Republicans' Budget: Redistribute America's Wealth Further Upward to the Wealthiest and Wreck the Poor, Working and Middle Classes

From The Progress Report -- May 11, 2011:

The Senate Republicans' Budget

Yesterday, Sen. Pat Toomey (R-PA), along with fellow Tea Party-affiliated Sens. Jim DeMint (R-SC), Marco Rubio (R-FL), Mike Lee (R-UT) and Ron Johnson (R-WI), rolled out a budget proposal to slash spending to 18.5 percent of GDP and purportedly eliminate the federal deficit within a decade. In many ways, Toomey's plan mimics the House Republicans' budget which aims to reduce spending to just under 20 percent of GDP. On the revenue side, Toomey's budget reduces the brackets for the personal income tax and reduces the rates for both income and corporate taxes, as well as committing itself (at least in the abstract) to clearing out the tax code's panoply of expenditures and provisions. On the spending side, the budget copies Ryan's deep cuts to Medicaid and his re-working of the program into a block-grant system, while comm itting itself to profoundly deep cuts in non-military discretionary spending in order to reach its stated goal of reducing government services. There is, however, one politically noteworthy difference between the House Republicans' budget and Toomey's new proposal: Toomey completely abandons the House Republicans' highly controversial transformation of Medicare, and instead opts to leave the entitlement program effectively untouched. The word "politically" is important, as this is a patently strategic feint rather than a substance policy disagreement between Senate and House Republicans; Toomey and his cohorts have already declared they would vote for the House's gutting of Medicare.

STILL REDISTRIBUTING UPWARDS: Digging into the specifics of Toomey's alterations to the tax system, it consolidates the income tax system into fewer brackets (though where Ryan leaves the final number unspecified, Toomey settles on three brackets) while lowering marginal tax rates. For corporations, it cuts their tax rate from 35 percent to 25 percent, while instituting a territorial approach to taxation, that exempts corporations from paying taxes on overseas profits. And while the initial text of Toomey's budget does not specify a cut in the top income tax rates, The Enquirer reported this morning that it does indeed follow Ryan's model and hold all marginal tax rates to a maximum of 25 percent. And like Ryan, Toomey's commitment to making up much of the revenue lost to rate reductions by eliminating "special-interest tax loopholes and deductions" comes with no substantive numbers or specifics. When Republicans were given the opportunity to reduce oil subsidies and tax loopholes, the party declined to do so. Not once, but twice. As the Center for American Progress' Michael Linden pointed out in response to the Ryan budget, without greater specifics as to what the rates will be and what tax expenditures will be closed, the structure of the proposal effectively requires a massive tax hike on the middle class. When cuts to tax expenditures that benefit both the middle class and the wealthy are used to pay for massive rate cuts exclusively for those at the top, the math becomes unavoidable. Toomey's budget has the same problem, and is yet another example of conservatives' growing conviction that the rich pay too much, and everyone else pays too little. Their solution is even more redistribution of wealth up the income ladder.

TARGETING THE MIDDLE AND THE POOR: Like the budget proposal engineered by House Republicans, a large amount of Toomey's cuts comes from block-granting Medicaid. Under current law, the federal government pays a fixed percentage of the states' Medicaid expenses. But under Toomey's proposal, that contribution is transformed into a fixed annual dollar amount. As with the House Republicans' budget, the combination of the block grants plus the reduction in overall Medicaid spending will most likely force states to make drastic cuts in support for Medicaid recipients -- a group which included one-fifth of all American children in 2003, as well as one-third of all childbirths. Meanwhile, as of 2007, the disabled made up 42 percent of the program's enrollees, and the elderly made up another 25 percent. In reviewing the House Republicans' budget, the Center on Budget and Policy Priorities concluded that the proposal would require "severe reductions " in health-care for children and the disabled, while also curtailing long-term care for seniors. On top of that the CBPP also found that nearly two-thirds of Ryan's cuts -- $2.9 trillion in all -- would impact low-income Americans. More recently, The Kaiser Foundation found that carrying out this scheme would kick between 31 and 44 million Americans off the Medicaid roles by 2021, leaving them without any other readily affordable options for coverage. Given the Toomey budget's equivalent plan for Medicaid, and its determination to reduce government spending to 18.5 percent of GDP while leaving Social Security, Medicare, and Pentagon spending virtually untouched, it seems inescapable that it would inflict an equally crushing hardship on the American poor and working class, not to mention gutting everything from education funding to technological development, infrastructure investment, and public health and safety -- all of which would decimate the standard of living for the American middle-class.