"David Rogers" - GOP Budget Cuts Would Hit Poor Hard

Published on Tuesday, May 17, 2011 by Politico.com

http://www.politico.com/news/stories/0511/55088.html

by David Rogers

It’s Back to the Future, and who woulda’ thought: Bill Clinton’s the new target.

After campaigning on the promise to roll back spending to Bush-era levels, House Republicans have overshot their mark and landed in the last years of the Clinton administration — at least in the case of cuts from labor, health and education appropriations important to poor and working-class families.

Indeed, a proposed $139.2 billion cap for the annual labor, health and education bill is about $19 billion less than the eight-year average for the same discretionary spending under former President George W. Bush — when measured in current dollars. It comes closest, in fact, to a bill negotiated in late 2000 by the man who’s the White House budget director again, Jack Lew.

The Back to the Future scenario is important to the current debt ceiling debate on two counts.

First, it underscores the often heavy concentration of cuts from programs most sensitive to low-income families. Second, if Clinton-era appropriations are truly the new standard, it invites more study of the past decade and the parallel growth of tax cuts and discretionary spending since he left, both contributing to the deficit crisis today.

A wave of new data from the Congressional Budget Office is relevant here.

CBO, which in 2001 famously predicted a $5.6 trillion surplus through this year, released a new analysis showing how the tide swung by $11.8 trillion, leaving trillions in red ink. The single biggest cause was a $3.4 trillion drop from CBO’s revenue projections — attributed to a poorer-than-expected economy. But new appropriations and tax cuts were big factors, as well.

An estimated $2.945 trillion in added costs is attributed to discretionary spending from 2002 through 2011, including what most observers would estimate is about $1.1 trillion related to wars overseas, chiefly in Iraq and Afghanistan. At the same time, tax cuts themselves added up to $2.8 trillion, bolstering the Democratic argument that new revenues must be part of any deficit-reduction deal, along with spending cuts.

CBO released the numbers even as it threw cold water on the GOP for overpromising what can be truly saved through an intense focus on appropriations.

When the April budget deal was reached on 2011 spending, for example, House Speaker John Boehner (R-Ohio) insisted the cuts would translate to $315 billion in savings over the next 10 years. Boehner based that boast on numbers provided by a Republican staffer on the Senate Budget Committee, but CBO projected the 10-year outlay savings at $122 billion when measured against its March baseline.

If last August’s higher CBO spending baseline is used instead, the savings would be higher but still only about half of what the speaker had insisted upon.

Appearing before the Economic Club of Chicago, House Budget Committee Chairman Paul Ryan (R-Wis.) again rejected any suggestion that revenues be part of the equation. And taking the fight up a notch, the young chairman derided President Barack Obama for preaching “shared sacrifice” but promoting, he said, a message of “shared scarcity” and, inevitably, “class warfare.”

“To an alarming degree, the budget debate has degenerated into a game of green-eyeshade arithmetic, with many in Washington — including the president — demanding that we trade ephemeral spending restraints for large, permanent tax increases.” Ryan said. “We are really just arguing over who to hurt and how best to manage the decline of our nation. … I call it the ‘shared scarcity’ mentality.”

“If we succumb to this view that our problems are bigger than we are — if we surrender more control over our economy to the governing class — then we are choosing shared scarcity over renewed prosperity and managed decline over economic growth. That’s the real class warfare that threatens us — a class of governing elites picking winners and losers and determining our destinies for us.”

But for longtime budget observers like Robert Greenstein of the progressive Center on Budget and Policy Priorities, Ryan’s budget is in a class of its own.

“I have never seen a budget so badly skewed that has gotten so far past either house of Congress,” said Greenstein, who lived through the Reagan tax cuts and budget wars of the ’80s. “The bottom line is the House budget is a huge Robin Hood in reverse and its own form of class warfare. In terms of a budget that has actually passed any chamber, I think this is probably — by a substantial margin — the harshest to people at the bottom.”

Medicaid and food stamps — both income sensitive — account for 30 percent of all the mandatory spending savings in the House budget. And apart from the labor, health and education bill, transportation and housing appropriations are targeted for a cut 14 percent beyond April’s agreement.

Changes in the Pell Grant program, targeted to college students from low-income families, can affect some of these historic comparisons of education spending. But a second variable — not reflected by the inflation adjustments — is the growth in poverty in the same period.

In 2001, for example, census data showed a poverty rate of about 11.7 percent, affecting 32.9 million individuals. By 2009, the most recent year for available data, the rate was up to 14.3 percent, affecting over 10 million more people.

Ryan’s Chicago appearance came as senior House Democrats sought out their own business audience in New York — on resolving the same debt issue.

Minority Leader Nancy Pelosi of California was accompanied by Assistant Minority Leader Jim Clyburn of South Carolina and Chris Van Hollen of Maryland, ranking member on the Budget Committee. “These guys understand that we are serious,” Clyburn later said of the reception he received, but he acknowledged that the challenge is to find the “sweet spot” where revenues can be accepted as part of the mix together with reductions.

Education investments remain crucial, he said. And with other nations like China and India graduating more engineers every year, Clyburn said that, too, is a “deficit in our populace and the ability of our young people to succeed.”