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Congressman Paul Ryan’s Budget Cuts

By Esther Hu

Congressman Paul Ryan’s budget plan would maintain all the Bush tax cuts currently scheduled to expire, and two-thirds of the new tax cuts would go to households earning over $200,000 a year. To cover the cost of new tax cuts for the wealthiest people in our country, the Ryan budget proposes big cuts in Medicare, Medicaid and many safety-net programs that help low-income Americans.

In short, this plan would finance tax cuts for the well-off by gutting programs vital to the poor and middle class – while still leaving federal deficits in place long into the future.

Impact - Healthcare

Cuts in health insurance would as many as 60 million more Americans without basic health protection (compared to the coverage projected under the 2010 Affordable Care Act). The minimum age for receiving Medicare would be raised to 67, and in the future seniors would shop for expensive private insurance plans using “premium support” vouchers of reduced value. The federal government would hand Medicaid to the states and cut annual spending by more than a third ($810 billion) within a decade. And state and local taxpayers end up paying extra costs.

Would the Ryan block grants allow states to run a more efficient Medicaid program?  Evidence suggests otherwise. Under the plan, states would be left with shrinking federal Medicaid funds – so the only new “flexibility” they would gain would be the right to make life more difficult for the most vulnerable.

Impact – Low-income family

Working class and poor Americans are still struggling in the current economic downturn, but the Ryan budget starves programs that help families get through tough times. For example $3.3 trillion would be slashed from programs aiding people with incomes below or just above the poverty line (set at $22,113 a year for a family of four in 2010). Each year, more than $300 billion would be slashed, leaving the safety net torn.  Food Stamps (cut by at least $134 billion), housing assistance, college grants, and the Earned Income Tax Credit that boosts low wages – all would be harmed. According to the Center on Budget and Policy Priorities, at least 62% of the Ryan cuts would fall on low-income households. The Ryan budget cuts ignore the realities of today’s labor markets and go against all we know about helping less privileged adults and their children do better in the future.

Impact - Women, children, elderly, people with disabilities

Older people would have to pay about $6000 more per year to get coverage comparable to Medicare today – too much for a typical older woman trying to get by on just over $15,000 a year. If Social Security is cut, many women in mid-life would also find themselves giving extra help to aging parents at the same time they are trying to hold jobs and raise their own children. Already, many eligible poor mothers and children are excluded from Medicaid coverage in states with tight finances or ungenerous governments – and the Ryan plan would exclude more.

Impact - Nonprofit organizations 

Nonprofit organizations can do a lot, but they cannot replace publicly funded healthcare, food stamps, and tax credits for low-income workers. Private giving covers less than $1 of every $3 used by nonprofits to hire staff and deliver help to low-income Americans. Nonprofits find it harder to pay rent and make payroll. According to the annual reports put out by Giving USA, philanthropic giving from elites and millions of smaller donors to nonprofit organizations serving people in poverty has stayed flat over the past decade – at the level of about $35 billion annually. Private giving to low-income charities would have to multiply more than tenfold by 2016 just to keep up with proposed budget cuts.

Politicians speak in crowd-pleasing rhetoric, but budgets reveal their true priorities. The Ryan budget would radically shrink or eliminate benefits and services that most Americans have counted on for decades. And it would do this in order to lock in drastically lower tax rates for the most prosperous. As Americans understand the details, most will reject this plan as a wrong turn for our country.

Congressman Ryan’s budget plan would:

  • Create Big New Tax Breaks for the Wealthy
  • Starve Healthcare, Education and Investments in New Jobs
  • Leave the U.S. Coping with Huge Deficits
  • Shred the U.S. Safety Net

Source: Dispelling the Mystery of Congressman Ryan's Republican Budget Cuts, Scholars Strategy Network, Harvard University)

More detailed information available here.

Particularly helpful:

CBPP Statement: March 21, 2012

What Ryan Missed, America, June 4, 2012

[Esther Hu was a NETWORK Intern during the summer of 2012.)