Republican presidential candidate Mitt Romney has selected House Budget Committee Chairman Paul Ryan (R-Wis.) as his running mate, further elevating tax and budget policy issues. Ryan is known for providing seemingly wonky budget plans over the last decade. Below, we highlight and summarize previous analyses of these plans. What stands out is that Ryan’s budget blueprints impose huge cuts to non-defense spending yet still fail to address long-run fiscal challenges in any serious way. Further, they clearly exacerbate many pressing economic challenges, like restoring full employment, rebuilding the middle class, and curbing health costs. Lastly, they are often simply incomplete or even dishonest, claiming to hold overall revenue levels constant while offering no tax increases to counterbalance very large tax cuts aimed at the highest-income households. Simply put, the Ryan budgets fail to correctly diagnose the most pressing economic problems facing the U.S. economy, and hence fail to propose real solutions. Here are themes everyone needs to know about the Romney-Ryan agenda for the federal budget, and a 10-point overview of Ryan’s budgets.
- The Ryan budget blueprints would derail economic recovery and lower employment in the near term by prematurely cutting domestic spending.
- Ryan’s budgets make deep cuts to Medicare, Medicaid, and Social Security, as well as repeal the Affordable Care Act .
- Ryan has proposed cutting non-defense spending and public investments—areas including education, infrastructure, and scientific research—to implausibly low levels that impede near- and long-term growth.
- Ryan’s budget blueprints shift the burden of taxation from the most upper-income households to the middle class, redistributing wealth up the income distribution.
- Ryan’s budgets appear fiscally responsible on paper only by dissembling which taxes will be raised to cover his enormous cuts to tax bills of high-income households and corporations.
MORE: EPI publications on Ryan’s economic policies
The Ryan Roadmap
In Jan. 2010, House Budget Committee Ranking Member Ryan presented A Roadmap for America’s Future, in which he proposed policy changes that, if enacted, would dismantle social insurance programs (Social Security, Medicare, and Medicaid) and raise taxes on the middle class to pay for tax cuts for corporations and the richest households. All of this is detailed in the EPI Briefing Paper Paul Ryan’s Plan for Millionaires’ Gain and Middle-Class Pain.
1. Ryan would raise taxes on the broad middle class in order to cut millionaires’ taxes in half. The arithmetic is clear: Ryan’s policies would inarguably redistribute income from the middle class to millionaires. Under his Roadmap, households earning between $20,000 and $200,000 would see their taxes rise relative to current policy, according to the Tax Policy Center (TPC), and this increase would be used in part to provide tax cuts for higher-income households. Millionaires would see their average tax rate fall to 12.8 percent, less than half of what they would pay under current policy, for an average tax cut of $502,000. A family earning between $30,000 and $40,000 annually, on the other hand, would see an average tax increase of $494 and would pay a higher 13.9 percent tax rate (even though the facts resoundingly support raising more revenue from upper-income householdsas a pillar of long-run fiscal policy).
2. Under the Ryan Roadmap, Romney’s tax rate would fall close to zero. The Ryan Roadmap allows all income derived from investments and savings to be exempt from taxation. This means that taxpayers like Romney could opt to pay an effective tax rate that would be even significantly lower than the 13.9 percent tax rate he paid in 2010. This is because the Ryan Roadmap privileges income earned from holding wealth over income earned from work—capital gains, dividends, and carried interest income would all see huge tax cuts under the Ryan Roadmap. This priority of rewarding wealth over work epitomizes the need for a “Buffett Rule” that would help equalize the tax rates of households that earned most of their money from holding wealth relative to those that earned most of their money from working. This is especially important given that tilted distribution of capital income has been thelargest factor driving income inequality wider over 1996 and 2006, followed by changes in tax policy which disproportionately benefited upper-income households (notably reducing the top tax rate on capital gains and dividends to 15 percent from 28 percent and 39.6 percent, respectively, over this period), according to the Congressional Research Service (CRS).
