Paul Ryan betrays his own views on income inequality
By Ezra Klein,
On Thursday, the House of Representatives passed Rep. Paul Ryan’s 2013 budget proposal. The plan’s pleased author didn’t mince words. “We are bearing witness to history this week,” Ryan said.
“Class is not a fixed designation in this country,” Ryan said. “We are an upwardly mobile society with a lot of movement between income groups. The Treasury Department’s latest study on income mobility in America found that during the 10-year period starting in 1996, roughly half of the taxpayers who started in the bottom 20 percent had moved up to a higher income group by 2005.”
Upward mobility, Ryan said, is the real key to the “American idea.” But that idea was under threat — and not, as so many seemed to think, because of Republicans or low tax rates on billionaires. The real danger, Ryan argued, was coming from the Democrats and the programs they support. It was classic Ryan: A wonkish effort to recast an issue on which Republicans had traditionally been weak as a policy problem that only conservatism could solve. And it didn’t end there.
Two weeks later, in a 15-page report entitled “A Deeper Look at Income Inequality,” Ryan made his argument again — but this time with more charts. “Conventional wisdom on government’s role in inequality often has it backwards,” he wrote. “Tax reforms have resulted in a more progressive federal income tax; government transfer payments have become less progressive (due in large part to growing entitlement payments to wealthier seniors).”
Ryan went on to endorse the “the growing bipartisan consensus to target corporate welfare, to income-adjust entitlement programs and to reform the tax code by removing loopholes and lowering barriers to growth.”
Ryan’s presentation was persuasive. He’s right that the growth of social spending on the elderly is crowding out spending on the poor. And he was more convincing because he seemed to admit a hard truth that Republicans often deny: that government programs for the poor are a crucial way of ensuring income mobility, and as they get squeezed, so, too, do the life chances of those born at the base of the income ladder.
But it is difficult to believe that Ryan’s budget was written by the same guy who wrote this paper. Because in Ryan’s budget, Social Security is untouched. The cuts to Medicaid and other health programs for the poor are twice the size of those to Medicare. The cuts to education, to food stamps, to transportation infrastructure and to pretty much everything else besides defense are draconian. As for the tax reform component, it cuts taxes on millionaires by more than $250,000, but it doesn’t name a single loophole or tax break that Ryan and the Republicans would close.
In the end, the Center on Budget and Policy Priorities estimates that 62 percent of the cuts come from programs for low-income Americans and 37 percent of the tax benefits go to the few Americans earning more than $1 million.
In other words, Ryan’s budget fails even Ryan’s tests for encouraging social mobility: It focuses its cuts on programs for the poor rather than programs for seniors, and it doesn’t eliminate any tax loopholes. (Ryan’s office didn’t respond to requests for comment on this piece.)
As Ryan argued in his October speech, the government does have a role in encouraging social mobility: It helps close the gap between the children of the poor and the children of the rich. Food stamps and other food-assistance programs help with nutrition. Public education and Pell grants help with skills. Medicaid — which covers more than 25 million children — helps with access to health care. But Ryan’s proposed cuts would hit these programs with particular force.
“Ryan’s plan is a privatization of the prerequisites for opportunity,” says Jacob Hacker, author of “Winner-Take-All Politics.” “And so they become the province of people whose parents have made it.”
Bob Greenstein, director of the Center on Budget and Policy Priorities, points to Ryan’s cuts to education: “Lower-income students are more likely to go to public universities and community colleges. But lately, state budget cuts are leading to tuition increases. The Ryan budget would further decimate state budgets, because one of the areas of the budget he hits the hardest is ‘non-security discretionary spending,’ of which 35 to 40 percent of that category is aid to cities and state governments. Normally, you would increase Pell grants to help with this. But he’s slashing Pell grants, too!”
To put it slightly differently, no millionaire’s child will find that Ryan’s budget ends her hopes of a college education. But plenty of lower-income children will. And in the long run, that’s bad for mobility, bad for growth and bad for the country. “If you don’t have a society that allows non-elites to have a serious shot of sharing in economic prosperity, there’s a huge untapped potential for economic growth,” Hacker says.
Five months ago, Ryan knew that. He condemned “empty promises that betray the powerless” and praised “the American idea that justice is done when we level the playing field at the starting line.” But it is hard to see his budget as anything less than a betrayal of the powerless. And as for the American idea that justice is done by leveling the playing field at the starting line? Well, perhaps Ryan could include that in his next budget. Then he would really be making history.