On April 6, the House revealed its proposal for spending in 2012, with the appropriations plan through 2021. NETWORK most vehemently disagrees with Chairman Ryan’s “Path to Prosperity,” as he is calling his House budget proposal. We’ve seen some aspects of this budget before; it keeps effective tax rates low for corporations and millionaires, continues limitations on supports for those who are most vulnerable, and eliminates life-saving regulations. However, never in the history of the nation has such a destruction of the social safety-net been proposed.

The most dangerous proposals, which differ the most from NETWORK’s values – and Catholic Social Teaching – are in healthcare, defense, income security, revenue and community development.  These encompass the most drastic transformations in Ryan’s proposal.

Who gains, and who loses in Ryan’s budget?

 Healthcare

Federal government expenditures for healthcare include community clinics, vaccinations for children in poverty, and the already-enacted parts of the Affordable Care Act. The cuts would deny health insurance to children with pre-existing conditions, increase the amount seniors would have to pay for medications, eliminate the possibility of young adults remaining on their parent’s insurance and dismantle other very popular elements of the healthcare law. The proposed budget takes significant aim at dismantling the Affordable Care Act – the House majority’s primary legislative goal.

Also proposed are structural changes to Medicaid and to Medicare. Medicaid is the means-tested program making it possible for those with little or no resources to acquire necessary medical care. Seniors who have no assets are able to receive basic care in nursing facilities through Medicaid. Some of the services that allow children with serious health problems to be educated come through Medicaid to schools, which could not afford these on their own.

Medicare is a very successful means of providing healthcare for seniors who have paid into it through their working years. Even though its costs have escalated in recent years, it is more cost efficient than care under private insurers. The costs of all healthcare are reflected in the costs of Medicare.

Who gains?  Insurance companies, pharmaceutical companies, states that will become responsible for the health of their citizens, …

Who loses? Children, those without insurance who rely on community clinics, the elderly, those who are unemployed, who have lost insurance, or are unable to afford private insurance…

Income Security

“Income Security” includes human needs categories across both the discretionary and “mandated” areas of the budget. It includes Supplementary Security Income (SSI), Unemployment Insurance, housing assistance, SNAP (Food Stamps), Women Infants and Children nutrition (WIC), federal employee retirement, home energy assistance, child care, Temporary Assistance for Needy Families (TANF), and more.

Proposed cuts would cut in half the housing vouchers for the elderly and persons with special housing needs. It would eliminate the program which educates and helps homeowners facing foreclosure. It would drastically reduce the housing vouchers available to veterans.

SNAP is proposed to become a block grant program, meaning that those eligible for this most successful anti-poverty program would no longer be guaranteed food assistance.  Nutritional programs such as WIC (Supplemental Program for Women, Infants and Children) and the Commodity Food Program (food boxes for the elderly) would be drastically cut.

LIHEAP (Low-Income Home Energy Assistance Program) would be cut below half, although it currently reaches only 40% of those eligible. As energy prices skyrocket, those on low- and fixed-incomes have no recourse in heating, cooling and lighting their homes.

Who gains?  Does anyone?

Who loses? Children, people with long-term disabilities, families using housing vouchers, the unemployed, retirees, food production and transportation workers and store keepers, the most vulnerable members of our communities.

Revenue

The United States is borrowing about 40 cents for every dollar we expend. Therefore, our debt to those from whom we borrow (U.S. entities and foreign nations and corporations) continues to grow. At the same time, revenue is at the lowest level ever. The effective tax rates for corporations (what is actually  paid) is one of the lowest among developed nations, due to loopholes, exclusions, deductions and credits. Individuals also have one of the lowest effective tax rates across nations, again due to deductions and credits. The federal government is taking in too little revenue for what needs to be spent, if we value the ability of all people to live in dignity.

Who gains? Corporations and millionaires

Who loses? Children, poor families, seniors and all vulnerable people

Chairman Ryan’s budget certainly is a “Path to Prosperity,” for those who are already the wealthiest in the nation. There is no time in the next ten years during which Ryan’s Budget proposes bringing in revenue to match spending. So long as we continue to give tax benefits to corporations and to millionaires, we will not make a dent in the deficit – even if we were to eliminate ALL non-defense, discretionary spending.

NETWORK believes that our tax structures need to support a revenue stream that allows all members of our communities to live in dignity. We believe that revenue must ensure that healthcare is available and affordable to all, that an appropriate home is available and affordable, that no child goes goes to bed hungry at night (approximately 25% of our children do now). These are responsibilities of the federal government, in response to the preamble statement: to promote the general welfare.