3. The Roadmap proposed deep cuts to Social Security, Medicare, and Medicaid. In regards to Medicare, the Roadmap would replace the current Medicare guarantee that health costs will be covered with a voucher that forces households to shop on their own from private insurance companies for a policy. The Congressional Budget Office (CBO) has estimated that these vouchers would be wholly insufficient to protect seniors from rising health costs, as total value of the vouchers relative to promised benefits would fall by more than 75 percent over the next 70 years. The Roadmap would also eliminate the Children’s Health Insurance Program (which covers 8.1 million children today) and cut and replace most of Medicaid—healthcare for the disabled and poor children and seniors—with a voucher. Lastly, the Ryan Roadmap would partially privatize and cut Social Security. TheCenter on Budget and Policy Priorities (CBPP) estimated that a younger American medium earner born in 1985 (turning 65 in 2050) would see a lifetime benefit cut of 24 percent, roughly two-thirds from price indexing and one-third from increasing the retirement age. By 2080, a medium earner would see a 39 percent Social Security benefit cut under the Ryan Roadmap.
4. The Ryan Roadmap would worsen the fiscal outlook for decades to come. The misconception that Ryan’s budget plans would improve the budget outlook stem from implausible assumptions forced upon CBO regarding the revenue effects of Ryan’s tax cuts.CBO’s long-term analysis of the Roadmap assumed federal receipts at 18.4 percent of GDP over the next decade (and implausibly holding at 19 percent beyond), because that’s what Ryan’s staff assured them his tax policies would raise and the CBO respected this assumption. However, when independent analysts looked at the Ryan Roadmap’s explicit tax policies, TPC estimated revenue would average only 16.3 percent—or $4 trillion less than Ryan assumed. Using TPC’s revenue estimates, CBPP calculated that the Roadmap would increase debt as a share of the economy for more than four decades, pushing public debt to over 175 percent of GDP by 2050.
Ryan’s fiscal 2012 budget
As newly appointed Chairman of the Budget Committee, Ryan produced in April 2011 a House Budget Resolution for fiscal year 2012, the Path to Prosperity: Restoring America’s Promise, again proposing ending guaranteed Medicare, slashing taxes for upper-income households, and defunding public investments. This is detailed in the EPI Policy MemoRyan’s Budget Would Undermine Economic Security for Millions.
5. The Ryan 2012 budget again calls for replacing today’s Medicare guarantee with a voucher, replacing Medicaid with a block grant, defunding both programs, and repealing the Affordable Care Act (ACA).CBO’s long-term analysis of Ryan’s fiscal 2012 budget estimated that federal spending on Medicaid would be roughly halved in the next two decades. Again, too many budget commentators give Ryan credit for solving a problem with these cuts. With respect to voucherizing Medicare, the Ryan budget would merely shift costs from the federal budget to households, businesses, and state governments—which would do nothing to lower overall health care costs. Medicare has done a better job keeping down cost growth per enrollee than private insurance companies: Since 1969, cumulative growth in private insurance spending per beneficiary has increased 60.8 percent more than that of Medicare. In analyzing Ryan’s 2012 budget, CBO estimated that Medicare is 11 percent cheaper than an actuarially equivalent private insurance plan, an efficiency premium that will similarly compound with time: Today’s guaranteed Medicare is projected to be 29 percent cheaper than an equivalent private insurance plan by 2030 (relative to CBO’s alternative fiscal scenario for the long-term budget outlook). Extrapolating from CBO’s analysis, the Center for Economic and Policy Research estimated that the Ryan proposal would increase national health care expenditure by $30 trillion over the next 75 years, assuming households purchase Medicare-equivalent plans. (A more likely scenario would involve an increase in national health care expenditure and a decrease in the number of Americans receiving adequate health care coverage.)
6. The Ryan fiscal 2012 budget would have derailed economic recovery with deep, immediate spending cuts, also starving the country of much needed public investment. In the near term, Ryan’s 2012 budget would derail a still-fragile economic recovery by exacerbating the clearest economic weakness: austerity in public budgets. At the time, EPI estimated that sharp cuts to the non-security discretionary budget—roughly half of which is classified as public investment—would decrease employment by 900,000 jobs in 2012 and 1.3 million jobs in 2013. (At the time, EPI also projected that deep cuts to Medicaid would reduce employment by an additional 2.1 million jobs over the next five years.) Over the longer term, Ryan’s budget would slow growth in the economy’s potential by cutting non-security discretionary (NSD) funding—including education, infrastructure, and basic scientific research—by $1.8 trillion over a decade, a decrease of roughly 42 percent. Given that public investment is a key driver of private investment, innovation, and economic growth—the budget would hurt both near-term recovery and long-term growth. The Ryan budget would decrease NSD spending to 1.5 percent of GDP by 2021, less than half its 3.3 percent historical average since 1962, necessitating deep cuts in NSD public investments and the basic functioning of government (each of which are currently at 1.7 percent of GDP). This is not just austere; it is simply an unrealistic funding level.
