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April 10, 2011 in Opinion
Congress’ curious budget recipe
In case you hadn’t noticed, Congress isn’t like the rest of the world. For instance:
1. Should households facing large bills work on ways to bring in less money?
2. Should legislators in Olympia and Boise cut taxes as they work on filling their respective budget holes?
3. Should Congress cut taxes as it works on solutions to the debt and deficit?
The answer to the first two questions is clear: Of course not. That’s why there are no serious efforts to cut taxes in Olympia or Boise.
But the third question has launched a national debate, because some Republicans, led by U.S. Rep. Paul Ryan, R-Wis., want to include tax cuts as part of a larger effort to rein in budget deficits and the nation’s growing debt. They aren’t just calling for the Bush-era tax cuts to be made permanent; they want to slash them even more.
This is akin to starting Bloomsday a mile behind everyone else in the hopes of finishing first.
Meanwhile, the president’s 10-year plan would eventually let the Bush tax cuts on high earners expire. But while that would yield more revenue than the Ryan plan, it would not bring in as much as the plan devised by President Barack Obama’s deficit commission. Under a formula of $1 of increased revenue for every $3 in cuts, the bipartisan panel lets all of the tax cuts expire, which would restore rates to where they were at the beginning of 2001.
By the way, that was the last time the federal budget was in good shape. Just in case that’s still the goal.
Send it back. As the head chef of the House Budget Committee, Ryan has whipped up a deficit-reducing budget resolution that addresses major budget drivers, though some key ingredients, such as Social Security and defense spending, have been omitted. Nonetheless, this dish provides ample fodder for debate, so let’s dig in.
The plan starts off with the seductive line that the budget deficit would drop from 9 percent of the total economy this year to 1.6 percent by 2021, according to friendly math done by the Heritage Foundation. As an appetizer, Ryan cuts the top personal and corporate tax rates. Then the cost of falling in love is revealed.
Ryan’s plan hits health care entitlements head-on, which is laudable because they are consuming increasingly large portions of the budget (as opposed to relatively tiny items such as earmarks, foreign aid and public radio funding). But once the details circulate, it will be interesting to see whether Americans share his appetite for destruction.
For one thing, Republicans just finished an election campaign in which they bashed the $500 billion in Medicare savings that is supposed to help finance health care reform. Now, they must leap to the other side of the barricade and fend off fearful Americans. Under Ryan’s plan, nothing would change for current Medicare clients, but starting in 2022 new enrollees would be given a chunk of money with which to purchase private health insurance.
As a Class of 2022 member, I have to ask: Will RyanCare improve what’s offered now? Probably not. If it did, he would give it to current seniors and watch his party reap the gratitude at the ballot box. It’s also unlikely because the whole point is to spend a lot less money on this onerous budget item. Looks like costs will be shifted to patients.
As for Medicaid, Ryan would save money by turning to block grants. This is right out of the late 1990s playbook, when Congress and President Bill Clinton agreed to “end welfare as we know it” by discontinuing Aid to Families with Dependent Children and replacing it with the more restrictive Temporary Assistance for Needy Families, which is run by the states. The whole point of that exercise was to reduce the number of people on welfare by, among other things, adding work requirements. And it succeeded.
But it’s hard to see what is gained by booting more people off Medicaid. Seventy percent of its expenditures go to long-term care for the elderly and the disabled. As we know from the health care debate, society does not escape the costs when more people lose coverage. I suppose states could realize savings by lowering their payments to health care providers, but Medicaid already pays less than Medicare and private insurance, which is why many doctors won’t see Medicaid patients. The only other choice is to cut patient services. Whatever the case, cost-shifting is how RyanCare saves money here, too.
While I commend Ryan for preparing such a bold dish, the resulting heartburn isn’t worth it. I suggest compassion for the most vulnerable citizens by adding back the revenue.
Smart Bombs is written by Associate Editor Gary Crooks and appears Sundays on the Opinion page. Crooks can be reached at garyc@spokesman.com or at (509) 459-5026.
Smart Bombs: Greatest generation? Not us 
hawken on April 10 at 7:54 a.m.
Again, Mr. Crooks builds his logically flawed argument on a false analogy, which is a false premise, in order to argue his liberal bent.
Households DO NOT have the authority to “seize” money that belongs to their neighbors. Households DO NOT have the authority to “tax” their neighbors.
If they did have such authority and did seize money that belongs to their neighbors, there would be “shots fired.”
Secondly, like all businesses, households do not have absolute control of their “income.” Unlike a tyrannical government that by force, can control it’s income through taxation. Providing, the electorate allows it. As we all know, the majority of the electorate made it abundantly clear November past, no new taxes.
Business cannot “dictate” how many widgets they will sell each quarter. Households cannot “dictate” how much they will be paid. Households cannot “dictate” that its members are fully employed. Neither business nor households can “dictate” income, unlike government.
Households, business and government have this only in common, when it comes to income and expenses. All three DO have absolute control on how much they spend.
Crook’s argument necessarily falls like a house of cards because at it’s foundation, it’s premise, the whole house is based upon a false analogy which is his false premise.
Logical fallacy always leads to fallacious conclusion.
Furthermore, the insinuation that any household would “work” on ways to bring in less money, in an economic downturn, is nonsense on it’s face.
Thirdly: Crooks ignores a basic, economic, reality which Obama, our Governor and many others have repeatedly stated and demonstrated by their own actions. Namely, that cutting taxes and spending fuels our economy. Nothing pumps more tax dollars into government coffers than a healthy, growing economy. With unemployment at its norm, 4-5% and our economy in strong growth, more people and more businesses pay exponentially more taxes based simply upon more income. Grow the economy first and you will grow exponentially more tax dollars to government. Tax more first and you will deplete the amount of tax dollars that go into tax coffers, causing a steeper decline into “chronic recession” and “depression.” The state of our union today.
Fourthly: The unwritten, implied, false assumption built into Crook’s argument is this: All government spending is “necessary,” ,,,, “essential,”,,,, and cannot be cut in any significant way.
Fifthly:Crooks totally ignores the billions of tax dollars wasted by government each and every year through incompetence, unchecked fraud, massive duplication of government departments and agencies,,, and the mentality that once a department is created it remains “essential” throughout eternity.
For example: Jimmy Carter created the U.S. Department of Education in 1979. Prior to 1979, how on earth did we ever become so great? Produce so many brilliant scientists, doctors, engineers, etc, etc, WITHOUT the U.S. Department of Education? The approved budget for the U.S. Department of Education, 2010 was $77.4 Billion. That’s only one department of many, that makes up our massive, Federal government.
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/education.pdf
Olympia and Washington should focus on the task they were given to do by the electorate. Cut big government spending. We all see how well that worked. After all of the fighting over spending cuts and government shut down, our glorious government delivered to us a 1% cut in spending. All the while both parties shouted from the roof-top, “We all agree that significant cuts need to be made.”
$37 Billion/$3.7 Trillion (Obama’s budget) = 1%
Mr. Crooks should work on his fallacious arguments which we see far too often.
berrybestfarm on April 10 at 9:05 a.m.
I understand how lowering taxes generally has a stimulating effect on the economy. I would appreciate everyone’s input on these questions. How does increasing the tax bite on profits (not the cost of doing business) drag down the economy? It is my understanding that investment costs (which do indeed help grow the economy) are tax deductible and do not count toward profit. If the profit passed on to share-holders is taxed more equitably than that of the corporation is part of the revenue solution then to have a higher percentage of profit passed out to shareholders?
Dennis Patterson—Deer Park
Ed Byrnes on April 10 at 10:29 a.m.
From the article:
“…the plan devised by President Barack Obama’s deficit commission. Under a formula of $1 of increased revenue for every $3 in cuts, the bipartisan panel lets all of the tax cuts expire, which would restore rates to where they were at the beginning of 2001.
By the way, that was the last time the federal budget was in good shape. Just in case that’s still the goal.”
The most direct way to reduce our national debt and deficits is a combination of spending cuts, which I support, and increasing revenue, which I also support. Apparently I am in good company since the BIPARTISAN Deficit Commission arrived at the same conclusions.
Getting out of this fiscal mess will bring pain to everyone and if we are the exceptional egalitarian society of opportunity that we claim to be then sharing the pain should come naturally, If we have groups that are politically exempt from the pain then the difference between us and authoritarian governments which we decry decreases.
Go ahead and throw labels in my direction, I am with the recommendations of the Bipartisan Deficit Commission.
Ed
MatthewRoot on April 10 at 10:49 a.m.
Ryan’s plan would add many trillions of dollars to the national debt before the first balanced budget is reached 50 years from now. That seems irresponsible.
As Gary Crooks mentions, Ryan does not reduce military spending, or propose any taxes that will pay for his proposed military spending.
As long as Democrats whine about a few billion in cuts to discretionary social spending and Republicans bluster every time cuts in defense or tax increases are mentioned, we will not get anywhere.
I agree Ed, let’s go with the Bipartisan Deficit Commission recommendations (and I say that as I just wrote a very large check to the U.S. Treasury).
Jeffrey_Grey on April 10 at 10:55 a.m.
Ed,
That would make two of us.
If it matters, my vote will reflect this the next time I get to cast a ballot.
(By ‘if it matters’ I mean; if there are any pols out there who are listenting to anyone besides the squeaky wheel fringe elements and those who make campaign contributions in amounts measured in ‘pounds,’ since it’s easier than trying to figure out actual amounts.)
Scoutster on April 10 at 11:58 a.m.
It is time for the Dems to put together a serious proposal like Ryan’s (flawed, yes, but all of them will be…that’s where the debate occurs).
Congress and the president are no more in agreement about what should be done than the American people are.
hawken on April 10 at 12:04 p.m.
ebyrnes:
I have long been on the record, in full support of their recommendation, soon after the “Joint Commission On Debt Reduction” was published. Let’s do it!
Obama, his liberal commune and the RINO Republicans ARE NOT. That’s the problem.