Defense spending

Chairman Ryan claims that defense spending has not increased. This does not ring true in looking at budget comparisons – even excluding the cost of ongoing wars.  According to the Project on Defense Alternatives and others, Pentagon spending in 2000 was approximately $380 billion.  In 2010, that spending was over $540 billion. This seems to be rapid growth, which he denies in the “Path to Prosperity.”

Who gains? The Military-Industrial Complex, Haliburton, General Electric, and many more

Who loses? People who value peace over bombs, the environment near nuclear facilities

(See http://www.peace-action.org/costs%20of%20militarization12.ppt)

Chairman Ryan and the House Budget committee have proposed an unbalanced budget, not unlike many in our recent past. Overall winners continue to be the most privileged and wealthiest among us – individuals and corporate entities. Power continues to be on the side of wealth and those who are currently in power. This budget proposal continues, indeed expands, the inequality in our nation.

The recent Republican House Budget Resolution (H Con Res 34), passed entirely with  House Republican support (235-193), is the greatest attack on safety-net protections the American people have seen in decades. While low- and middle-income families would struggle for survival under decimated human needs programs, wealthy individuals would see the savings from the elimination of those programs translated into even greater and excessive tax breaks.

In its most basic form, the House Budget Resolution is a fundamental change in the social contract that the United States government has held with the American people for the past 50 years. Programs slated for severe, historic cuts under the Republican House Budget Resolution include Medicaid, Medicare, SNAP (food stamps), Pell Grants and numerous other programs that provide a safety-net for people who are elderly, disabled and unable to support themselves and their families. There is no greater test of our society than how we care for people who are vulnerable, and the passage of this specific budget resolution speaks to a new low point in the Republican-controlled House of Representatives.

MEDICAID

The proposal to restructure Medicaid as a block grant shifts responsibility to the states, does not guarantee sufficient funding to cover all who are eligible, and give states the opportunity to use funding for other purposes.

States unable to bear the cost burden would be forced to keep people off Medicaid, ending basic protections for the most vulnerable groups in our society. States already struggle to keep up their portion of Medicaid costs, and have begun to change definitions of eligibility to reduce the numbers of those receiving medical assistance.

Health and life itself are tenuous for those in our community who lack housing, sufficient nutrition and other basic needs. Protection of life depends on accessibility of healthcare.  The proposed changes to Medicaid would mean that the most vulnerable people among us would be the most endangered.

MEDICARE

Proposed changes to Medicare included in the House-passed budget resolution would mean substantially greater costs to those around or under age 55 today. Starting in 2022, seniors would be required to purchase private insurance with federal funds. The growth of federal funds for Medicare would not keep pace with the inflation of medical costs, inflicting a greater and greater healthcare cost burden on the elderly. By 2022, an eligible senior would see their cost burden double. Such large increases in costs are attributed to the replacement of cost-effective Medicare with more expensive private insurance.  It is estimated that a senior may have out-of-pocket expenses up to one-third of their total income.

SNAP (Supplemental Nutrition Assistance Program)

SNAP (formerly Food Stamps) has proven to be the most successful and cost-effective anti-poverty program in the nation, most recently in response to the recession and high unemployment rate. With the current “food insecurity rate” of 1 in 20 families (FRAC, 3/2/11) surely more children and struggling families will go hungry if the Republican Budget Resolution to turn SNAP into a block grant becomes law. The House Republican plan to change SNAP would endanger lives.  Not only is an adequate food safety net the most basic support the government and fellow citizens can provide struggling families, but economists agree that food stamps are one of the best known stimulus tools the government can use to spur the economy, adding $1.74 to the economy for every $1.00 spent.

EDUCATION

Education takes one of the biggest hits under the Republican-passed House Budget Resolution. In FY2012, education funding is cut by $17.7 billion, or 19 percent. Funding for Pell Grants for low- and middle-income students is cut by 60%, essentially prohibiting access to higher education for millions of students. These cuts guarantee that young people who work so hard to build a better life for themselves and their families through the promise of a higher education, will be denied that opportunity.

WHAT IS PROTECTED: TAX BENEFITS AND MILITARY SPENDING

What will not be eliminated or curtailed under the Republican House Budget Resolution are tax cuts for the wealthiest or military expenditures. The House Republican Budget Resolution includes permanently enacting the Bush tax cuts, one of the biggest drivers of America’s current short-term deficit. Under the proposed plan, the estate tax would continue at the reduced rate that was extended in the December 2010 tax deal, meaning even less revenue to support hardworking American families. The savings from the elimination of social safety net programs would gift the wealthiest individuals with the continuation of Bush tax cuts averaging $125,000 a year per millionaire. In total, tax breaks for the wealthiest individuals and corporations would cost $4.2 trillion over the next decade. Additionally, the House Budget Resolution proposes absolutely no cuts to military spending but actually increases the budget by $215 billion over ten years.