Ryan’s fiscal 2013 budget
In March 2012, Ryan produced a House Budget Resolution for fiscal year 2013, the Path to Prosperity: A Blueprint for American Renewal, that again failed to address the central economic and fiscal challenges we face. This budget was actually usefully called out for containing too many accounting gimmicks to be taken seriously as a foundation for debate, as detailed in the EPI and The Century Foundation Briefing Paper, The Ryan budget versus the Budget for All: Exacerbating versus alleviating our serious economic challenges.
7. The Ryan fiscal 2013 budget would reduce employment by millions, impeding the return to full employment. Roughly 10 million jobs are needed to restore pre-recession unemployment and labor force participation rates, yet the 2013 Ryan budget again turned the dial on unemployment in the wrong direction. The Ryan budget calls for immediate reductions in primary budget deficits (i.e., revenue less non-interest spending). Relative to current policies, EPI estimated that primary spending cuts of $125 billion in fiscal 2013 would reduce GDP by 1.1 percent, and primary cuts of $279 billion in fiscal 2014 would reduce GDP by 2.4 percent. These cuts would again appreciably slow economic recovery. Net of a very small, albeit costly, boost to demand from tax cuts (which are about 75 percent less efficient per dollar in generating jobs and growth), these deep government spending cuts would reduce employment by 1.3 million jobs in fiscal 2013 and 2.8 million jobs in fiscal 2014, relative to current budget policies.
8. The Ryan fiscal 2013 budget would repeal the Affordable Care Act, reversing the most substantial piece of deficit reduction in decades, and halve Medicaid, increasing the number of uninsured Americans by 44 million or more. Passage of ACA was the largest force driving CBO’s dramatic recent improvements in long-term public debt projections; between 2009 and 2010 (pre- and post-ACA enactment), their extended baseline projection for public debt in 2083 was revised sharply downwards from 306 percent of GDP to just 111 percent—a decrease of nearly two-thirds. Repealing the ACA would also mean 30 million fewer Americans would have health insurance coverage by 2022, according to CBO. Like the Roadmap and fiscal 2012 budget, his 2013 budget again proposed replacing Medicare’s guarantee of health coverage with a voucher, the value of which would not keep pace with spiraling health care costs (the major revision was that seniors would be able to purchase fee-for-service Medicare instead of private plans, but they would still be given a voucher that would not keep up with health inflation and Medicare would be stripped of its ability to contain costs through government monopsony power). Medicaid spending would be cut in half by 2022, which the Kaiser Family Foundation estimated would cause another 14 million to 27 million Americans to lose health insurance above and beyond losses from repealing ACA. By 2050, federal spending on Medicaid, the Children’s Health Insurance Program, and targeted subsidies to expand insurance coverage would be cut by more than 75 percent. CBPP estimated that 62 percent of Ryan’s $5.3 trillion in non-defense spending cuts would come from programs for lower-income households, defunding the social safety net.
9. Cuts to programs crucial for low and middle-income households’ economic security fund the preservation and expansion of Bush-era tax cuts for the highest-income Americans. Ryan’s deep domestic spending cuts essentially cover the cost of maintaining the Bush tax cuts and alternative minimum tax (AMT) patch ($5.4 trillion over a decade). But the Ryan plan goes further than this. The AMT would then be repealed, the top ordinary income tax rate would be cut from 35 percent to 25 percent, the top corporate tax rate would be cut from 35 percent to 25 percent, and the foreign earnings of U.S. multinational companies would be exempt from taxation (thereby exacerbating offshoring and discouraging domestic investment)—proposals overwhelmingly echoed in Romney’s budget and economic plan. Ryan’s additional tax cuts are significantly skewed to the top of the income distribution, with 71 percent of their benefit going to households with income above $200,000 annually, roughly the top 5 percent of households, according to TPC. Households with income under $75,000 a year (representing 71 percent of households) would receive only 6 percent of the net tax cuts, and 11 percent of households (mostly earning under $30,000 annually) would see a taxincrease from scaling back refundable tax credits, relative to current policies. Households with over $1 million in annual income would see a tax cut of $265,000 in addition to a tax cut of $141,000 from extending the Bush-era tax cuts.
