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Paul Ryan’s budget: Should the poor pay for deficit reduction?

at 11:23 AM ET, 03/20/2012

Here’s the basic outline of House Budget Committee Chairman Paul Ryan’s 2013 budget in one sentence: Ryan’s budget funds trillions of dollars in tax cuts, defense spending and deficit reduction by cutting deeply into health-care programs and income supports for the poor.


(Chip Somodevilla - Getty Images)
At the end of his initial release, Ryan posts a table comparing his budget to the president’s budget. The single largest difference is in the tax section: Ryan raises $2 trillion less in revenue than the White House does. In the president’s budget, those revenues come mostly from increasing taxes on the wealthy. So that’s the first big gap between the two proposals: Under Ryan’s budget, revenue would be lower, and the distribution of taxes more regressive, than under Obama’s budget.

On the spending side, Ryan’s biggest cuts come from health-care programs. He eliminates the $1.5 trillion that the Affordable Care Act uses to purchase health insurance for 30 million Americans. Then he cuts Medicaid and related health programs by $770 billion — which is to say, by about a third. Medicare takes $200 billion in cuts on top of that. This graph from the Congressional Budget Office’s analysis of Ryan’s budget tells the story:


(Congressional Budget Office)
It would be very interesting to see an estimate of the uninsured population under Ryan’s budget.

Ryan’s next significant source of cuts is so-called “other mandatory.” Compared to the president’s budget, Ryan cuts $1.8 trillion from this category. Some of that might simply be an accounting difference: The president’s budget proposes to move infrastructure spending from the “discretionary” side of the budget to the “mandatory” side. Ryan might be moving that back, which isn’t, in and of itself, a spending cut. But beyond that, the main programs in “other mandatory” are low-income supports like refundable tax credits for the poor and food stamps. Ryan is cutting these quite substantially.

On a first pass, then, it appears that Ryan is offering a large tax cut, leaving seniors mostly alone for the next 10 years, increasing defense spending and cutting spending on programs for the poor.

Ryan prides himself on making tough choices. But where such choices need to be made for politically powerful constituencies — say, the tax breaks offered to the wealthy and the middle class, or the benefits offered to current seniors — Ryan punts. Changes for seniors don’t begin for a decade, the tax breaks Ryan will close to pay for his tax cuts go unnamed, and, of course, there are no tax increases at all. When such choices need to be made for programs that the poor depend on, however, Ryan is considerably more specific, and considerably more willing to inflict real budgetary pain on current beneficiaries.

Ryan’s budget includes substantially more deficit reduction than Obama’s budget. The Congressional Budget Office predicts that, in 10 years, public debt will be about 76 percent of GDP under Obama’s budget, and 61 percent of GDP under Ryan’s budget. But almost all of Ryan’s savings come from the same source: programs for the poor.

So Ryan’s budget ultimately poses two questions: First, whether this amount of deficit reduction is actually necessary. It’s more substantial, I believe, than what’s called for in Simpson-Bowles. And second, if you do consider this amount of deficit reduction necessary, whether the right way to achieve it is almost solely by cutting programs for the poor.

 
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