Leaders of the Republican Party have spent a lot of time trying to convince us they really care about low-income Americans. Paul Ryan put out a report on poverty. Marco Rubio vowed to strengthen the safety net. Rand Paul talked about saving Detroit.
But the real test of Republican priorities isn’t what they say. It’s what they propose to do with the federal budget. And on Thursday, House Republicans made their priorities abundantly clear when they passed the Ryan Budget without any Democratic support. The plan balances the budget in 10 years through dramatic spending cuts, particularly on programs and services for low-income Americans. Unsurprisingly, those cuts have been pilloried around the liberal Internet for their cruelty and hypocrisy.
That critique is true. But focusing on the Ryan budget’s moral failings obscures its equally apparent logical flaws. For all the axe-wielding, it does little to tackle the drivers of our long-term debt—the rationale behind the steep cuts to begin with.
Here’s a quick rundown:
1. The budget calls for severe spending cuts, in a way that’s likely to undermine the recovery. Ryan says the overriding goal of his budget is to reduce spending, in order to shrink the size of the federal government. It’s actually something that Republicans have already succeeded in doing, more than most Americans probably realize. Through sequestration and other legislation, Republicans have secured $2.6 trillion in spending cuts from 2015 to 2024. Now Ryan is asking to cut spending even more, so that the budget deficit would disappear altogether within the next decade. With a little hand-waving—Ryan assumes that his plan would unleash extra economic growth, generating an extra $175 billion in revenue—the budget would seem to accomplish that goal.
But balancing the budget in this case would come at a steep cost. According to most mainstream economists, austerity over the last few years had held back growth. More austerity now would have similar effects. Over the next decade, Ryan would cut federal spending to an average of 16.8 percent of GDP—well below the current budget, what Obama sought in his budget, and the U.S. average over the past 40 years. In short, this is a really severe cut.
2. The mandatory cuts come disproportionately from programs affecting the poor. To achieve this spending reduction, Ryan has to deal with the biggest underlying cause of future deficits: “mandatory spending.” Mandatory spending refers to funding for programs that increases automatically with need: The best known among these are Medicare, Medicaid, Social Security and other income security programs, as well as federal civilian and military retirement funding. The more people who qualify for these programs, the more the government spends on them—without any special authorization from Congress. Much of the Affordable Care Act also falls within the mandatory spending category. (That’s one of the reasons Republicans couldn’t defund it without repealing the law itself.)
Balancing the budget requires significant cuts to mandatory spending—and that’s exactly what the Ryan Budget would do. Relative to CBO’s baseline—that is, what the government would spend without any changes in policy—Ryan proposes to cut more than $4 trillion over the next decade:
But Ryan would cut mandatory spending selectively. The reasons mandatory spending is supposed to rise so quickly—and, by extension, the reasons deficits are likely to grow—are an aging population and rising health care costs. But Ryan doesn’t want to cut either Social Security or Medicare, because that would alienate senior citizens who vote Republican. So while Ryan retains the Affordable Care Act’s $700 billion of Medicare cuts—a fact neither he nor his allies are likely to advertise—he cuts only an additional $129 billion from those two programs. That leaves more than $4 trillion still to cut. And Ryan gets a bunch of it by taking an axe to Medicaid and Obamacare. The Center for Budget and Policy Priorities estimates that the Ryan Budget would cut nearly $2.8 trillion from the Affordable Care Act’s subsidies and Medicaid. Those dollars go directly to low-income Americans for the purchase of health insurance.
Even those cuts wouldn’t provide enough saving to meet Ryan’s goals, so Ryan finds yet another trillion in other programs that primarily benefit lower-income Americans. Among the targets: Food stamps, the Earned Income Tax Credit, unemployment insurance, and retirement funding for federal workers. The CBO already projects that funding for those programs will fall in future years, from 3.5 percent of GDP in 2015 to 2.7 percent in 2024, thanks in part to sequestration. That suggests they are not really a major source of long-term debt. Ryan steals a trillion dollars from them anyways.
3. The discretionary cuts would also come disproportionately from programs affecting the poor. Even those cuts wouldn’t be enough to produce the savings Ryan covets. That’s why, in addition to cutting mandatory spending on low-income people, Ryan would significantly reduce “discretionary” spending—that is, funding for programs that require some kind of Congressional authorization. There are two types of discretionary spending: defense and non-defense. Defense is self-explanatory. Non-defense, to quote CBO, “encompass such activities as transportation, education grants, housing assistance, health-related research, veterans’ health care, most homeland security activities, the federal justice system, foreign aid, and environmental protection.” Many of these programs make vital investments in the future or keep us safe.
Under sequestration, discretionary spending is already expected to fall by 17 percent over the next decade—split between defense and non-defense equally. The Ryan Budget seeks to reduce discretionary spending more but—and this is essential—it also seeks to increase spending on defense. That means non-defense spending has to fall by even more. Sure enough, under the Ryan budget, defense discretionary spending would rise by $483 billion but non-defense discretionary spending would fall by $783 billion.
These cuts, again, would bring spending below both the levels Obama has requested and the 40-year average for the U.S.:
4. The budget ignores the long-term drivers of our debt. Even working under the false premise that the looming crisis of our long-term debt requires sharp spending cuts, those cuts should fall proportionally on the drivers of that debt. But that’s not what the Ryan Budget does. Instead, it leaves seniors (and soon-to-be seniors) largely alone—the budget proposes nothing for Social Security reform and relatively minor cuts to Medicare. That requires disproportionate cuts to services and support for low-income Americans.
This is where the Ryan Budget moves from a cruel document to an illogical one. Ryan and his fellow Republicans see spending increasing in one area of the budget and take an axe to another one. That’s like a family cutting back on groceries in response to rising gas prices. That may help balance your budget, but you may go hungry—and it does nothing to stop the rising gas prices from continuing to create a hole in your finances.
Of course, the household budget analogy is an inapt one, because unlike a household, the United States can print dollars. But it just goes to show the true purpose of the Ryan Budget: to use the premise of a debt crisis as an excuse to cut services and support for low-income Americans.
Danny Vinik is a staff writer at The New Republic.