[edited to add a link to the Washington Post article by Glenn Kessler and to correct Rand typos in references to Ryan--somehow the two must have blurred themselves in my mind]
As most of you undoubtedly know, the federal government is operating under spending authority that ends Friday. Without some resolution, government will partially shut downm resulting in closed national parks, no processing of paper returns at the IRS, no paychecks for military personnel (who will nonetheless still report for work), delays in clinical trials at the NIH, and many other impediments to decent functioning of government. See e.g., Nicolas Johnston, Government Shutdown Would Suspend IRS Audis, Close Parks, Bloomberg.com, Apr. 6, 2011.
As the Johnston article notes, this kind of a shutdown is not just an easy exercise in downsizing government--it would have a sizable, negative economic impact as 800,000 government workers would essentially be furloughed (no income), loan guarantees from FHA would stop, construction projects under review by the EPA would stop, and many other vital governmental functions would be slowed or stopped pending approval of a budget. That negative impact would have repercussions throughout the local, regional and national economy. Government workers would buy fewer commodities and stay home more, impacting local and national businesses from bus services to movie theaters, restaurants to new car manufacturers. Delays in construction, of course, would add to the problems that this sector has had since the onset of the Great Recession, leaving construction companies and workers in the lurch yet again. Not a pretty scenario when the economy has just begun to turn the corner.
Why are we facing a shutdown? Because the House, controlled by right-wing Republicans, wants to excise all the government spending represented by programs that (i) benefit low-income, vulnerable Americans, such as Head Start, public education spending, basic research funding, , etc. OR (ii) require Big Business to take on at least some of the costs (externalities) associated with the business being able to reap huge profits, such as environmental protection, business regulation, consumer protection, financial consumer protection, etc.
How do we know this? Look at the "The Path to Prosperity: Restoring America's Promise: Fiscal Year 2012 Budget Resolution" drawn up by Paul Ryan (Rep. Wisc.) who is chair of the House Committee on the Budget. This document is the right-wing flim-flam artistry at its peak. And it will not take us on a path to prosperity. It is, instead, a recipe for oligarchy. It will leave the lower income sectors of the American population in a trench of despair from stagnant or declining wages coupled with decimated or non-existent social safety nets. This document augers well only for the Wall Street banksters, the big multinationals, and those who own them. The wealthy and ultra rich will do fine, as their GOP stooges in Congress (and in the Tea Party) enact legislation to ensure that the rich continue to garner most of the productivity gains in the country, camoflaged with enough of the "values" issues that appeal to the lower-income religious fundamentalists to get them to continue to vote with the rich against their economic interests.
Let's consider the intro (page 4) and the summary of Ryan's budget pages 5-. One thing should jump out at you--this document just repeats ad nauseum the same old, historically invalidated, right-wing economic "free market" fundamentalism ==> a claim that tax cuts for Big Business and the wealthy, combined with spending cuts that favor Big Business (and the wealthy) but take away important public functions and safety nets for those who are not well off, will result in economic growth and jobs (that will trickle down to the lower-income rungs).
Translation guide (hat tip to Lloyd Doggett): whenever Paul Ryan says he wants to "save" or "reform" or "advance" or "repair" a program that benefits ordinary Americans, please translate with "eviscerate" that program. Whenever Paul Ryan says he wants to "reform" a major area of federal law (like environmental protection, federal income taxation, corporate taxation or health care), please translate as "make it work to the benefit of the wealthy or Big Business".
- It says it is committed to "timeless principles"--"liberty, limited government, and equality". Liberty is meaningless unless it includes opportunities to lead a decent life and to fulfill one's own potential. This use of liberty is an excuse for creating oligarchy.
- It says that it wants to "free the nation from the crushing burden of debt". But we don't have a crushing burden of debt. And the debt we do have can be resolved by borrowing more long-term at these cheap rates, undoing the revenue-side silliness enacted during the Bush years by restoring most of the tax laws to the pre-2001 tax legislation provisions (but getting rid of the preferential rate for capital gains and enacting a more progressive estate tax, etc.), and pulling away from the obscene military expenditures that we have been embarked on in particular dating from Reagan's presidency when militarization became one of the fundamental pillars of all his decisionmaking.
- Claims to cut $5.8 trillion over 10 years; "curb corporate welfare" and "bring government spending to below 20% of the economy
- note that there is nothing sacred about having spending be below 20% of the economy; historical patterns have ranged up and down but in fact we could spend much more than 20% of the economy if we think that is a high priority--this therefore represents a decision that spending at less than 20% is an a priori "good" without any basis for reaching that decision, since of course one has to know what one is spending on to know whether it is good to do so or not
- the Ryan plan does not curb corporate welfare--it extends it incredibly
- Claims to "reach primary balance in 2015"
- this claim is absurd on its face.
