on spending, it's practically neutral on taxes, and other potential sources of revenue. The CRFB, under the Ryan plan, the tax code would be consolidated into two rates of 10 and 25 percent. He would repeal the Alternative Minimum Tax, and reform the corporate tax code to achieve a top marginal rate of 25 percent for those making over 450,000, a 15% reduction in the current rates. Somehow, the plan assumes that these reduced rates will lead to the same amount of tax revenue as our current levels.

In The Atlantic, Derek Thompson argues that in order to achieve the same tax revenues, we'd either have to eliminate all of the tax advantages for that income bracket, or raise taxes on everyone else. Thompson believes this is a plan to raise taxes on those who don't earn that much, including the same groups that would see $3.3 trillion in cuts to life saving benefits. 

Whether or not Thompson's predictions come true, he and the CBPP alike note that all of the aforementioned proposed cuts occur with little near-term impact on Social Security, Medicare, and defense, programs dear the to hearts of elderly voters and the defense industry, which as Thompson points out, it's hard to win a Republican election without. Ryan's budget tries to have it both ways -- cutting most government assistance programs to the bone, just not those important to the GOP's base voters.