On Tuesday, House Republicans rolled out their budget plan in the Washington version of a Hollywood movie opening. There was a star turn for Budget Chair Paul Ryan at a conservative think tank. Gaseous rhetoric -- "liberties endangered, time to choose" -- fouled the air. There were dueling videos, and furious salvos of partisan messaging. And a backup document -- the "Path to Prosperity" -- festooned with tables for wonks to wallow in.
Each of the two documents is designed to define a message. Their contrasts help clarify the real choices the country faces. Federal deficits exploded after Wall Street's excesses blew up the economy. The questions now are who gets the bill and when does the payment start? Ryan's Republican budget and the CPC's offer starkly different answers that would take the country in starkly different directions.
The Bathtub Fantasy
"My goal is to cut government... to get it down to the size where we can drown it in the bathtub." Grover Norquist.
Ryan's Republican budget, like a speedo bathing suit on a corpulent geezer, is revealing, but not flattering. Even by Washington standards, this is a remarkably dishonest document. It claims to be serious, but offers targets that are simply preposterous. It calls for leveling with the American people, but cravenly ducks laying out who will pay for top end tax cuts. It calls itself a "blueprint for American renewal" while systematically trampling the American dream.
Republicans have lined up like lemmings to sign Grover Norquist's infamous pledge never to raise taxes on anyone at any time. But turns out they even treat the quips of the conservative gadfly as gospel. As the Center for Budget and Policy Priorities pointed out, the Ryan budget, by its own numbers, assiduously pursues Grover's bathtub fantasy.
The Congressional Budget Office reports that under the Ryan budget, by 2050 most of the federal government would simply cease to exist. Ryan's budget would shrink all federal expenditures outside of interest payments, Social Security, Medicare, Medicaid and children's health to 3.75 percent of gross domestic product (GDP).
To translate that arcane measure, CBO notes that "spending for defense alone has not been lower than 3 percent of GDP in any year [since World War II]. " Ryan and Republicans call for increasing defense spending -- so the rest of the government would have to be cut to bathtub size. Ryan argues that the "challenges this nation faces are among the largest in its history," but the budget target he offers is, well, goofy.
Tribunes of the 1%
With this budget, Republicans choose to be the tribunes of the 1%. They send the bill not to the banks that blew up the economy or the wealthy that enjoyed the party, but to the elderly, the middle class and the poor. Consider:
• Cut Taxes on The Rich. At a time of extreme inequality -- with the top 1 percent capturing a staggering 93 percent of all income gains in 2010 -- Republicans would dramatically lower taxes on the wealthiest Americans and, by definition, raise them on working families.
[Ryan isn't candid enough to admit to that, of course. He extends the top end Bush tax cuts, cuts top income tax rates to 25 percent, sustains lower rates on wealth (capital gains, dividends, millionaires' estates) while claiming the reforms will raise as much money by eliminating loopholes and tax breaks that he refuses to specify. But the only way to raise enough money to do that is to go after the biggest deductions -- limit the mortgage deduction for middle class homeowners and/or cut the tax benefits for employers provided health care. The first would add to housing woes; the second would lead more employers to stop providing health care. Both reforms that would directly hit working families.]
• Cut Health Care for Millions. With health care costs soaring and employers cutting back on health insurance benefits, the Republican budget would add millions to the rolls of the uninsured by eliminating the Obama health care reforms, with no program in its place.
• End Medicare as We Know It. With boomers headed into retirement and soaring Medicare and Medicaid costs driving projected deficits, we have to get health care costs under control. But instead of taking on the drug and insurance companies and the hospital complexes that drive up costs, the Republican budget would end Medicare as we know it, requiring seniors to pay more. When today's 55-year-olds retire, they would discover that Medicare has been turned into a voucher or "premium support" program that will not keep up with health care costs, forcing them to pay thousands more out of their own pockets. The Republican budget would also cut Medicaid support drastically for the most vulnerable -- the impoverished, the disabled, and the terminally ill.
• Cut Access to College. With college tuition soaring and more and more people being priced out of the education they have earned and need, the Republican budget would solve the problem by cutting back on student loan and grant programs. They would ration college admission by income rather than by merit.
• The Poor Pay for Deficit Reduction. And with poverty rising, the Republican budget would require that the poorest and most vulnerable Americans bear much of the burden of reducing the deficits that exploded when Wall Street blew up the economy. (Although, again, Republicans don't admit which domestic programs would take the hit. But, by reducing spending on domestic discretionary programs by one third in 10 years, they insure devastating cuts in everything from Head Start to education to disease control.)
