If your family was facing economic hardship, what steps would you take to deal with it? Would you look for ways to reduce spending, increase your income, pay your bills, and cover basic necessities as well as invest for the future? Or would you reduce your spending, reduce your income, and stop paying your bills? As the debt ceiling deadline looms, Republicans are suggesting America go the latter route. And they’re calling it sanity.
I listened to a bit of the House debate over what the GOP is calling it’s "Cut, Cap & Balance" bill, which the GOP is debating even as the deadline to raise the debt ceiling looms — even as we’re probably already paying the price for their continued distraction from the debt ceiling debate. As one member of Congress put it, a better name might for the GOP bill might be "Slash, Shred & Punish."
Again and again, I heard Republicans repeat the family budget-federal budget analogy. Of course, it’s a false analogy, especially when it comes to debt. But Republicans don’t even carry out their own false analogy to its logical conclusion.
"Our government spends more than it takes in," is the constant refrain, and the answer is to cut. In fact, cutting is the only answer, because it’s not just about spending. This is where things stops making sense.
Take an average American family of four, with two working parents, and two school-age children. During tough economic times, the family will very likely cut back on spending. One parent might carpool or use public transportation to reduce spending on gas. The old family car may have to last a couple of years more, before it’s replaced. The family grocery cart may feature more generic brands than name brands. The Disney vacation may be cancelled in favor of low-cost activities close to home.
But what family in dire economic straights is going to reduce both the amount of money it has going out and the amount of money it has coming in? None that you and I know, because families in economic crisis are not "revenue neutral."
If anything, families look for ways to increase the amount of money they have coming in. Maybe one of the kids gets an after-school job to contribute to the family income. One parent might take a second job, pick up extra hours, or moonlight in order to bring more money into the family budget. The other parents might decide that now is the time to ask the boss for a salary increase.
But would a family respond to crisis by ensuring it has less money coming in? Would one parent quit his job? Would the other volunteer for a pay cut, so that they have less money going out and less money coming in? No. What families in economic crisis wouldn’t do is slash their income. (Especially when the cost of living isn’t likely to go down.)
Yet that’s what Republicans are suggesting the federal government should do. Their opposition to closing tax loopholes for wealthy individuals and corporations stems from their opposition to any increase in revenues to address the deficit. That’s reflected in the "Cut, Cap & Balance" bill which requires a simple majority to cut spending, but a super majority to do anything that raises taxes, including closing tax loopholes.
Instead, the GOP is actually advocating a plan that would cost jobs and shrink the economy.
House Republicans are about to put their deficit cutting plan on the table, a snappy sounding piece of legislation called Cut, Cap, and Balance. It has three main parts: First, cut $111 billion out of next year’s budget. Second, cap government spending at about 20% of GDP, a level that would likely force major cuts to Medicare and Social Security, and major reductions in discretionary spending. The third part is a balanced budget amendment that would make it very hard to raise taxes.
There is a lot that can be said about this plan. But the most important thing may be the most immediate one. In the short term, by taking $111 billion out of the economy in 2012, Republicans are choosing a path that would slow short term economic growth, thereby costing jobs. In other words, it’s a short term anti-stimulus. The White House, for one, wants everyone to understand this point.
… Republicans can argue that the business certainty that results from these cuts will more than compensate for the loss of GDP, especially in the out years. But that is an argument that the CBO is unlikely to score. And it is a case that Republicans will have to make next year during an election. It may not matter in the primaries, but for those wanting to get back to work it could certainly matter in the general election. And this seems to be something the White House is counting on.
Another thing a family isn’t likely to do is cut back on necessities, like food or health care. In fact they’ll make sacrifices, in terms of spending less on other things to pay for those things. Likewise investments in the future. Families will even go into debt for things that are worthwhile. So a family will take out a educational loans to send their kids to college, rather than saying "Sorry kids, but that’s an investment we can’t afford."
But that’s what the GOP is effectively saying with a bill that would require 25% cut in every government program.
As the Center for American Progress’ Michael Ettlinger and Michael Linden noted today, actually getting spending down to that level would require 25 percent cuts in every government program, including the Pentagon and Social Security (or, of course, deeper cuts for every program that gets left untouched):
In 2016, for example, we estimate that total federal spending is likely to be around $4.4 trillion, or 22.9 percent of GDP. [...] Of that $4.4 trillion in 2016, about $520 billion will be interest payments on the debt — an area Congress can’t directly cut. That leaves about $3.9 trillion in noninterest spending, from which Congress would have to slash about $1 trillion in order to bring total spending down to 18 percent of GDP. This would require a 25 percent cut to everything in the federal budget — from Social Security to veterans’ benefits to the Pentagon to education. Congress could try to protect some programs from such severe reductions but then, of course, other areas would have to be slashed even more.
