Why Should Revenues Be in the Deal?

June 25th, 2011 at 5:25 pm

I found myself on TV last night arguing once again for a budget deal that balanced spending cuts and new revenues.  Only later did it occur to me that I had neglected to say why that’s so important.  Maybe it’s obvious, but my experience is that in debates like this with two starkly opposing views, there’s a danger of staking out your position without rationale, and that weakens your argument.

The case for revenues is a simple one.  Given the level of deficit reduction to which both parties are committed, around $4 trillion over 10-12 years, if you try to get there solely by cutting spending, you’ll be forced to cut too deeply into parts of government that vulnerable people depend on.  In short, you’ll do more harm than good.

Specifics?  Rep Ryan’s budget, embraced by House Republicans, is a good example.  As my CBPP colleague Bob Greenstein shows here, two-thirds of its spending cuts, almost $3 trillion, come from programs that help low-income families:

“$2.17 trillion in reductions from Medicaid and related health care; $350 billion in cuts in mandatory programs serving low-income Americans (other than Medicaid [so things like food assistance, child care credits, unemployment benefits]; $400 billion in cuts in low-income discretionary programs.”

More specifics come from this important editorial in today’s NYT, which points out that exempting low-income programs from deficit-cutting deals “has been a major feature of deficit deals going back to 1985.”  That tradition is especially germane today, with the economic recovery still far from reaching the most vulnerable among us.

All this from a plan that delivers $700 billion of permanently extended Bush-era tax cuts to the wealthy.  If you dropped in from outer space and looked at the R’s budget, you would conclude that the big economic problem facing our nation is that poor people have too much income and rich people have too little.

And that, my friends, is why we need a plan that doesn’t depend solely on spending cuts.

 

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15 comments in reply to "Why Should Revenues Be in the Deal?"

  1. Jeff H says:

    Well said!


  2. Geoffrey Freedman says:

    If you spell out the increases in spending for the military, descretionary spending, medicare medical and social security and combine that with the revenues lost due to the Bush era tax cuts, its a given that we need more revenue, even with significant budget cuts. Unless you can’t add and anaylyze, that is.

    If you lump military, dept of veteran affairs, state dept budgets, intelligent spending, foriegn aid and dept of homeland security together, this is where the greatest percent of increase is, not entitlements (which do need to be modified as well).

    Here’s an idea about getting Republicans to go along with raising the debt limit. Pull out our commitments from Iraq, Afghanistan and Libya as quickly as is safely possible. Maybe that will get Republicans back to the table.


  3. azlib says:

    The fact low income folks will be hit hard by spending cuts is a feature and not a bug of modern Republican ideology. The welfare of the “little people” is not a priority in their world view. People are poor in the Republican world view because they are undeserving. This fact is demonstrated over and over again. Here in AZ the Republican dominated legislature voted down extended aid to the unemployed even though the aid costs the state budget nothing.

    I have truly come to believe most Republicans would rather see people die on the streets from starvation, rather than raise taxes on the wealthy by a single dime. I doubt if your argument holds much water to Republicans.


    • distracted driver says:

      Oh, but you’re wrong… The poor ARE a priority of the Right. The right think about the poor all the time.

      How they can use them, how they can blame them, how they can abuse them, how they can get more money for themselves, through cellophane services for the poor… and let’s not forget another group the right slather over on a daily basis, the elderly. Not to mention, of course, the disabled.


  4. Isabel says:

    Jared,
    Ryan is a professional at filibustering. Don’t give him an inch. He likes to accuse you of interrupting him but actually he is the one who does the interrupting. Watch this debate again and really give it to him the next time! I would like to see more emphasis on the amount that the Ryan plan adds to the debt, among other specific details of his absurdity!


  5. Concerned says:

    azlib is correct. Plus, when you talk about revenues the Republicans will say that revenues take away from the job-creating possibilities and output generation that those stolen revenues would be used in the private (wealthy) sector. Which of course, is nonsense, but there should be a stock answer to it because that is what is going to be coming out of their non-sensical mouths.