10. The Ryan fiscal 2013 budget includes no means to pay for a $4.5 trillion tax cut aimed overwhelmingly at upper-income households. Ryan’s additional tax cuts are ignored in the budget tables for his 2013 plan, which reflect revenue averaging 18.3 percent of GDP over fiscal 2013-2022. This mirrors the CBO’slong-term analysis of Ryan’s budget which uses the same false assumption—provided by Ryan’s staff—that revenue will somehow total 19 percent of GDP over the long run (fiscal 2025 and beyond). Theindependent TPC analysis of the explicit details of Ryan’s budget shows revenue averaging only 15.5 percent of GDP over fiscal 2013-2022. Further, while he claims that his revenue targets can be met by “broadening the tax base,” Ryan hasn’t specified a single tax expenditure (the largest categories of tax base-narrowers) that would be eliminated, and has insisted that two of the largest such expenditures—the highly regressive preferential tax rates on capital gains and dividends—must be maintained. With zero base broadening or realistic assumptions about tax reform based on estimates by CRS, public debt under the Ryan budget would be between $3.0 trillion (+19.6 percent) and $5.3 trillion (+34.2 percent) higher by 2022 without the magic asterisk—a significant margin of dishonesty.
Romney embraced Ryan’s fiscal 2013 budget in April, and modeled much of his budget and economic plan, Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth,around Ryan’s budgetary blueprints, but now it’s explicit: The Romney-Ryan fiscal agenda would wreak havoc on the middle class—and the U.S. economy at large—in order to keep cutting taxes for millionaires. Romney and Ryan are not serious about accelerating economic recovery or stabilizing the long-term fiscal outlook, or even proposing evidence-based solutions to our actual economic challenges (raising millionaires’ disposable income is not one of them). What they would enact, if given the chance, would increase unemployment, slow near-term economic growth, destroy the safety net and social insurance programs, and defund non-security discretionary investments, all in order to lavish millionaires with tax cuts more than twice as large as those that would be afforded by continuing all the Bush-era tax cuts.
Tags: medicare, medicaid, social security, tax
What a Romney-Ryan Budget Would Mean for Americans
Republican presidential candidate Mitt Romney has selected House Budget Committee Chairman Paul Ryan (R-Wis.) as his running mate, further elevating tax and budget policy issues. Ryan is known for providing seemingly wonky budget plans over the last decade. Below, we highlight and summarize previous analyses of these plans. What stands out is that Ryan’s budget blueprints impose huge cuts to non-defense spending yet still fail to address long-run fiscal challenges in any serious way. Further, they clearly exacerbate many pressing economic challenges, like restoring full employment, rebuilding the middle class, and curbing health costs. Lastly, they are often simply incomplete or even dishonest, claiming to hold overall revenue levels constant while offering no tax increases to counterbalance very large tax cuts aimed at the highest-income households. Simply put, the Ryan budgets fail to correctly diagnose the most pressing economic problems facing the U.S. economy, and hence fail to propose real solutions. Here are themes everyone needs to know about the Romney-Ryan agenda for the federal budget, and a 10-point overview of Ryan’s budgets.
MORE: EPI publications on Ryan’s economic policies
The Ryan Roadmap
In Jan. 2010, House Budget Committee Ranking Member Ryan presented A Roadmap for America’s Future, in which he proposed policy changes that, if enacted, would dismantle social insurance programs (Social Security, Medicare, and Medicaid) and raise taxes on the middle class to pay for tax cuts for corporations and the richest households. All of this is detailed in the EPI Briefing Paper Paul Ryan’s Plan for Millionaires’ Gain and Middle-Class Pain.