Refer to Paul Ryan’s, Republican budget proposal. It cuts over $6 trillion over the next ten years. It’s the closest thing on the board to support the recommendation of Obama’s Debt Commission recommendation. Your demonstrably, previous, liberal world view is a bit confusing to me now. If, in fact you are saying we should adopt the recommendations of Obama’s debt commission. Which I personally support.
Let’s keep intellectually focused on this debate.
Set aside the smoke and mirrors. Please. Do you or do you not support the recommendation of Obama’s Debt Commission? Like all liberals, you seem to want it “both ways.” Clarity! Please.
hawken on April 10 at 12:15 p.m.
ebyrnes:
Let me attempt to be more clear.
Based upon your support of the Debt Commission, do you support Paul Ryan’s recommendations, which is the only thing on the table that resembles the recommendations of the Debt Commission.
Please accept my apology for not being more clear in my previous question.
richard on April 10 at 1:43 p.m.
For all those who tout the Deficit Commission … your president has done nothing to further that as a remedy; instead, he and the Dems in congress stick to their guns that cuts to big progams will result in women dying from cancer (Harry Reid and Louise Slaughter). seniors will starve to death (Nancy Pelosi, Dk Durbin) and the Republican and tea party solution is “extreme” (the Democratic cause in their “talking points” which are written into the current news cycle by media).
Rassmusen poll . . .
Do you believe the President is . . .
A) more liberal than you - 57%
B) about the same as you - 28%
C) more conservative than you - 9%
I believe about 3% of that last group post right here an this blog … good grief!!
And you are correct hawken … the Dems are completely stymied as what to do other than to criticise Ryan’s proposal.
Ed Byrnes on April 10 at 5:10 p.m.
If anyone can show me specific revenue line items where Ryan’s budget directly increases revenues I would be more apt to get behind it.
To offer theoretical and therefore speculative (economics is not a science at the level of physics, chemistry or mathematics) promises of anticipated revenues is not at all intellectually different than offering theoretical and therefore speculative (psychology and sociology are not sciences at the level of physics, chemistry or mathematics) promises of anticipated savings from social programs.
Since the Ryan budget contains explicit line item reductions in social spending it should, to be intellectually honest, have explicit line item revenue increases. If it does not then it misses 25% of the Bipartisan Deficit Commission recommendation.
I believe that we should follow the Bipartisan Deficit Commission recommendations though I am skeptical that anyone ever will because it is politically risky.
Ed
DickAdams on April 10 at 6:23 p.m.
Arbitrary numbers said as though they were the truth. Liars.
garyc on April 11 at 10:47 a.m.
Then we are in agreement. Ryan was on the commission. He disagrees with us.
richard on April 11 at 8:34 p.m.
“Since the Ryan budget contains explicit line item reductions in social spending it should, to be intellectually honest, have explicit line item revenue increases. If it does not then it misses 25% of the Bipartisan Deficit Commission recommendation.”
I don’t understand your logic, Ed. Give me one reason why it has to be intellectually dishonest if the budget does not include raising taxes.
The problem is NOT that we do not collectively pay too little to government; the problem is that government has spent way beyond its means.
Simple concept; where the left has to confuse the issue to get what it wants. Believe me; the nation wants smaller government; city, county state and federal.
Government cannot continue to give money and favors to every group which claims a need or a slight. Government was never inteded to and it should not take care of our every need.
greenlibertarian on April 11 at 9:19 p.m.
The left?
Laughable.
-Bruce Bartlett, Domestic Policy Advisor to President Ronald Reagan, Treasury Official under GHWB.
http://www.thefiscaltimes.com/Columns/2011/04/07/Wealthy-Get-Free-Pass-in-Ryan-Budget.aspx
Only the teabaggers are gullible enough to think the Ryan Manifesto is an actual deficit reduction plan.
greenlibertarian on April 11 at 9:45 p.m.
-David Stockman, former Director of the Office of Management and Budget in the Reagan Administration.
http://inthearena.blogs.cnn.com/2011/04/06/david-stockman-republicans-need-to-man-up-and-shut-the-government-down/
Yeah, those former Reagan guys are real lefties.
Get a clue.
Reduce the ignorance.
Cut defense spending by 25% as REAGAN’S budget chief Stockman suggests, let the Bush tax cuts for the rich expire in ‘14, and you’ve got about $3 TRILLION in deficit reduction right there, over ten years.
gmorton on April 12 at 9:47 a.m.
greenlibertarian wrote,
“A real act of courage would have been for him to admit, as all serious budget analysts know, that revenues will have to rise well above 19 percent of GDP to stabilize the debt.”
Stabilizing the debt is not the aim. *Reducing it* is the aim, as is reducing the portion of the GDP consumed by government.
Government (at all levels) currently consumes about 45% of the total value of all the goods and services Americans produce. For 150 years, until the 1930s, that fraction hovered around 7%. During that 150 years the US became the wealthiest country in history and the most innovative, dynamic, and powerful economy in the world.
So, no, the aim is not to “stabilize” the debt by further increasing the share of GDP expropriated by government – to 19% and beyond. It is to reduce it – to 10% or less.
jwc928 on April 12 at 8:44 p.m.
I see their are still the angry ones using the term “Teabaggers”, again I would ask if you learned the porn term from your Mom or is it something you engage in?