How The Republican Budget Screws The Middle Class

Ken O’Brien

“The simplest way to understand these budgets is surely to suppose that they are intended to do what they would, in fact, actually do: make the rich richer and ordinary families poorer,” wrote Paul Krugman, The New York Times ‘columnist and Noble Prize-winning economist. “We’re looking at an enormous, destructive con job, and you should be very, very angry.” 

The GOP-controlled House and Senate budgets drastically cut spending on education, retirement, environment, road and bridges, climate change, immigration, job creation, Obamacare, food stamps, and other social welfare programs. At the same time it gives the Pentagon a blank check, and includes tax cuts for the rich and corporations while raising taxes for lower-income Americans. That’s the analysis by the National Priorities Project (NPP), not just Krugman, and they make an even more disturbing point. 

In almost every one of these budget areas, nationwide polls show that a majority of Americans strongly oppose what the GOP is proposing. In other words, the Republicans are not delivering the kind of federal government that Americans want; they are declaring economic war on average Americans by reshaping government to serve the upper classes and biggest businesses.

What follows is a summary of the NPP’s analysis, with its documentation, showing that Republicans are brazenly ignoring public opinion and national needs—which isn’t just anti-democratic but reveals how deeply corrupt the modern GOP has become.

1. Bleed domestic programs to death. The budget is broken down into various areas that are reviewed separately, starting with domestic discretionary spending. This includes education, energy, environment, housing, job training and more. The White House wants modest increases in these areas in 2016. Polls show that Americans want more investment in infrastructure, climate change, the economy, immigration, and support higher tax revenues for these priorities. The GOP propose to freeze current spending or cut it back by hundreds of billions of dollars starting next fall, adding up to $5 trillion in cuts over the next decade.

2. Who needs new or better jobs? Two-thirds of Americans say improving job prospects is a key issue facing Washington. Obama wants to spend about half a trillion dollars over the next six years on road and bridge upgrades, research and development, and give tax credits to new manufacturers. The House and Senate budgets propose “no new funding” in these areas, NPP said, with the Senate saying that “reduced spending and regulation will indirectly lead to job creation.”

3. Who needs a good education? The same-size majority that wants to see more and better jobs, also wants to see Congress improve access to education. The White House wants to expand federal subsidies from pre-school through high school, and spend $60 billion to provide two years of community college for free over the next decade. Republicans propose the opposite. The House wants to cap Pell grants, which are loans to low-income people for college and graduate school. That means “financial aid to fewer families,” NPP said. It also wants “substantial cuts” to discretionary education programs. The Senate is as bad. NPP said its budget has “no new funding for education,” and “unspecified cuts to domestic discretionary spending could mean cuts to education.”

4. Who needs health care anyway? Obamacare may have its problems because it relies on private insurers to be middlemen, but since its inception11.7 million people have gained access to health care and millions have subsidized premiums. The Kaiser Family Foundation, which tracks health care trends, reports that 56 percent of Americans want Congress to expand, improve and implement the law. Obama wants “small tweaks” in 2016, NPP said, whereas the House and Senate still obsess with repealing it entirely.

5. Next on the chopping block: Social Security. Here, too, even cautious pollsters like the Pew Research Center, report that 66 percent of Americans want to strengthen the program—which, contrary to GOP rhetoric, isn’t an “entitlement,” but the government acting as a retirement bank for decades of payroll deductions. Both chambers have already begun to attack a small part of Social Security that helps people with disabilities, saying they want to weed out fraud and cut payments. Meanwhile, the House wants a commission created to “study the program’s problems,” as NPP put it. The GOP agenda is not expanding payments to make life easier, but cutting senior benefits while allowing young people to give their payroll deductions to Wall Street.

6. Privatize Medicare, health care for seniors. Medicare is the federal government health plan for people age 65 and older. It is not free, but costs significantly less than private health insurance. Pew reported that 61 percent of Americans want this system fortified and improved. Obama wants to raise premiums for wealthy retirees, start co-payments for home health care, and allow the federal government to negotiate for lower drug costs, NPP said. The House GOP would also raise premiums for wealthier people, but starting in 2024 if would offer people a lump-sum payment to end their coverage, so they could theoretically buy private insurance. They also would ban the government from negotiating lower drug prices. Both of those proposals are giveaways that take money out of seniors’ pockets and give it to corporations. The Senate GOP simply says it wants to cut about half a trillion dollars from Medicare over the next decade, but doesn’t say how or where those cuts would be. That's pretending no one would be hurt.     

7. Kick 7 Million Poor People Off Medicaid. Medicaid is the state-run health program for low-income people. Under Obamacare, before the U.S. Supreme Court ruled that states don’t have to implement this part of the law, the federal government planned to give every state grants to allow all poor people to get coverage through Medicaid. Even though almost all red states have not helped millions of residents this way, 7 million Americans have gotten access to health care through this Obamacare reform. Sixty-two percent of Americans believe that this Medicaid expansion should continue.

The White House wants to keep it that way and start a project where Medicaid recipients would be able to access new long-term care options, which comes into play when people no longer can take care of themselves. The House GOP doesn’t just want to repeal Obamacare, kicking millions off this health plan, NPP reports, but it would cut overall Medicaid spending and turn the program—along with SCHIP (the State Children’s Health Insurance Program)—into one block grant. That scenario all-but ensures that health care for poorer families will shrink. The Senate GOP, as with Medicare, says trillions must be cut, “but does not specify how,” NPP reports.