1. Ryan would raise taxes on the broad middle class in order to cut millionaires’ taxes in half. The arithmetic is clear: Ryan’s policies would inarguably redistribute income from the middle class to millionaires. Under his Roadmap, households earning between $20,000 and $200,000 would see their taxes rise relative to current policy, according to the Tax Policy Center (TPC), and this increase would be used in part to provide tax cuts for higher-income households. Millionaires would see their average tax rate fall to 12.8 percent, less than half of what they would pay under current policy, for an average tax cut of $502,000. A family earning between $30,000 and $40,000 annually, on the other hand, would see an average tax increase of $494 and would pay a higher 13.9 percent tax rate (even though the facts resoundingly support raising more revenue from upper-income householdsas a pillar of long-run fiscal policy).
2. Under the Ryan Roadmap, Romney’s tax rate would fall close to zero. The Ryan Roadmap allows all income derived from investments and savings to be exempt from taxation. This means that taxpayers like Romney could opt to pay an effective tax rate that would be even significantly lower than the 13.9 percent tax rate he paid in 2010. This is because the Ryan Roadmap privileges income earned from holding wealth over income earned from work—capital gains, dividends, and carried interest income would all see huge tax cuts under the Ryan Roadmap. This priority of rewarding wealth over work epitomizes the need for a “Buffett Rule” that would help equalize the tax rates of households that earned most of their money from holding wealth relative to those that earned most of their money from working. This is especially important given that tilted distribution of capital income has been thelargest factor driving income inequality wider over 1996 and 2006, followed by changes in tax policy which disproportionately benefited upper-income households (notably reducing the top tax rate on capital gains and dividends to 15 percent from 28 percent and 39.6 percent, respectively, over this period), according to the Congressional Research Service (CRS).
3. The Roadmap proposed deep cuts to Social Security, Medicare, and Medicaid. In regards to Medicare, the Roadmap would replace the current Medicare guarantee that health costs will be covered with a voucher that forces households to shop on their own from private insurance companies for a policy. The Congressional Budget Office (CBO) has estimated that these vouchers would be wholly insufficient to protect seniors from rising health costs, as total value of the vouchers relative to promised benefits would fall by more than 75 percent over the next 70 years. The Roadmap would also eliminate the Children’s Health Insurance Program (which covers 8.1 million children today) and cut and replace most of Medicaid—healthcare for the disabled and poor children and seniors—with a voucher. Lastly, the Ryan Roadmap would partially privatize and cut Social Security. TheCenter on Budget and Policy Priorities (CBPP) estimated that a younger American medium earner born in 1985 (turning 65 in 2050) would see a lifetime benefit cut of 24 percent, roughly two-thirds from price indexing and one-third from increasing the retirement age. By 2080, a medium earner would see a 39 percent Social Security benefit cut under the Ryan Roadmap.
4. The Ryan Roadmap would worsen the fiscal outlook for decades to come. The misconception that Ryan’s budget plans would improve the budget outlook stem from implausible assumptions forced upon CBO regarding the revenue effects of Ryan’s tax cuts.CBO’s long-term analysis of the Roadmap assumed federal receipts at 18.4 percent of GDP over the next decade (and implausibly holding at 19 percent beyond), because that’s what Ryan’s staff assured them his tax policies would raise and the CBO respected this assumption. However, when independent analysts looked at the Ryan Roadmap’s explicit tax policies, TPC estimated revenue would average only 16.3 percent—or $4 trillion less than Ryan assumed. Using TPC’s revenue estimates, CBPP calculated that the Roadmap would increase debt as a share of the economy for more than four decades, pushing public debt to over 175 percent of GDP by 2050.
Ryan’s fiscal 2012 budget
As newly appointed Chairman of the Budget Committee, Ryan produced in April 2011 a House Budget Resolution for fiscal year 2012, the Path to Prosperity: Restoring America’s Promise, again proposing ending guaranteed Medicare, slashing taxes for upper-income households, and defunding public investments. This is detailed in the EPI Policy MemoRyan’s Budget Would Undermine Economic Security for Millions.