- it uses the Heritage Foundation's figures (based on so-called "dynamic" analysis) which means that it assumes its conclusion--ie., that cutting government spending and cutting taxes for the rich and for Big Business will create economic growth
- the plan repeals the health care reform legislation passed by Congress; therefore, it eliminates the savings achieved by that bill, which means it will increase the deficit by more than a trillion over a decade. The document absurdly claims (with no basis), however, that eliminating health care reform will reduce the deficit
- this claim is absurd on its face.
- claims to "keep taxes low so the economy can grow"
- This is just the so-called Laffer "theory" out for yet another GOP ride--this is the false mantra (tax cuts promote growth) that has been repeated by the GOP for four decades to justify cutting taxes no matter what the economic situation and no matter what the result of prior tax cut legislation;
- tax cuts are not panaceas for economic growth or job creation;
- Bush tax cuts didn't work as sold to the public--things got worse for everybody but those at the top
- There is no reason to think that these will either. In fact, it is less likely that the Ryan proposal for tax cuts will have a good impact on the economy, since they continue to favor outsourcing of US business, decreasing revenues from corporate multinationals, decreasing revenues from the ultra wealthy, and by negatively impacting job growth and retirement benefits and health care, will more than likely cause the economy to shrink.
- claims that the tax code resulting will be "simpler and less burdesome for households and small businesses" while "top rates for individuals and businesses [are set] at 25 percent [to] improve incentives for growth, savings, and investment":
- 70% of households do not itemize their returns. That's a very simple tax return. So except for the earned income tax credit--which is a complexity worth having, since it gives a positive refund to those in the lowest income distributions--tax returns are already really simple for the vast majority of American taxpayers
- a top rate of 25% is a huge tax cut--yet again--for the wealthiest Americans and for Big Business --that provides no benefit whatsoever to the overwhelming majority of Americans who have been "losers" in this economy at least since 2007 and a huge benefit to the very few at the top who have been the "winners".
- The assumption that lowering taxes provides an incentive for growth, savings and investment is unproven and, to the extent it does, it is beneficial only to the wealthy who have enough so they can save and invest. Investment incentives are not good if they result in American wealthy elites investing even more of their excess profits in other economies (which is the likely result of this proposal). Investment incentives are only a good thing for the country if they result in more money supporting small entrepreneurial business undertakings--something with which cutting the top rate on wealthy Americans and Big Business has almost nothing to do.
- Claims to "create nearly 1 million new private -sector jobs next year" and 2.5 million in 10 years from now; to "spur economic growth", and to "unleash prosperity and economic security" with "higher wages" and more income per family
- note that this disregards the fact that it will result in the loss of at least the same number of public sector jobs as the federal government downsizes and the states cut jobs (as they have already begun to do) because of the lack of federal redistribution funding revenues
- besides which, this is just wishful thinking--there is NO SUBSTANCE WHATSOEVER IN THESE FIGURES FOR JOB CREATION, ECONOMIC SECURITY, or WAGE INCREASES.
- every GOP taxcutter from Reagan forward has claimed that the particular tax cut proposed will create jobs. But tax cuts don't create jobs--they just make the rich richer.
- Private entrepreneurialism in the US can create jobs--but not much here supports private entrepreneurialism in the US. To do that, you need funding for public education (especially higher education, as in the GI Bill), funding for basic research, funding for extended unemployment periods so that the un-and under-employed can buy stuff and give business to small businesses in their community, a health care system that works (ideally, single-payer to remove the "rent" profit-taking of health insurance companies from the system; certainly not the return proposed by Rand to the problems that the health reform act begins to deal with), etc.
- For the last few decades, what prosperity we have had has gone to the benefit of the upper class, not to the benefit of ordinary wageearners. There is nothing in this proposal to reverse that--in fact, it continues the same failed policies that got us into this situation
- the claim for economic security is a particularly laughable claim. Remember that Paul Ryan and his radical right GOP cohort intend to eviscerate Social Security, Medicare and Medicaid, with the result that the baby boomer generation would find itself without retirement income or medical care. That is no promise of "economic security". It would be a joke if it weren't so deadly seriously devastating for ordinary Americans.
On health care, for example, Ryan wants to just give states block grants for Medicaid, resulting in cuts to even more vulnerable Americans. Ryan claims to "save Medicare" by getting rid of it--replacing a government-payer system with "the same kind of health care options now enujoyed by members of Congress". While not directly dealing with specific "reforms" to Social Security, Ryan claims to "advance Social Security solutions" to force changes that "ensure solvency". But the Social Security system will likely be still solvent 75 years from now, and if we needed more funding, we could simply lift the cap on the wages that are subject to the payroll tax. That would solve any problem that might exist years down the road by taxing the wealthy the same way we tax the poor. That isn't on Paul Ryan's agenda.
The "entitlement" provisions--Medicaid, Medicare, Social Security--reveal the heart of the right-wing agenda. The intent is to get rid of the New Deal while giving the savings to the wealthy and Big Business in terms of yet more in tax cuts and relief from regulatory oversight that protects ordinary Americans.
