It's an election year, so the GOP are talking about killing Medicare?

Posted Wednesday, March 21, 2012 in Analysis

It's an election year, so the GOP are talking about killing Medicare?

Congressman Paul Ryan (R-WI) presenting the Republican budget proposal, "The Path to Prosperity".

by Gina Hamilton

Is this a party that wants to lose the House, fail to gain in the Senate, and fail to retake the presidency? Time and time again, Americans who are seniors or close to being seniors have told their representatives and senators that they don't want Medicare and Social Security to change.  Now, some possible changes to Medicare make sense to us, including a Kaiser Permanente-type system that pays by the member, not the procedure, but that's not what is being proposed by the Republicans. Moreover, fiscal sense and political sense are two entirely different animals.

What's more, the GOP knows perfectly well that seniors comprise the majority of their base. Which is why what they are doing now seems almost pathologically insane.

Take the new 2013 Paul Ryan budget, ironically called "The Path to Prosperity", just like last year's DOA budget. This proposed budget, which is also doomed in its cradle, aims to tame the national debt by reshaping Medicare and cutting deeply into Medicaid, food stamps and other programs for the poor, while reshuffling the tax code to sharply lower rates.  

To wit, there would be two tax brackets ... 10 percent for the very poor, and 25 percent for the rest of us.  The average middle class household, earning $50,000, would finally have something in common with billionaires ... a 25 percent tax bracket, with no deductions for childcare, college tuition, or homeownership.   Ryan calls these middle class exemptions "loopholes" and insists the top one percent gets more of them than you do.  Ryan's plan also calls for "broadening the tax base" (to include the destitute, elderly, and minimum wage earners) who would suddenly be paying their fair 10 percent, even if by doing so it makes them homeless or unable to afford health care.  Millionaires whose income is capital gains, on the other hand, could end up paying even less than the lowest income earners.  He is insisting on keeping the Bush era capital gain tax rate of 15 percent, which, when you consider all the brokerage fees and other off-the-top expenses, can work out to less than 15 percent, as we learned from Warren Buffett and from Mitt Romney this year.

Well, that's fair, in Ryan's own words.

Did we mention that the proposal eliminates health care for the poor?

Oh, those funny Republican cards. They always tell these old sawhorses of jokes this time of year... Oh, wait, they're NOT kidding.  Somehow, they think this plan is really going to demonstrate to the American people that Republicans are willing to tackle the difficult debt situation head-on.  They argue that restraining future borrowing is a moral imperative. And because they've all drunk the Grover Norquist koolaid called the "no tax pledge", the only way to make that happen is to cut spending. Entitlement programs for the elderly and poor must be slashed, they say, both to reduce the deficit and to ensure that some kind of skeleton program continues to be available in years to come.

That it will also sink millions of Americans into poverty and the infrastructure of the country into dust is just an unfortunate side effect, we suppose.

Well, Ryan's office says that the program will generate millions of jobs, just like dozens of tax-reductions to the upper class have in the last two decades.  Except, they haven't, of course.  This graph, based on figures from the Labor Department and Tax Policy Center, demonstrates that the highest job creation has been in years with a much higher marginal income tax rate than what now exists.

Ryan and his party know this very well.  They had to try to answer a series of questions put to them on the fly last year by Al Hunt of Bloomberg, and had to finally admit they didn't know why job creation fell after the Bush era tax cuts.  During an exchange in December 2011 with Rep. Fred Upton (R-MI) — who represented the GOP on the fiscal supercommittee that failed to craft a deficit reduction package and theoretically understood something about the economy and job creation —  Al Hunt asked him why he was still proposing tax cuts instead of tax increases, considering that more jobs were created under the Clinton administration and its higher taxes on the rich than were created following the Bush tax cuts. Here's a bit of the exchange:

HUNT: Why under those pre-Bush tax cut tax rates did the economy do so well in the ‘90s? And why under the Bush tax rates, less for the wealthy, to do so poorly in this decade?

UPTON: Well, a couple things. One, spending went up, Al, the wars. I mean, that’s trillions of dollars. And also there was no change in the entitlements. And we also know -

HUNT: But that shouldn’t hurt the economy. That shouldn’t hurt economic growth.

UPTON: Yeah, but that impacts the debt and the deficit.

HUNT: But I’m asking, why did the economy grow a lot? Why were more jobs created in the previous decade under higher taxes than in this decade under lower taxes?

UPTON: I don’t know specifically the answer to that question. I can – I can maybe merit a guess. But, I mean, in large part is because our job – we lost jobs. I mean, look at the jobs report that came out this last week, three-hundred- some-thousand people actually stopped looking for jobs.

In English, then, Upton said that no jobs were created because the economy lost jobs and people stopped looking for work.  No discussion of some of the underlying issues, such as massive deregulation, that had an undeniable effect on the economy.  No thought that deficits rise when revenues ... in the form of taxation ... can't keep pace with expenditures, whether those expenditures are wars, social needs, or new roads. 

We can feel for the Republicans.  Their house of cards has finally tumbled, and they don't understand why it wouldn't stay up.  What we can't understand is why ordinary American voters might be willing to look at that pile of cards and say, "Yep, that's what I want for me and my family."  Or, for that matter, why the Republicans are so convinced that the American people will follow them into this nightmare.

None of it matters that much, except that it's been a colossal waste of time, energy, and thought, when there are many pressing issues that this Congress is not addressing.  The 2013 Ryan budget, like the 2012 Ryan budget before it, has little chance in committee, less chance in the House, and virtually no chance in the Senate.  It certainly won't be signed by the President.  In fact, there probably won't be a budget in 2013, just like there hasn't been one in 2012, or 2011, or 2010.  The sharply partisan Congress has failed to produce one since April of 2009.  But that's another story.

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