And yet, this is an important piece of work, especially in an election year. The proposals described below represent the consensus blueprint for the budget policies of today’s Republican Party. Should the presidency change parties next year, these ideas could represent the point of departure for a dramatic transformation of the role of government, particularly as it relates to the least advantaged, in ways that would intensify hardship for tens of millions of Americans.
Let me show you what I mean:
— Loss of health insurance coverage: The Republican budget would, of course, repeal Obamacare — and, thus, the Medicaid expansion. It would then convert Medicaid into a block grant (a fixed funding amount to states), disabling the problem’s ability to ramp up in recession. The budget would also end subsidies to those who’ve recently been able to afford private health coverage. The result would be loss of coverage for tens of millions of Americans and a sharp reversal of a great national achievement from 2014: the decline in the rate of uninsured from 13.3 percent to 10.4 percent, the largest such decline on record.
— Underfunded public goods: Funding for non-defense discretionary programs, which include education, scientific research, infrastructure, national parks and forests, law enforcement, courts, and other national needs, is already slated to reach a historic low in 2018. The House Republican budget would further cut spending in these areas by about $1 trillion over the next decade.
— Environmental and economic exploitation: The House Republicans would get rid of the Consumer Financial Protection Bureau and roll back most of the financial regulation passed in response to the “innovations” that brought us the housing bubble. It would then gut both the budget and regulatory capability of the Environmental Protection Agency, inhibiting its ability to fight global warming.
— Greater poverty: All told, under this budget, roughly 40 percent of current federal resources to help low-income households would be gone by 2026. Moreover, though conservative rhetoric argues for devolving federal functions down to the state level, House Republicans have also begun pushing for the repeal of the Social Services Block Grant — which “provides states with $1.7 billion a year to meet the needs of their most vulnerable populations, primarily vulnerable children, seniors, and people with disabilities” — and an anti-immigrant change to the Child Tax Credit that would deprive millions of kids (about 80 percent of whom are U.S. citizens) of much-needed income.
Now, if you’re really into budget wonkery, you might have noticed that the official analysts of such proposals at the Congressional Budget Office provide a rosier review of the House budget resolution than the one I just gave you. CBO finds that the proposal significantly reduces the deficit and debt, and, in doing so, unleashes stronger income growth than it otherwise expects to occur.
In fact, that would be a highly unlikely outcome, as it’s based on implausible assumptions. To be very clear, it is not CBO’s fault for accepting those assumptions. They must plug in the assumptions they’re given. So when House R’s say that although they’re cutting a bunch of taxes for high-earners and multinational corporations and will somehow make up the lost revenue by closing unspecified loopholes, CBO has no choice but to believe them.
Because of assumed revenue neutrality, the large spending cuts lower the deficit and debt. Next, CBO assumes that lower debt will deliver lower interest rates and less crowding out of more productive private borrowing by government borrowing. So the plan gets credit for leading to faster GDP, wage and income growth.
Consider the links in this chain. First, this group that has sworn in blood oaths never to raise taxes is supposed to somehow claw back the revenue they cut though raising tax payments somewhere else in the code (just don’t ask where). Next, while I see no evidence that our current debt levels are crowding out private borrowing and pressuring interest rates, lower debt is supposed to have the positive macro effects CBO assumes (meanwhile, all those cuts to infrastructure, research and education do no harm to growth, of course). Then, despite our high levels of income inequality, the benefits of this new growth are supposed to flow to middle-income and poor people.
But here’s the clincher. Even if this magic occurred, most people would still be worse off, because the spending cuts to the programs on which they depend would more than offset their income gains.
One more point. I called this a “consensus blueprint” for Republican fiscal policy above, but that’s not quite right. A minority of House Republicans refuse to support their colleagues’ budget resolution. That’s not, of course, because they share my concerns. It’s because it doesn’t go far enough in cutting spending outside of defense.
So as much as I’d love to ignore this mishegoss, I’m afraid we cannot afford to do so. We must view this budget blueprint as a potential path that’s out there, depending on the outcome of the election. There are a lot of people whose well-being depends on this path not being taken.