It's worth reminding everybody yet again that most of those same Republicans who are crying crocodile tears about the deficit these days voted for the $1.3 trillion Bush tax cut package in 2001, and for the 2003, 2004, 2005 etc tax cut packages that got us into most of the deficit situation, as well as for the AMT "patches" for the mostly upper-middle class group with income from 350,000 and up. They weren't crying about the deficit then. They intentionally structured the tax cuts as temporary through a "sunset provision" that would make them look like they cost less than they actually did cost--even though they intended, explicitly admitted at the time, to make all of the changes permanent. They just didn't want to have to put it in writing that the tax cuts were going to cause such incredibly huge deficits, but they didn't mind actually causing them. The mantra then was that "deficits don't matter". They also said that the huge Bush tax cuts, enacted in a series of bills over the entire Bush presidency, was going to "stimulate the economy" and "create jobs". Remember that the 2004 tax bill that allowed multinationals to repatriate billions from overseas while paying almost no tax on it--a "repatriation tax holiday"--was labeled the "American jobs creation act"; instead; most of the companies that brought home big amounts of cash used it for share buybacks and actually laid off workers in the US instead of creating jobs.
Remember that along with their "tax cuts create growth and jobs" mantra they also said that "deregulation will create growth and jobs". Deregulation, of course, led us directly to the Great Recession--and we now have tens of millions of ordinary Americans out of work because of that, as well as tens of millions of ordinary Americans who have lost their homes because of that.
The Reagan fundamentals--deregulation, militarization, privatization, and tax cuts--didn't work under Reagan and haven't worked since. Yet here Paul Ryan is, like one of those salesman in the old West who went from town to town selling watered down whiskey as the "miracle cureall"--only Ryan is smiling sweetly, looking genuine, and trying to sell us the same old melarkey that tax cuts and deregulation will give us an astounding cure for the Great Recession by creating growth and jobs.
Don't buy that "hair of the dog" argument, folks. It's the same old song, sung no matter what the facts are. Tax cuts for the wealthy, less help for the vulnerable, and the gradual demolition of the social safety net that we established in this country after the Great Depression based on our understanding that allowing all the benefits to go to a few wealthy leads to disaster.
Of course, when even the ever-GOP-friendlier Washington Post says watch out for the trickery and in the Ryan budget document, you know there must be something there. Glenn Kessler, Fact Checking the Ryan Budget, Washinton Post, Apr. 6, 2011 does just that, concluding that "the Ryan budget relies on dubious assertions, questionable assumptions, and fishy figures."
Lloyd Doggett's statement at the Budget Committee markup session says a good deal of what needs to be said in response to this GOP idiocy: "This is not a 'Path to Prosperity'--it is a path to mediocrity, insecruity, and the wrong path for America". Here is the prepared statement as released:
This is not a path to prosperity; it is a path to mediocrity; it is a path to insecurity; it’s the wrong path. We welcome a spirited debate about our economic future. Mr. Ryan fails to offer a balanced approach to achieve our shared objective of a balanced budget. You might say that in short, we Democrats say that this budget is just not our cup of tea.
Yes, this is a “choice of two futures” for our country, but the choice that this budget presents is really one between their ideology and reality, it’s between a fact-based analysis and fiction-based mythology and ideology. The only thing that is real about this budget are the harsh cuts that will bring real insecurity to the many while providing a largesse for the wealthiest Americans who have been taking a bigger and bigger share of our national wealth.
In this budget, wherever you read the terms “modernize” or “reform,” just understand that these are Republican euphemisms for a four letter word that hurts—“less”—less retirement security, less educational security, less health security, less economic security. This budget does not share the sacrifice, but it certainly does spread the pain.
We get less of what matters not because they tackle our soaring national debt in a courageous way, but because of how they choose to tackle that debt consistent with their ideology. This proposal, I believe, makes very wrong choices for our future.
There is, for example, a much better alternative than eliminating $4 billion from early education or student financial assistance that will only deny students the means to get all of the education for which they are willing to work to achieve their full God-given potential. Instead of cutting that $4 billion, I would cut the $4 billion that is being spent every year through the Tax Code to enable Wall Street financial enterprises to avoid taxes on profits from loans and financial activities overseas and which are, at the same time, encouraging the export of American jobs.
Instead of eliminating $500 million in cancer research and other scientific research that saves lives and creates jobs in America, I would eliminate the $500 million a year spent through the Tax Code, in what's called the look-through provision, which enables multinationals to shift income earned abroad among through their foreign subsidiaries.
Instead of eliminating $3 billion a year from our crumbling bridges and roads, I would eliminate the $3 billion loophole in the Tax Code that grants a corporate tax deduction on interest charges when you borrow money to build a factory overseas without having to pay taxes on the income you earned from that factory. We need to stop exporting American jobs, exporting American manufacturing, exporting American tax revenues, and start developing a more competitive workforce and rebuilding America. And we can choose to have the same effect on the deficit by choosing to close harmful loopholes instead of yielding to harmful Republican cuts.
You can watch Doggett at the Budget Committee April 6 markup session on YouTube here: