House Budget Committee Chairman Paul Ryan’s budget plan would get about two-thirds of its more than $4 trillion in budget cuts over 10 years from programs that serve people of limited means, which violates basic principles of fairness and stands a core principle of President Obama’s fiscal commission on its head.
The plan of Erskine Bowles and Alan Simpson, who co-chaired President Obama’s National Commission on Fiscal Responsibility and Reform, established, as a basic principle, that deficit reduction should not increase poverty or inequality or hurt the disadvantaged. The Ryan plan, which the chairman unveiled in a news conference, speech, and Wall Street Journal op-ed today, charts a different course, turning its biggest cannons on these people.
This finding emerges from a Center on Budget and Policy Priorities analysis of the Ryan plan. Table S-4 of the plan shows that it proposes net program cuts of $4.3 trillion over ten years. The plan shows a $5.8 trillion cut in outlays from the Congressional Budget Office baseline, but $446 billion of that is interest savings and another $1.04 trillion is simply an assumption that the Iraq and Afghanistan wars will phase down on the Obama Administration’s timetable. Actual program cuts produce net savings of $4.322 trillion.
Cuts in low-income programs appear likely to account for at least $2.9 trillion — or about two-thirds — of this amount. The $2.9 trillion includes the following three categories of cuts:
- $2.17 trillion in reductions from Medicaid and related health care. The plan shows Medicaid cuts of $771 billion, plus savings of $1.4 trillion from repealing the health reform law’s Medicaid expansion and its subsidies to help low- and moderate-income people purchase health insurance.
- $350 billion in cuts in mandatory programs serving low-income Americans (other than Medicaid). The budget documents that Chairman Ryan issued today show that he is proposing $715 billion in cuts in mandatory programs other than Medicare, Medicaid, and Social Security, but do not specify how much will be cut from various programs (although they imply that cuts in the food stamp program will be large). In this analysis, we make the conservative assumption that savings from low-income mandatory programs (other than Medicaid) would be proportionate to their share of spending in this category. Thus, we derive the $350 billion figure from the fact that about half of mandatory spending other than for Medicare, Medicaid, and Social Security goes for programs for low- and moderate-income individuals and families. This likely substantially understates the cuts that the plan would make in low-income programs. The Ryan documents show that $380 billion in cuts would come from programs in the income security portion of the budget (function 600), and the overwhelming bulk of the mandatory spending in that category goes for low-income programs. The documents also show $126 billion in mandatory cuts in the education, training, employment, and social services portion of the budget (function 500), which, based on the discussion in those documents, would likely come mainly from cuts in the mandatory portion of the Pell Grant program for low-income students.
- $400 billion in cuts in low-income discretionary programs. The Ryan budget documents show that he is proposing $1.6 trillion in cuts in non-security discretionary programs, but again do not provide details about the size of cuts to specific programs. (The documents do identify some major low-income program areas, including Pell Grants and low-income housing, as prime targets for cuts.) Here, too, we make the conservative assumption that low-income programs in this category would bear a proportionate share of the cuts. Thus, we derive the $400 billion figure from the fact that about a quarter of non-security discretionary spending goes for programs for low- and moderate-income individuals and families.
Our numerical assumptions are conservative in another way as well. That’s because, when faced with the choice of which specific programs to cut, policymakers are unlikely to cut much from a number of non-low-income programs in these budget categories that are popular, such as veterans’ disability compensation and the FBI. That means that other programs — including low-income programs — would have to be cut by more than their proportionate share.
This post first appeared on the site of the Center for Budget and Policy Priorities.