Nel's New Day

April 3, 2014

Ryan’s Budget: Steal from the Poor, Give to the Rich

paulryanspeaking630x354Rep. Paul Ryan (R-WI), the man who thinks that the country’s problems would be solved if only men in the inner city would get to work, has released his fourth annual budget proposal, again full of welfare subsidies for the wealthy. Today the man with a position that even the U.S. Conference of Catholic Bishops have condemned as immoral received an award for public service from the Catholic Marquette University. People are paying up to $25,000 for tickets and sponsorships for its fancy luncheon.

Budgets reflect a political party’s priorities and values. Ryan (public service award winner) has created that cuts $5.1 trillion over ten years by increasing defense spending, giving money to the wealthy, and taking money from the rest of the people in the country:

  • Reduction of the corporate tax rate from 35 percent to 25 percent and drop the highest income tax bracketed (90 percent in the 1950s) from 39.6 percent to 25 percent with any necessary taxes taken from middle-class taxpayers.
  • Protection of $45 billion in tax subsidies over 10 years to oil companies, the top five of which already reaped $93 billion in profits from 2013 alone.
  • Repeal of the Medicaid expansion provision in the Affordable Care Act by eliminating $1.5 trillion over ten years from the program that covered 67 million people in 2012, including 32 million children.
  • Cuts of $125 billion over ten years from the Supplemental Nutritional Assistance Program (SNAP), also called food stamps.
  • Erasure of the ACA. Medicare staying the same for those receiving it at this time but future Medicare plans coming from an exchange of private insurers—just like ACA. Policing of these private sector plays “to avoid cherry-picking and ensure that Medicare’s sickest and highest-cost beneficiaries receive coverage.” Just like the ACA. Medicare forcing 55-year-olds into a new voucher system that would increase Medicare premiums by 50 percent, according to the CBO.
  • Massive cuts to infrastructure, science, medical research, college loans, education etc. past the current disastrous level caused by sequestration despite the fact that austerity has been proved to fail as shown by the damaged economy from the George W. Bush austerity. In Europe, the deeper the austerity, the higher the unemployment; Ryan’s budget could lose 1.1 million jobs in one year. Difference between unemployment with and without the GOP austerity.

Austerity comparison

  • Huge unspecified cuts in low-income programs such as school lunches, child nutrition programs, and Supplemental Security Income which helps severely poor disabled and elderly people as well as the Earned Income Tax Credit (EITC) which Ryan praised in his recent poverty report while saving farm programs.

A Tax Policy Center analysis of identical tax proposals in last year’s House Republican budget found that they cost nearly $6 trillion over 10 years. Rep. Ryan claimed that this will not increase the deficit because his policies will be included in a larger “tax reform” that includes offsetting revenue increases, but there is no idea when this “reform” would be unless it is big tax increases for low- and middle-income taxpayers. Rep. Dave Camp (R-MI) has already suggested some of these “reforms” such as doing away the deduction of home mortgages. He isn’t running for re-election.

This one difference in Ryan’s fourth budget will be touted across the conservative media. Ryan purports that his “macroeconomic fiscal impact” would further reduce the deficit by $74 billion in 2024, creating a $5 billion net surplus. In discussing this “dynamic scoring,” Jordan Weissman explains that “the GOP tends to use it as a quick fix in budgeting the same way Chinese takeout joints deploy MSG to flavor your lo mein.” The theory is that cutting the deficit would improve the economy by lowering interest rates, making it easier for the private sector to invest. More growth would cause jobs and tax revenue to close the deficit. Ryan failed to consider, however, that interest rates are almost zero. They won’t be lowered unless people are given money for borrowing.

One of Ryan’s disastrous ideas is to move federal assistance in food stamps and Medicaid into blocks grants giving states the discretion of who to spend. In theory, states might be better equipped to determine the best use; in practicality, not so much as shown by their welfare reform in 1996 to give states this flexibility.

In the first year of welfare reform, about 70 percent of the Temporary Assistance for Needy Families (TANF) block grants paid for families’ basic cash assistance. That figure fell to 29 percent by 2012 with states spending only 8 percent on transportation, job training, and other services to help people transition from welfare into the workforce.

In 2012, Louisiana spent 7 percent of its $261 million in TANF funds on basic assistance, down from 36 percent in 2001. Only 4 percent of the funds helped welfare recipients get back into the workforce, and even less—2 percent—went to child care, another critical component of a reform effort that helped women with small children into low-wage jobs. Of the grants, 71 percent went to other services, including “other nonassistance,” a way to hide payments for programs that states didn’t want to identify.

In times of fiscal problems, states use TANF money to pay for programs that don’t help the neediest out of poverty, everything from pre-K to financial aid for college students. Many states circumvent court orders to spend more money on poverty programs by using TANF funds. For example, after Georgia was court-ordered to improve its child abuse and neglect system because of inadequate and dangerous conditions, the state used over half of its federal TANF grant on foster care and related services instead of keeping children out of foster care.

States receiving TANF funds are required to contribute toward the program. For example, New Jersey, under court order to provide pre-K for poor children, counted more than $420 million of the court-ordered expenditure for early childhood education and full-day school toward its TANF contribution. In 2012, Louisiana counted the $46 million it spent on college financial aid as its contribution towards the welfare program. Hawaii claimed that $33 million it spent funding students at the University of Hawaii is actually anti-poverty spending.

Other states count private funds already being spent by nonprofits such as Catholic Charities, the YMCA, or Goodwill toward their own welfare contributions. Utah counts volunteer services offered through one of the Mormon church’s Deseret Industry food banks as nearly half of its TANF match.

As a result, the number of children and families in the U.S. living on less than $2 a day has doubled since 1996. Ryan’s plan would import this model, open to fraud, into other federal anti-poverty programs with far larger budgets than the annual budget $16 billion for TANF, an amount unchanged since the reform of 1996. The complaints in Ryan’s report that helping people in poverty has had no effect might be answered by the methods that states have used to suck funding out of block grants to cover their fiscal shortages.

Ryan’s budget gives more freedom to Wall Street with dire consequences to the poor and middle-class:

  • Cut the Securities and Exchange Commission budget so that it can’t oversee the financial sector;
  • Transfer the Consumer Financial Protection Bureau budget to Congress so that the watchdog agency can be removed;
  • Ensure taxpayer bailouts of big banks so that taxpayers keep paying for their risky actions.

The result of Ryan’s budget, were it to go into effect, is an even greater increase in income inequality accompanied by slower recovery and higher long-term unemployment. It should be noted that Ryan released his budget proposal on April Fools Day. At least he goes off as chair of the Budget Committee this year. This is his last hurrah.

The budget is going nowhere, but it shows the GOP policies and values: take from the poor and give to the wealthy while increasing defense.


1 Comment »

  1. So sad. So heartless.


    Comment by Lee Lynch — April 5, 2014 @ 1:54 AM | Reply

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