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GOP Budget Pits Rich, Elderly Against Everyone Else

April 5, 2011

Last November, the elderly and the rich powered Republicans to victory in the midterm elections. Voters aged 65 and older backed the GOP by a staggering 59% to 38%, while boosting their share of the turnout to 21% from 16% in 2008. Those with family incomes over $200,000 chose Republicans over Democrats by a 30 point margin. Now, the GOP is rewarding seniors and the wealthy for their loyalty. As it turns out, the Ryan budget blueprint presented today delivers yet another tax cut windfall for the rich while preserving Medicare for today's beneficiaries. As for everyone else, they won't be so lucky.
As 2010 campaign ads like this one show, Republicans won their House majority in large part by terrifying seniors about cuts to the Medicare Advantage program affecting only a small minority of recipients. But while Paul Ryan's 2012 proposal protects the popular single-payer, government health insurance system beloved by 46 million Americans today, vouchers and $3 trillion in budget cuts for future beneficiaries now 55 or younger means only one thing. For them, the end of Medicare as we know it means the rationing of health care as we all understand it.
Ezra Klein summed up the dynamic at work for Ryan's Medicare and Medicaid reforms (more on that below):

In both cases, what saves money is not the reform. It's the cut. For Medicare, the cut is that the government wouldn't cover the full cost of the private Medicare plans, and the portion they would cover is set to shrink as time goes on. In Medicaid, the block grants are set to increase more slowly than health-care costs, which is to say, the federal government will shoulder a smaller share of the costs than it currently does. The question for both plans is the same: What happens to beneficiaries?

When Ryan last year first introduced his Roadmap for America's Future that became his 2012 budget proposal, Klein explained the implications:

It's hard, given the constraints of our current debate, to call something "rationing" without being accused of slurring it. But this is rationing, and that's not a slur. This is the government capping its payments and moderating their growth in such a way that many seniors will not get the care they need.

Again, with their Medicare and Social Security benefits preserved, today's seniors - that is, the ones who gave Republicans their majority and represented the only age group to support John McCain in 2008 - will be protected. Everyone else, not so much.
The ironies abound. After 2021, elderly voters will have a government subsidy to purchase from a choice of health care plans in the private insurance marketplace. If that sounds like the Patient Protection and Affordable Care Act (PPACA) signed into law by President Obama last year, it should. Sadly, for Americans under 65, Paul Ryan and the Congressional Republicans would end the similar health care reform they deride as Obamacare. Of course, the replace part of "repeal and replace" remains undefined in Ryan's budget:

Repeals and defunds the President's health care law, advancing instead common-sense solutions focused on lowering costs, expanding access and protecting the doctor-patient relationship

The implications for the poor and the disabled are especially dire. As the Center on Budget and Policy Priorities documented, Medicaid, like Medicare, costs much less for both children and adults than private insurance. Also like Medicare, Medicaid's growth in per capita spending for its nearly 60 million beneficiaries has been much slower than the rise in premiums for private health insurance. But the Ryan plan would not only gut Medicaid by $1 trillion over 10 years (about a third of its projected budget), but would send the remaining dollars to states in the form of block grants. Writing in The New Republic, Jonathan Cohn summed up the predictable path Paul Ryan's rumored proposals would take:

If the law changes and Medicaid becomes a block grant, then every year the federal government would simply give the states a lump sum, set by a fixed formula, and let the states make the most of it. Conservatives claim block grants would give states the flexibility they need to make their programs more efficient. But, as Harold Pollack has noted in these pages, states already have some flexibility. And because demand for Medicaid tends to peak during economic downturns, when state tax revenues fall, the likely impact of a block grant scheme would be to make Medicaid even less affordable at the time it is most necessary.
That's not to say plenty of governors wouldn't take advantage of block grant status to change their Medicaid programs in ways they cannot now. They surely would--by capping enrollment, thinning benefits, increasing co-payments, and so on.

That, Paul Ryan explained, is a kind of "welfare reform."
But the pain for Americans who aren't already rich or older than 65 hardly ends there.
That's because Paul Ryan and the Republicans plan yet another regressive wave of upper end tax cuts that would shift the revenue burden away from the rich and onto the backs of everyone else.
For starters, unlike President Obama's 2012 proposals, the GOP budget would make the Bush tax cuts permanent for those earning over $250,000 a year. That would drain $700 billion from the Treasury over 10 years. Worse still, the Republican plan to cut the top individual and corporate tax rate from 35% to 25% virtually guarantees another huge payday for the gilded-class. While claiming to close existing loopholes in order to produce a "revenue neutral" result, Paul Ryan's brave new world would be a beautiful one for the rich. As Matthew Yglesias explained yesterday:

This is an important element of Ryan's original "roadmap" plan that's never gotten the attention it deserves. But according to a Center for Tax Justice analysis (PDF), even though Ryan features large aggregate tax cuts, ninety percent of Americans would actually pay higher taxes under his plan.
In other words, it wasn't just cuts in middle class benefits in order to cut taxes on the rich. It was cuts in middle class benefits and middle class tax hikes in order to cut taxes on the rich. It'll be interesting to see if the House Republicans formally introduce such a plan and if so how many people will vote for it.

Of course, that Republicans would favor today's rich and elderly - their most dependable voting blocks - should come as no surprise. What should be equally unsurprising is that the draconian Ryan Roadmap that Republicans ran away from before the 2010 midterm elections is now essentially their official budget blueprint. As Paul Ryan pretended last August:

"My plan is not the Republican Party's platform and was never intended to be."

Now, the New York Times' David Brooks insists, "It will become the 2012 Republican platform, no matter who is the nominee."


About

Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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