• Let America Decline. With our basic infrastructure -- from roads to schools to sewage systems -- in dangerous decline, the construction industry flat on its back, and interest rates near record lows, Republicans call for spending less, not more, on rebuilding America, costing jobs, and rendering our economy less competitive and putting more lives at risk.
• Make the World a Tax Haven. With global corporations growing ever more adept at using transfer pricing and overseas tax havens to avoid taxes here at home, Republicans would make the entire world outside the U.S. a corporate tax haven, ending any taxation on profits reported abroad, encouraging companies to move jobs and book profits abroad.
• Pad the Pentagon. With the U.S. spending almost as much on its military as the rest of the world combined, Republicans demand that we raise, not pare, Pentagon spending.
The Austerity Trap
Ryan's Republican Budget has one other fundamental message -- that America must turn its attention immediately to the "crushing burden of debt." Ryan would cut spending by over $500 billion in the first two years compared to the president's budget, while claiming to lower taxes by about $131 billion. That takes nearly a 2 percent of GDP boost out of an economy growing at about the same rate. Ryan brags that the Republican budget reduces deficits faster and lower than the president's budget. (Although given that he won't reveal how he pays for over $4 trillion in tax cuts and what programs would take the spending cuts, that is far from proven.)
Lost in the race for austerity is the reality that we desperately need jobs and growth. Although the economy has started to generate jobs, 25 million Americans are still in need of full time work. We have fewer jobs than we had a decade ago, and millions more people. This debate should be focused on jobs, not cuts.
Ryan and Republicans duck this by arguing that austerity will increase confidence, and "job creators" will get to work. But we have seen how austerity works in Europe, now teetering on the edge of recession. It not only costs jobs; it makes deficit reduction harder. Ryan's budget assumes a rate of growth that his spending cuts and layoffs are likely to undermine.
The Budget for All
In stark contrast, the Congressional Progressive Caucus releases its FY2013 "Budget for All" on Wednesday. The CPC budget is offered as an alternative to the Ryan budget on the floor of the Congress and in the halls of public opinion. It, too, is a message document -- designed to show that common sense priorities do add up.
The CPC budget reduces deficits faster than Ryan does over the first 10 years. But the CPC begins sensibly, by boosting the economy with jobs measures in the early years. It calls for direct hiring programs -- a Student Jobs Corps and a School Improvement Corps among others. It would rebuild America with an infrastructure bank and bigger investment in roads, bridges and trains. It sustains investment in research and development, clean energy and manufacturing. And it repeals the austerity inflicted by the debt ceiling agreement.
The CPC assumption is that putting people back to work is the priority. And its budget shows this is not incompatible with deficit reduction.
As the economy recovers, the CPC would send the bill for deficit reduction to those who contributed to or benefited from the mess. It focuses on the "true drivers of our deficit -- unsustainable tax policies, the wars overseas, and the causes and effects of the recent recession" -- rather than going after programs for the poor and the elderly.
Hold Wall Street Responsible. The CPC would hold the banks accountable, imposing a "financial crisis responsibility fee" on the banks, raising $90 billion over 10 years and putting a brake on computer driven, nano-second financial speculation by imposing a financial transactions tax raising nearly $850 billion over 10 years.
Tax the Rich. Instead of lowering taxes on the rich, the CPC would raise them -- repealing the top end Bush tax cuts, taxing income from wealth at the same rate as income from work, raising tax rates on millionaires. The CPC would even impose a small temporary surcharge on individual fortunes over $10 million.
The CPC embraces Obama's minimum tax on overseas profits, curbs deductions for CEO stock options, and ends fossil fuel preferences. Perhaps its most controversial clause is its most sensible -- putting a price on carbon emissions, while aggressively refunding costs to working and poor families.
Reform Health Care. On soaring health care costs, the CPC would seek to limit costs, not send them to the most vulnerable. It would embrace the reforms built into the health care bill, add a public option to compete with private insurers, and require bulk purchase negotiations with drug companies for lower prices on drugs.
Pare the Pentagon. The Pentagon budget would be modestly pared over 10 years. Where Ryan ducks on Social Security, the CPC would act, lifting the income cap on Social Security taxes to secure the program.
In his budget, Ryan suggests, "Americans, not Washington, deserve to choose the path their nation takes." These two budgets make that choice clear. The CPC would invest in jobs, preserve Social Security and Medicare, and call on the banks and the wealthy to pay a hefty share for getting us out of the hole we are in. Ryan's Republican budget would impose austerity, lavish benefits on the rich, end Medicare as we know it and send the bill for the mess to working families, the poor and the elderly. The CPC would invest in rebuilding the country and reviving the American Dream. Ryan would invest in policing the world and protecting the tax havens of multinationals, and turn the Dream into a fantasy. The Ryan budget stands with the 1%. The CPC with the rest of us. You get to choose.