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When Republican Budget Cuts Backfire

October 4, 2011

Addressing the Congressional Joint Economic Committee Tuesday, Federal Reserve Chairman Ben Bernanke warned policymakers to "avoid fiscal actions that could impede the ongoing economic recovery." Given the grim predictions for job losses and slower economic growth forecast to result from the August debt ceiling deal and the Ryan GOP budget plan, Bernanke was certainly right to reiterate that "that Congress should not cut spending sharply while the economy is weak."
But in other ways large and small, the Republicans' new-found fetish for debt reduction will only make America's bottom line worse. As their proposed cuts to family planning programs and the IRS show, Republicans' supposed fiscal discipline will cost the Treasury more than it will save.
As part of their perpetual war against Planned Parenthood, Republican leaders are once again proposing to "zero out" federal funding for the Title X family planning program. If the likes of Mike Pence (R-IN) and Denny Rehberg (R-MT) get their way, Congress would eliminate the $317 million for Title X, a program signed into law in 1970 by Richard Nixon, who proclaimed that "no American woman should be denied access to family planning assistance because of her economic condition."
Writing at the Huffington Post, Laura Bassett documented the boomerang effect this Republicans' faith-based cutting would have on the national debt:

The cost of covering a Medicaid-funded birth, including prenatal care, delivery, postpartum and infant care for a year, was an estimated $12,613 in 2008, according to a May 2010 Guttmacher Institute study. This far outpaces the cost of providing birth control and other contraceptive services to low-income women at Title X-funded clinics, which averages only $257 per client per year.
Crunching the numbers, every dollar the U.S. government spends on family planning services to help people plan how many children to have and when to have them saves taxpayers about $3.74 in Medicaid birth-related costs. The government spends about $300 million a year on the Title X program, but in 2008 alone, it saved the country $3.4 billion dollars in return.

As Ruth Marcus pointed out in February, "Every public dollar invested in family planning care saves $3.74 in Medicaid expenditures for pregnant women and their babies during the first year of care. Imagine the lifetime savings."

Title X clinics serve more than 5 million women annually, the vast majority of them low-income.
The Guttmacher Institute has estimated that Title X helps prevent nearly 1 million unintended pregnancies annually. The institute says these pregnancies would otherwise result in 433,000 unintended births and 406,000 abortions.

"And then," Marcus noted, "there is the other 'important work'...2.2 million Pap smears, 2.3 million breast exams, nearly 6 million tests for sexually transmitted infections."
Of course, the Republican crusade to take the knife to women's health care isn't about budgets as much as ideology. (As Texas Rep. Wayne Christian described the battle in the Lone Star State, ""Well of course this is a war on birth control and abortions and everything, that's what family planning is supposed to be about.") As it turns out, the same might said about the GOP's never-ending quest to gut the Internal Revenue Service.
In the 1990's, Congressional Republicans led by Senator Phil Gramm waged a scorched-earth campaign against the IRS. Thanks to crippled enforcement - and a substantial reduction in audits - the $195 billion in revenue lost annually to tax cheating in the nineties grew to $345 billion in 2001. Recent estimates have placed the "tax gap" between $410 billion and $500 billion a year, or well over 10% of the entire annual federal budget.
This spring, anti-tax Republicans once again turned to their broken math. As part of the $39 billion budget cutting deal in April, John Boehner's minions rejected the President's ask for a 9% boost - and 5,100 more workers - for the IRS this year and demanded more cuts in 2012 and beyond. The GOP jihad wasn't merely payback for the Obama administration's crackdown on wealthy tax cheats, but a preemptive strike to gut enforcement of the individual health insurance mandate due in 2014 as part of the Affordable Care Act.
But as Jonathan Cohn explained in April, in his budget deal with President Obama and Harry Reid, Speaker John Boehner won the day for the GOP's "pro-tax evasion, pro-deficits" position. As the Fiscal Times summed it up:

Among budget cuts Republicans are proposing for the current fiscal year is $600 million in IRS spending between now and September. IRS Commissioner Douglas Shulman told a House subcommittee last week that such a budget cut over just six months likely would reduce federal revenues by $4 billion. The IRS "would need to make substantial cuts to its enforcement programs," he said.
In other words, cut spending by $600 million, lose $4 billion in revenue and add $3.4 billion to the deficit. That's absurd arithmetic and unfair to the large majority of taxpayers who pay what they should. Shulman said the IRS collected $2.345 trillion in fiscal 2010, ended last Sept. 30, some 93 percent of federal receipts.

Writing in the Washington Post in March, Ezra Klein summed up the Republicans "penny-wise, pound-foolish spending cuts":

"Converting dollar bills into $10 bills is an excellent way to pay off your credit card. Except, it seems, if you're a House Republican...
As the Associated Press reported, "every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency's budget." It's an easy way to reduce the deficit: You don't have to cut heating oil for the poor or Pell grants for students. You just have to make people pay what they owe."

Of course, the costs when Republican try to cut budgets (that is, when a Democrat is in the White House) can be measured in both dollars and sense. While the Arab Spring is flowering, the U.S. foreign aid budget is withering on the vine, limiting America's ability to respond to future natural disasters and diplomatic opportunities. (As a percentage of the overall federal budget, foreign assistance is likely to drop back to pre-9/11 levels.) And last month as in April and August, Republican deficit hawks were once again willing to shut down the government if their spending cut demands weren't met. As the Washington Post's Klein lamented in doing the math last week:

"[The] government shutdown would cost much more than the two parties are fighting over."


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

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