  6. Michael says:

    The level of deficit reduction which both parties are committed to is sociopathic, so revenues should not be part of the deal. Because sociopathy is bad.


  7. David says:

    An awful lot of Medicaid spending is to continue nursing home care for elderly persons who have spent down all their assets. This is the majority source of funding for all nursing homes. I can’t imagine what society would do with all of these people if Medicaid is drastically cut – turn them out into the street?


    • Casey says:

      Turn them out into the street?

      That’s what Reagan did to the mentally ill, and he’s remembered as the most fiscally responsible President of all time!


  8. stuxlulz says:

    The question isn’t whether Mr. Bernstein is correct–he is–but how you get Obama, who is himself just a moderate Republican, to champion these policies. If Obama is too afraid to openly support something as seemingly simple as gay rights, how in holy hell do you get him to support tax increases?


  9. B says:

    “More specifics come from this important editorial in today’s NYT, which points out that exempting low-income programs from deficit-cutting deals “has been a major feature of deficit deals going back to 1985.” That tradition is especially germane today, with the economic recovery still far from reaching the most vulnerable among us.”

    Therein lies the rub. You’re willing to shrink the deficit by 4 trillion over 10 years. (I refuse to go to 12 as that’s a cheap gimmick. The CBO uses a 10 year window, stick to it.) But you would like to do it by raising revenues.

    Republicans and conservatives and libertarians want to shrink spending by 4 trillion. And I would like to know if you think it’s remotely possible to cut 4 trillion in spending over 10 years and still exempt low-income programs*?

    * Technically we can call SS and Medicare low-income programs since the elderly are retired and thus have low-incomes. So basically almost everything is a low-income program.


  10. Paul J says:

    Saying that the Ryan budget will take money from low-income folks may persuade the Democratic base, just as, as noted above, it will be regarded as a feature and not a bug for the Republican base.

    The problem is that the independents’ knock on Democrats is that Dems are into taking away money from US and giving it to THEM. And Republicans successfully play into that concern, to the detriment of America as a whole.

    What I’d like to see from CBPP is a study that highlights how the Ryan budget will negatively impact the 95% of Americans who have been left behind because of those policies epitomized by the Ryan budget.


  11. WASanford says:

    There is another reason that revenues should be on the table besides the necessity for all Americans to share in the sacrifice that balancing the budget will entail. That’s the breath taking transfer of wealth from our masses into a few hands at the top of our economy. This transfer of wealth and power is more than just a taking from the American people; it is also a danger to our democracy and to our civil liberties. Our democracy has already been badly damaged as powerful groups and individuals purchase the votes of our so-called representatives to the extent that the welfare of the “represented” constituents no longer matters.
    This circumstance literally cries out for a remedy. A confiscatory rate in the top tax bracket and publically financed campaigns would go a long way towards re-establishing the primacy of the American citizenry over those who have a special interest!


  12. Dave V says:

    Social programs simply do not go away. The bureaucratic imperative ensures that once they are in place, the spending on them will increase to include more grateful recipients, meaning growth at a rate that exceeds the growth of nominal GDP plus inflation.

    Looking at revenue, first understand that 50% of American citizens pay no federal income tax, and likely little state income tax. Of the remainder who pay taxes, the top 10% of income earners could be taxed at 100% and fail to close the revenue/expenditure gap. That leaves guys like me: not poor, but far from wealthy; that ‘my friend’ is where the numbers are.

    If one cannot tax the middle class and get re elected, and cannot close the gap by taxing the wealthy, then borrowing is an alternative to cutting back on social programs. Witness Greece, Portugal, Spain, et al for the results of a country spending more than it earns on generous social programs.

    Most of the readers will accuse me of ignoring the tired old archtype of the starving man. I suspect he is one in a thousand; let’s feed him and free the rest of the economy from the Chavismo model of government dependency.


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