5. The Ryan 2012 budget again calls for replacing today’s Medicare guarantee with a voucher, replacing Medicaid with a block grant, defunding both programs, and repealing the Affordable Care Act (ACA).CBO’s long-term analysis of Ryan’s fiscal 2012 budget estimated that federal spending on Medicaid would be roughly halved in the next two decades. Again, too many budget commentators give Ryan credit for solving a problem with these cuts. With respect to voucherizing Medicare, the Ryan budget would merely shift costs from the federal budget to households, businesses, and state governments—which would do nothing to lower overall health care costs. Medicare has done a better job keeping down cost growth per enrollee than private insurance companies: Since 1969, cumulative growth in private insurance spending per beneficiary has increased 60.8 percent more than that of Medicare. In analyzing Ryan’s 2012 budget, CBO estimated that Medicare is 11 percent cheaper than an actuarially equivalent private insurance plan, an efficiency premium that will similarly compound with time: Today’s guaranteed Medicare is projected to be 29 percent cheaper than an equivalent private insurance plan by 2030 (relative to CBO’s alternative fiscal scenario for the long-term budget outlook). Extrapolating from CBO’s analysis, the Center for Economic and Policy Research estimated that the Ryan proposal would increase national health care expenditure by $30 trillion over the next 75 years, assuming households purchase Medicare-equivalent plans. (A more likely scenario would involve an increase in national health care expenditure and a decrease in the number of Americans receiving adequate health care coverage.)
6. The Ryan fiscal 2012 budget would have derailed economic recovery with deep, immediate spending cuts, also starving the country of much needed public investment. In the near term, Ryan’s 2012 budget would derail a still-fragile economic recovery by exacerbating the clearest economic weakness: austerity in public budgets. At the time, EPI estimated that sharp cuts to the non-security discretionary budget—roughly half of which is classified as public investment—would decrease employment by 900,000 jobs in 2012 and 1.3 million jobs in 2013. (At the time, EPI also projected that deep cuts to Medicaid would reduce employment by an additional 2.1 million jobs over the next five years.) Over the longer term, Ryan’s budget would slow growth in the economy’s potential by cutting non-security discretionary (NSD) funding—including education, infrastructure, and basic scientific research—by $1.8 trillion over a decade, a decrease of roughly 42 percent. Given that public investment is a key driver of private investment, innovation, and economic growth—the budget would hurt both near-term recovery and long-term growth. The Ryan budget would decrease NSD spending to 1.5 percent of GDP by 2021, less than half its 3.3 percent historical average since 1962, necessitating deep cuts in NSD public investments and the basic functioning of government (each of which are currently at 1.7 percent of GDP). This is not just austere; it is simply an unrealistic funding level.
Ryan’s fiscal 2013 budget
In March 2012, Ryan produced a House Budget Resolution for fiscal year 2013, the Path to Prosperity: A Blueprint for American Renewal, that again failed to address the central economic and fiscal challenges we face. This budget was actually usefully called out for containing too many accounting gimmicks to be taken seriously as a foundation for debate, as detailed in the EPI and The Century Foundation Briefing Paper, The Ryan budget versus the Budget for All: Exacerbating versus alleviating our serious economic challenges.
7. The Ryan fiscal 2013 budget would reduce employment by millions, impeding the return to full employment. Roughly 10 million jobs are needed to restore pre-recession unemployment and labor force participation rates, yet the 2013 Ryan budget again turned the dial on unemployment in the wrong direction. The Ryan budget calls for immediate reductions in primary budget deficits (i.e., revenue less non-interest spending). Relative to current policies, EPI estimated that primary spending cuts of $125 billion in fiscal 2013 would reduce GDP by 1.1 percent, and primary cuts of $279 billion in fiscal 2014 would reduce GDP by 2.4 percent. These cuts would again appreciably slow economic recovery. Net of a very small, albeit costly, boost to demand from tax cuts (which are about 75 percent less efficient per dollar in generating jobs and growth), these deep government spending cuts would reduce employment by 1.3 million jobs in fiscal 2013 and 2.8 million jobs in fiscal 2014, relative to current budget policies.