8. Our century’s version of “Let Them Eat Cake.” Those infamous words were attributed to France's queen in the late 1700s, when commenting about impoverished countrymen. Today, in America, the food stamp program (formally called SNAP) tries to ensure that nobody goes hungry, and is supported by 70 percent of the public. The White House wants to continue it and make applying easier for seniors, NPP reports. The House GOP, in contrast, would make “deep cuts to SNAP” and turn it into a grant to states—where legislators might not even use the funds for food aid. The Senate GOP merely says food stamps should be on the list of programs that will yield $4.3 trillion in spending cuts over the next decade.

9. But give the Pentagon more blank checks. Sixty-three percent of Americans say the Pentagon spends the “right amount or too much on national security," NPP reported, citing a Gallup poll. The White House wants to increase the defense budget by more than half a trillion dollars in 2016, which NPP said would make it “the highest base budget in history.” The House Republican budget writers say that’s not enough, however, and seek to use loopholes in war funding laws to add several hundred billion more over the next decade. The Senate GOP essentially rubber stamps that approach, offering no specifics.

10. And use the excuse of endless war to do it. Even though 85 percent of the public is afraid that getting involved in the civil wars in Syria and Iraq will be long and costly, the White House wants $51 billion in additional wartime funding in 2016, and another $5.3 billion to fight the Islamic State (ISIS). Not to outdone by Obama, the House GOP proposes spending an additional $90 billion next year, NPP reports, while Senate GOP wants about $60 billion more on top of the baseline Pentagon budget.

11. Corporate taxes are still too high, right? That’s not what 66 percent of Americans told the Gallup poll, which the White House sort of acknowledges. Obama, trying to reach some deal with Republicans on tax reform, would lower the top corporate tax rate from 35 percent to 28 percent, and 25 percent for domestic manufacturing, NPP reports. But the White House also would impose fees on Wall Street speculators to raise “$112 billion over 10 years,” close loopholes that let companies park billions overseas tax-free, and impose a 14 percent tax on that cash. House Republicans, in contrast, have only proposed lower rates for corporations and small businesses, NPP said, and nothing to recapture outsized wealth. The Senate GOP hasn't proposed any corporate tax changes.

12. And the rich can’t afford to pay, either? In January, 68 percent of Americans polled said wealthy households aren’t paying a fair share in taxes. Obama’s budget would try to rebalance that by raising the capital gains tax—on investment income—to 28 percent, and close loopholes that only the wealthiest Americans can exploit, such as avoiding inheritance taxes, which would raise $208 billion in a decade, NPP reports. Obama also would implement a minimum tax rate for the richest people, and close a big loophole for Wall St. hedge fund managers, which would raise an additional $17.6 billion over a decade.

The House GOP, in contrast, only wants to lower tax rates “for individuals and families,” NPP said, and eliminate the “Alternative Minimum Tax that sets a minimum tax for the wealthy.” The Senate GOP, as is the case with corporate taxes, hasn’t proposed any tax changes for the wealthy individuals, suggesting that the status quo works fine for them.

13. But working class and poor must pay more. In a January poll, 91 percent of Americans said that middle-class households paid enough or too much in taxes, and 79 percent said the same for low-income households. Obama’s response to these sentiments is to increase tax credits for all poor people—with and without children—and give a tax credit to students to help pay for college.

Both House and Senate GOP go in the opposite direction, phasing out two tax credits that now lower taxes for 13 million families, NPP reported. Their budgets allow “the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) to expire in 2017, raising taxes on more than 13 million working families.” In other words, the GOP won't touch taxes for the rich, but will raise them on the poor.

14. Why Krugman called all of this a “con game.” In politics, there’s always a publicly given reason why something is proposed and the real motive, which is not stated. The GOP’s public rationale for these devastating cuts is their sanctimonious obsession with lowering the federal deficit, which makes them pretend to be responsible stewards. About two-thirds of the public say that reducing federal borrowing is a good idea. Obama has cut annual deficits by more than 50 percent since he took office, fact checkers have found. Obama’s 2016 budget would continue this, cutting about half a trillion next year, and $1.8 trillion over the next decade.

But deficit reduction is not what is going on here. The House and Senate Republican budgets actually would cut less money from next year’s deficit—about $350 billion—than Obama, NPP said, and then decrease domestic spending by more than $5 trillion dollars over the next decade to “balance” the budget. What's going on is the GOP wants to cut back the federal government to roughly where it was before the Progressive era began a century ago, when government helped the rich get richer and there were no safety nets.

“Think about what these budgets would do if you ignore the mysterious trillions in unspecified spending cuts and revenue enhancements,” Krugman wrote. “What you’re left with us huge transfers of income from the poor and the working class, who would see severe benefit cuts, to the rich, would see big tax cuts.”

Krugman said this wasn’t Republican extremism as usual, but a declaration of economic warfare on behalf of wealthy Americans at the expense of everyday Americans who want, and expect, more from federal government.

“Look, I know that it’s hard to keep up with the outrage after so many years of fiscal fraudulence,” he concluded. “But please try. We’re looking at an enormous, destructive con job, and you should be very, very angry.”

The National Priorities Project’s budget analysis underscores that the GOP’s proposals aren’t just corrupt—a vast giveaway to the wealthy people and interests who fund their campaigns—but are fundamentally anti-democratic. Poll after poll report that a majority of Americans want Congress to invest in education, road and bridges, jobs, climate change, immigration, healthcare reform, retirement security, safety nets for the poor and vulnerable, and raise taxes on those who can easily afford to pay a fairer share. 

Astoundingly, congressional Republicans not only oppose every one of those goals, but their budget proposals, if enacted, would undeniably make life harder for average Americans, millions of whom would slide down the economic ladder toward poverty.