Cutting spending so deeply would reduce the federal budget to the level at which it was in 1966, when the country’s needs and demographics were very different. No President in the last 50 years, including conservative icon Ronald Reagan, has even proposed a budget with spending so low. But the GOP is willing to have the country default on its obligations unless Congress adopts this radical path.
You don’t have to read between the lines to see the goal is to "starve the beast" and thus shred what’s left of the safety net.
I’ve said for some time that what today’s GOP really wants is to "turn back time" to a "golden-age" of freedom before Social Security, Medicaid, and the rest of what comprises our social safety net. Well, it’s no mistake that "Cut, Gap & Balance," would take America back to the 1960s budget-wise.
The Republican-led House of Representatives this week will consider legislation that would effectively endorse restricting federal spending to the arbitrary level of 18 percent of gross domestic product. That would require the slashing of important and popular programs far below even the draconian levels of the 2012 budget approved by the House earlier this year. The United States would be the lowest-spending economically advanced country in the world.
The last time the United States had spending this low was in 1966. Much has changed since then, which makes a federal budget at that level both impractical and undesirable. We are an older country, with more retirees receiving the Social Security and Medicare benefits they’ve earned during their working lives. Social Security benefits have been consciously increased to improve the quality of life for retirees. Health care costs have multiplied so providing Medicare, veterans’ care, and Medicaid is much more expensive. Education has become more costly, and government fuel costs have risen along with everyone else’s.
We are a very different country than we were back then, with very different needs and with stronger economic competitors making investments in their own countries to make themselves strong. We must match those investments to remain the No. 1 economy and the most competitive nation on earth. We simply can’t put a 1966 transmission into a 2012 Mustang.
And you don’t get there without making the most vulnerable among us bear the costs.
Let’s start with the “cut” and “cap” portions of the bill. These sections require spending cuts in 2012 and caps over the next decade identical to those in the House Budget Committee Chairman Paul Ryan’s plan., By House Republicans’ own design, achieving those spending levels would require cuts that would be harmful to the economic recovery in the short-term while also damaging our long-term competitiveness and placing a higher burden on seniors and the most vulnerable. To give a few examples:
- The bill would abruptly cut more than $100 billion in spending in the first year alone, a step that Congressional Budget Office Director Doug Elmendorf stated would “affect our projections for GDP growth over the next two years.”
- The House Budget Resolution plan would cut clean energy investments by 70 percent, infrastructure investments by a third, and education and training by 25 percent – cutting 320,000 children from Head Start and reducing aid for families trying to put their kids through college by hundreds, or even thousands of dollars.
- It would cut Medicaid by one-third over the decade, and by nearly 50% by 2030. This could, according to the Kaiser Family Foundation, result in 36 million people losing Medicaid coverage, including people with disabilities and seniors in nursing homes. And that comes on top of the 17 million who would lose coverage due to repealing subsidies in the Affordable Care Act.
- And it would cut programs for the most vulnerable – for example, by food stamp benefits for a family of four by $1,760 per year or cut 8 million households from the program.
- Finally, the House Budget Resolution proposed to convert Medicare to a voucher program, increasing costs for Medicare beneficiaries by $6,400 a year beginning in 2021 – with those higher costs increasing over time.
And you don’t stop with the poor either. You punish middle- and working-class families who — like the fictional family I mentioned earlier — are struggling through this recession. After all, they have it coming.
Here’s your average right wing congressman’s take on the default crisis:
ROKITA: We’ll learn to live within our means right now, in the here and now. And this might force that issue even if the economy does or the stock market does go down, the economy might get worse. The economy is terrible it’s been terrible for years now, and the reason it’s bad is not because of a debt-ceiling vote.
The reason it’s bad is because we have people who believe that by making government bigger by keeping people on unemployment checks and on welfare we’re going to dig us out of this mess.
That’s what they think. It’s about bad people on welfare. Plus ca change, plus c’est la meme chose. It’s up to the GOP leadership to figure out how to deal with that. Perhaps they could consult with some special needs specialists.