8. The Ryan fiscal 2013 budget would repeal the Affordable Care Act, reversing the most substantial piece of deficit reduction in decades, and halve Medicaid, increasing the number of uninsured Americans by 44 million or more. Passage of ACA was the largest force driving CBO’s dramatic recent improvements in long-term public debt projections; between 2009 and 2010 (pre- and post-ACA enactment), their extended baseline projection for public debt in 2083 was revised sharply downwards from 306 percent of GDP to just 111 percent—a decrease of nearly two-thirds. Repealing the ACA would also mean 30 million fewer Americans would have health insurance coverage by 2022, according to CBO. Like the Roadmap and fiscal 2012 budget, his 2013 budget again proposed replacing Medicare’s guarantee of health coverage with a voucher, the value of which would not keep pace with spiraling health care costs (the major revision was that seniors would be able to purchase fee-for-service Medicare instead of private plans, but they would still be given a voucher that would not keep up with health inflation and Medicare would be stripped of its ability to contain costs through government monopsony power). Medicaid spending would be cut in half by 2022, which the Kaiser Family Foundation estimated would cause another 14 million to 27 million Americans to lose health insurance above and beyond losses from repealing ACA. By 2050, federal spending on Medicaid, the Children’s Health Insurance Program, and targeted subsidies to expand insurance coverage would be cut by more than 75 percent. CBPP estimated that 62 percent of Ryan’s $5.3 trillion in non-defense spending cuts would come from programs for lower-income households, defunding the social safety net.
9. Cuts to programs crucial for low and middle-income households’ economic security fund the preservation and expansion of Bush-era tax cuts for the highest-income Americans. Ryan’s deep domestic spending cuts essentially cover the cost of maintaining the Bush tax cuts and alternative minimum tax (AMT) patch ($5.4 trillion over a decade). But the Ryan plan goes further than this. The AMT would then be repealed, the top ordinary income tax rate would be cut from 35 percent to 25 percent, the top corporate tax rate would be cut from 35 percent to 25 percent, and the foreign earnings of U.S. multinational companies would be exempt from taxation (thereby exacerbating offshoring and discouraging domestic investment)—proposals overwhelmingly echoed in Romney’s budget and economic plan. Ryan’s additional tax cuts are significantly skewed to the top of the income distribution, with 71 percent of their benefit going to households with income above $200,000 annually, roughly the top 5 percent of households, according to TPC. Households with income under $75,000 a year (representing 71 percent of households) would receive only 6 percent of the net tax cuts, and 11 percent of households (mostly earning under $30,000 annually) would see a taxincrease from scaling back refundable tax credits, relative to current policies. Households with over $1 million in annual income would see a tax cut of $265,000 in addition to a tax cut of $141,000 from extending the Bush-era tax cuts.
10. The Ryan fiscal 2013 budget includes no means to pay for a $4.5 trillion tax cut aimed overwhelmingly at upper-income households. Ryan’s additional tax cuts are ignored in the budget tables for his 2013 plan, which reflect revenue averaging 18.3 percent of GDP over fiscal 2013-2022. This mirrors the CBO’slong-term analysis of Ryan’s budget which uses the same false assumption—provided by Ryan’s staff—that revenue will somehow total 19 percent of GDP over the long run (fiscal 2025 and beyond). Theindependent TPC analysis of the explicit details of Ryan’s budget shows revenue averaging only 15.5 percent of GDP over fiscal 2013-2022. Further, while he claims that his revenue targets can be met by “broadening the tax base,” Ryan hasn’t specified a single tax expenditure (the largest categories of tax base-narrowers) that would be eliminated, and has insisted that two of the largest such expenditures—the highly regressive preferential tax rates on capital gains and dividends—must be maintained. With zero base broadening or realistic assumptions about tax reform based on estimates by CRS, public debt under the Ryan budget would be between $3.0 trillion (+19.6 percent) and $5.3 trillion (+34.2 percent) higher by 2022 without the magic asterisk—a significant margin of dishonesty.
Romney embraced Ryan’s fiscal 2013 budget in April, and modeled much of his budget and economic plan, Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth,around Ryan’s budgetary blueprints, but now it’s explicit: The Romney-Ryan fiscal agenda would wreak havoc on the middle class—and the U.S. economy at large—in order to keep cutting taxes for millionaires. Romney and Ryan are not serious about accelerating economic recovery or stabilizing the long-term fiscal outlook, or even proposing evidence-based solutions to our actual economic challenges (raising millionaires’ disposable income is not one of them). What they would enact, if given the chance, would increase unemployment, slow near-term economic growth, destroy the safety net and social insurance programs, and defund non-security discretionary investments, all in order to lavish millionaires with tax cuts more than twice as large as those that would be afforded by continuing all the Bush-era tax cuts.
Tags: medicare, medicaid, social security, tax