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Cities for Progress » Article / Op-Ed

GOP Unveils Radical New Budget Gutting Medicare, Medicaid -- Taking from the Poor, Giving to the Rich

April 5, 2011 · · Originally published in AlterNet

From start to finish, this budget is a smoke screen obscuring a dangerous far-right agenda.

Rep. Paul Ryan, R-Wisconsin, is waging radical class warfare and ideological privatization schemes and selling it as a debt reduction plan. His newly released FY12 budget proposal, The Path to Prosperity, ought to have the subtitle: "A Windfall For the Already Prosperous."

As Dean Baker of the Center for Economic and Policy Research reminds us, the economic policies of the last three decades, by favoring corporations and the wealthy over average Americans, have achieved the world's most breathtaking upward redistribution of wealth. America's richest 1 percent are getting about $1.5 trillion richer each year. Studies also show that the richest 5 percent hold almost 64 percent of our wealth while and the bottom 80 percent of scrape by on just 12.8 percent of the pie.

Yet under the guise of debt reduction, the chairman of the House Budget Committee's budget proposal would take from the already poor, give to the already rich and attempt to achieve debt reduction not by cutting real costs, but by privatizing entitlement programs and shifting costs from the wealthy and corporations to struggling states, seniors, disabled, sick and low-income Americans. And the additional revenues necessary for serious debt reduction is glaringly absent, with proposals that would actually decrease tax-revenue from those most able to pay.

From start to finish, this budget is a smoke screen. Indeed, though Ryan's central claim is that his proposal will cut government spending by $5.8 trillion over the next decade, Joel Packer of the Commitee for Education Funding points out the reality:  "For the overall budget over ten years it cuts outlays by $5.8 trillion below CBO baseline but it also cuts revenues by $4.2 trillion below CBO baseline, thus reducing the deficit over ten years by $1.65 trillion." 

This reverse-Robin Hood scheme cynically claims to "Strengthen the Social Safety Net," yet it eviscerates an already tattered net by privatizing Medicare and converting Medicaid and SNAP (food stamps) from successful, guaranteed benefits programs to limited block grant programs. 

It would devastate lives of the at least 44 million Americans living in poverty by slashing spending on critical human needs to below 2008 funding levels and freezing it there for 5 years. At the same time, it would boost the luxurious lifestyles of the tiny percentage of Americans who are genuinely rich by repealing estate and corporate taxes, slashing the income taxes the wealthiest among us pay and instituting a regressive national sales tax that would most likely increase tax obligations for poor, working-class, and middle-class Americans.

Even though this GOP FY12 Budget Resolution doesn't specify details of a plan to privatize Social Security, stay tuned. Privatizing Social Security is another essential piece of Ryan's (and the GOP's) dangerous agenda.

Instead of further shrinking the middle class and endangering the health and economic well-being of those of us not fortunate to be among the nation's wealthiest 2 percent, a responsible budget would look to ease long-term debt in some of the following ways:

First, fix our broken health care system. Under Ryan's health care schemes, beneficiaries would increasingly bear the burden of soaring costs with no guarantee of receiving the remedies prescribed by their doctors. A better and fairer approach would expand the single-payer Medicare system nation-wide, achieving cost-savings, implementing real cost control and retaining guaranteed healthcare for all Americans. Baker also suggests that if Ryan is such a fan of vouchers, how about a voucher system that achieves some of effective cost-saving and health-promoting results: give Medicare beneficiaries the option of buying into the more efficient health care systems in Canada and Europe.

Second, my Institute for Policy Studies colleague Chuck Collins articulates our argument for four revenue-raisers that would bring in a whopping $400 billion each year: 1) impose a small tax on speculative financial transactions that do little to strengthen the real economy 2) reduce corporate tax dodging by closing overseas tax havens and requiring companies to pay U.S. taxes on the profits they actually earn in this country 3) establish higher tax brackets for households with annual incomes of $1 million or more, and 4) Institute a progressive estate tax on fortunes over $5 million, with higher rates on billionaire estates.

Finally, cut the bloated military budget. Obama's bipartisan Debt Commission called for cutting the Pentagon's spending by at least $100 billion over the next decade. We need to cut more than that but we shouldn't accept less.

The GOP is right about one thing: We should be serious about long-term debt reduction. Ryan's dangerous and seriously flawed scheme, however, is nothing more than an ideological ploy to shrink government programs that help poor and middle-class Americans while rewarding the already wealthy.

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