The House Republican Budget Resolution fails to even disguise itself as a deficit-reduction tool. With  the majority of savings from safety-net cuts being  used for tax breaks to the wealthiest (further contributing to our ballooning deficit- not decreasing it), poor and vulnerable groups continue to be the target of draconian cuts disguised as necessary measures to get our fiscal house in order.

In reality, if these changes were allowed to pass, they would fundamentally change the face of America, all while still contributing to our growing deficit. Without the promise of an education made possible by Pell Grants, the ability to receive SNAP benefits and provide food for one’s family, the protection of Medicare that individuals have paid into their whole lives, or Medicaid supports for the elderly in long-term care, the American dream, or even just basic survival, will be even further out of reach for many Americans. All for the ability to provide even greater tax-cuts to less than five percent of the population, who already hold over eighty percent of the nation’s wealth.

Though the government has been funded for the remainder of 2011, the budget battle in Washington is not over. Treasury emergency measures keeping us from default will run out around August 2, and an agreement to raise the debt ceiling must be reached before then to prevent another global economic crisis. At the same time, the House and Senate are working on the appropriations process for fiscal year 2012, which begins in October. As people of faith, it is important that we defend programs that protect people who are poor and vulnerable.

Talking about the budget can seem intimidating. The process of funding the government is complicated, and most people do not have the time or the energy to learn about the intricacies of the tax code or appropriations process. But the good news is: you don’t have to! A moral response to this budget crisis prioritizes programs that provide for those who are poor and vulnerable, because our country’s future is dependent on the posterity of our entire nation, not just the wealthy. At NETWORK, we believe our values should frame the debate and our government should care for the common good.

• There are two ways to decrease the federal debt: reduce spending and increase revenue. In order to keep our communities strong, we need to do both responsibly.
• Over the last ten years, our national debt has doubled due to reckless tax cuts for wealthy Americans and corporations, and the wars in Iraq and Afghanistan. As we deal with trillion dollar deficits today, we need solutions that address the problems, not solutions driven by ideology.
• Not raising the debt ceiling would have a devastating effect on people of all economic classes—especially people in poverty. Refusing to pay our bills would be a disaster for our economy—a default will cost us more than half a million jobs, dramatically increase interest rates on student loans, mortgages, and credit cards, and add to the deficit because other countries would charge more interest on our current debt.

Specific policy ideas that NETWORK supports:

• We should move away from fighting wars on a credit card and embrace smart security by investing in development and eliminating unnecessary defense spending.
• Our tax code needs to be simplified. Right now, our government spends more through tax giveaways than it takes in.
• Medicare and Medicaid reform should attack rising healthcare costs by building on cost-savings included in the Affordable Care Law, instead of shifting the burden of paying for these costs to poor and elderly people.
• Social Security did not cause this deficit and should be examined separately from debt-reduction plans.
• A balanced budget amendment would be a reckless response to the current debt problems. It would not allow future generations to respond to crises in a timely or appropriate manner. Additionally, it would force drastic cuts to programs that help poor people, instead of looking at shared sacrifice to resolve our country’s fiscal problems.

This week will begin the debate for the Department of Defense appropriations. With a military budget of $513.03 billion, set to increase by 3.3% with the FY12 allocations to $530.03 billion, none of these figures even include the funding the DOD will get for war funds (House Appropriations Committee table Compiled by Coalition on Human Needs http://www.chn.org/pdf/2011/HouseCutsFY12.pdf). This is a ridiculous amount of spending, when considering that the rest of the committee budgets will be reduced. Not only is the DOD the committee with the largest amount of appropriations, but it will also be seeing an increase.

The frustrating part of this whole budget ordeal is that people are saying that EVERYONE must feel the pain of budget reductions. Yet, it seems to me by lowering the amount of appropriations to every department except defense, that in fact congress is targeting a very select group of people in our country. Those who are most in need, the elderly, poor, and children are being the ones most affected by these cuts.

I would like to point out that also as politicians argue that most of the money Defense is asking for is going toward soldiers and their families, it is not. Most of the money must not be going to recruitment nor helping families because the amount for these things has not been raised for many years. And actually, the families of soldiers are likely the very families the cuts are hurting, since most soldiers come from middle to low income families. Politicians need to be better educated before they make such promises as saying everyone will feel effects.

Also, a lot of people are talking about streamlining and cutting out inefficient or programs that are not of top priority right now. People are saying this must happen in every area of the budget, yet this is not happening in defense spending. How fair is a budget proposal that is not only forcing cuts but also insisting that programs be reviewed for efficiency, yet the largest chunk of the discretionary budget is left out?

With the debate beginning this week, there is still time to voice an opinion on the DOD. Whether you would like to see large decreases in the military budget or just see a fairer budget, speak up. For most Americans, a strong military is not the top priority, which is exactly opposite of what many in Congress will tell you is our top priority. Personally, I would like to see a government who is more concerned about creating peace than squelching out violence with more violence. So whatever your take may be against the military budget, it is not too late to speak up. Your voice is important in this stressful budget time.

Today, President Obama and Vice President Biden will meet separately with Senators Reid and McConnell. Over the last several weeks, the Biden group has made progress in coming to a plan to avoid defaulting on the debt. But all the compromises have been in increasing the number and amount of areas to be cut. Representatives Eric Cantor and Jon Kyle walked out of the negotiations.

Representative Boehner and other Republican members of the House have dug in their heels:

• Everything has to be on the table – except taxes!
• Whatever the amount of the debt limit increase – it must be surpassed in the amount of spending cuts.

$2 trillion as a down payment on debt reduction is being discussed. Perhaps as much as $400 billion might be taken from the military. If this is the end agreement, that would leave $1.6 trillion to come from cuts to discretionary programs, Medicaid, Medicare, food assistance, elder care – and Social Security. There are no other places from which to cut.

No new taxes! That is the mantra. It is good to remember:

• The tax cuts established in 2001 and 2003 were temporary – giving back to the people because we had such a surplus!  They were set to expire in 2009. So, eliminating these temporary tax benefits to the wealthiest in our nation would NOT be a tax increase, and certainly not a NEW TAX!
• The Mortgage Interest Deduction was established to assist middle class families to become homeowners. However, the most expensive homes receive the greatest deduction – certainly not of the greatest benefit to the middle class attempting to purchase a modest home of their own.
• Many of us benefit from employer health insurance, which is a tax break.  However, some of the plans are the highly criticized “Cadillac” healthcare plans covering far more than keeping workers healthy enough to continue in the workforce.  Perhaps some cap on the types of plans / the amount covered would be a just savings, and not truly a new tax.

The Biden group has already agreed to reductions in funding to Medicare and to discretionary programs.  However, there has been no give on the Republican side in terms of bringing in more revenue.

• Revenue, right now, equals 14.8% of GDP.
• Expenditures equal approximately 24%.

Expenditures include the billions of dollars in tax loopholes used by corporations, SNAP, WIC and other nutrition benefits, Pell grants and education for special needs students, nursing home care for the elderly and infirm, and unemployment benefits for those whose jobs have disappeared.

If we as a nation succumb to a debt relief package without revenue increases, we need to be very certain we understand the pain this will cause to those already suffering.

Early Thursday morning, Senator Chuck Schumer (D-NY) laid out the Democrats’ plan to simultaneously work towards deficit reduction and promote job growth. With just 54,000 jobs created in May, America’s jobs agenda has a long way to go in recouping all the jobs lost during the Great Recession. When people get back to work and pay taxes however, bleak deficit forecasts will improve, boosted by a broadening tax base from a growing workforce. Senator Schumer believes that Democrats can set a course which makes deficit reduction and job creation complimentary, not mutually exclusive, goals.

Senator Schumer also stated that Democrats are currently seeking a three-pronged approach to any deficit reduction deal, including:

• No cuts to Medicare beneficiaries
• Deficit reduction that must be balanced and shared sacrifice that must be made
• Not ignoring the need to create jobs.

While Senator Schumer stated that Democrats are looking for savings in the Medicare delivery system, he also clearly stated that cuts that hurt beneficiaries should not be tolerated.

Senator Schumer reaffirmed Democrats’ commitment to finding savings in the defense budget as well, which he said may take some pressure off discretionary program cuts and could generate support from colleagues on the far right looking for reductions in defense spending.

Senator Schumer did not hold back on his belief that congressional Republicans are opposing programs they have historically supported (such as payroll tax breaks to encourage job growth) in order to slow down the economy for their benefit in the 2012 elections. It is sad to imagine politicians being so evil as to depress wages and prevent job creations for millions of American people, but in this time of intense partisan politics, in no way unfathomable.

It is a moral imperative at this important point in the deficit and debt debate that all advocates, beneficiaries and people who care about human needs programs continue to push the administration and Congress for increased revenues so the burden of deficit reduction is not placed on the shoulders of people living in poverty through cuts to important safety-net programs. Call the White House and your members of Congress to let them know that any deficit reduction agreement must include a plan to get people back to work. The deficit clearly cannot be solved by cuts to human needs programs alone, particularly with such persistently high unemployment rates. Our elected officials must find ways to both increase revenue and direct that vital revenue to investment in jobs programs. It will be all of our jobs to ensure that the administration and Congress follow through on these vital priorities.

Call the White House and your members of Congress to let them know that any deficit reduction agreement must include a plan to get people back to work.

The “debt clock” must have been at 21:58 with minutes clicking on, when the leadership came to a deal.  This afternoon we wait to see if the House and Senate members will cobble together enough votes to pass and send it on to the President for signature.  It is not a deal anyone finds to their liking.  Republicans are grateful that there are no taxes and that the savings come from spending cuts – mostly in discretionary funds ($350 Billion over ten years in Department of Defense, $400 Billion in non-military over the same time).  Democrats are grateful that there is only one required vote – not dragging this out for the next six to eight months and blocking all other congressional work.  And they are grateful that mandated programs such as Medicaid, Medicare, Pell Grants and they are grateful for a bi-partisan commission which is not barred from looking at revenue increases.

Good to have a deal – better if it is passed in both chambers this afternoon.  But, the work is not screeching to a halt!  All the cuts in both defense and non-defense spending will be worked out in the appropriations decisions, particularly for 2012 and 2013.  The next few weeks will be critical in examining the “caps” placed on spending categories and determining what programs we need to put our greatest energies into supporting.

Our work, keeping legislators aware of the impacts of their decisions, will only escalate in the weeks and months ahead.  The work by our advocates in the field is far from over.  Legislators are most swayed by the appeals from their own constituents, who have the power to reelect or not reelect.  So, voices of constituents are needed more than ever in the decisions on how the cuts will be apportioned across programs.  I plead with all those who care about those who struggle to survive economically, to continue to work with us at NETWORK.  Write your emails, make the phone calls and go to home offices as often as you can.

In “Where’s Your Budget, Mr. President,” (Wall Street Journal, 8/3/11) House Budget Committee Chairman Paul Ryan wrote that President Obama had failed to present any plan to deal with the long-term debt and deficit.  This is only one of the untruths in his article.

However, in April, the President laid down a framework for $4 trillion in deficit reduction, describing responsible reforms to Medicare and Medicaid and closing tax loopholes.

The President initiated and led meetings, examples being:

• the Biden Group
• multiple times with all 8 Congressional leaders
• two rounds of talks with Congressman Boehner – which Mr. Boehner walked out on.

Mr. Ryan claimed that the Republicans had gained everything in the final deal; there are a number of things they have been attempting to achieve – which they have not:

• They were not able to voucherize Medicare, or to make Medicaid into a disastrous block grant program
• They were not able to cause damage to the Social Security program
• They were not able to force Congress to spend another several weeks or months attendingonly to the debt crisis – in a mere six more months.
• They were not able to force ALL the cuts to come from non-security programs

Mr. Ryan again told the untruths about the effects of the Affordable Care Act, and contradicting the assessments of the Congressional Budget Office (CBO), in truth:

• The Affordable Care Act (ACA) was fully paid for
• The ACA is scored to reduce the deficit by $200 billion over the next 10 years, and more than $1 trillion in the following 10 years.
• The ACA will provide health care coverage for 34 million Americans and will extend the life of the Medicare trust fund.
• The ACA WILL NOT cause the $6,400 annual increase in health costs for seniors – which would have been the result of the Ryan plan.

The biggest, and worst, deception is promoting the idea that the budget can be balanced and deficits reduced without any tax increases.

NETWORK believes that there is a direct correlation between the dreadful deficits faced by our nation – and the huge chasm called the “wealth gap.”  Continued payments to the wealthiest members of our communities through tax incentives, compensated for by higher taxes paid by low-income households, continue to widen this gap.  In justice, those who are most able to support this nation must be held accountable to do so. To learn more about the wealth gap, visit “Mind-the-Gap” at: www.networklobby.org/campaign/mind-the-gap.

Last week, in a Pentagon news conference, Secretary Leon Panetta indicated that the proposed $500 billion cuts in Pentagon spending would bring about serious national security consequences which he termed a “doomsday mechanism.”

The Washington Post, August 16, had a lead article: Great Falls Reflects Big Windfall – highlighting residents of Great Falls, VA.  A high proportion of them work for corporations reliant on military contracts. The median income of the area has increased by 32% in the last ten years.  Sixteen percent of this community of 15,000 earns more than $500,000 per year, with over half earning at least $250,000.

The juxtaposition of these two reports presents a possible source of savings in military spending, without serious national security consequences.