Rep. Ryan: It’s Only a Cut When I Say It’s a Cut!

April 10th, 2014 at 11:47 am

One of DC’s sillier arguments–a very competitive category–is the claim that you’re not really cutting a program when you reduce its growth rate.

Apparently, Congressman Ryan was unhappy with a new CBPP post pointing out that most–69%–of his budget cuts come from programs that serve low or moderate income people.  As CBPP’s Bob Greenstein points out: [my bold, btw]

Responding to the 69 percent figure, the Chairman shifted direction in a new piece that he inserted this week in the Congressional Record.  He claimed these cuts aren’t really “cuts” at all; instead, they are simply smaller spending increases than would otherwise occur.  “A smaller increase is not a spending cut,” he wrote.

Well, two problems:

First, the Chairman is trying to have it both ways.  At the very start of his “Pathway to Prosperity,” he writes, “The House Republican budget cuts spending by $5.1 trillion over the next ten years.”  Apparently, he wants to brag to congressional budget cutters that his plan cuts spending deeply, while convincing critics of his budget cuts that they aren’t really “cuts” at all.

Second, the latter argument — that a cut isn’t really a “cut” — makes little sense.  For many programs, it costs more to provide the same services for its beneficiaries from year to year, because of inflation.  In addition, the population is aging and, thus, more people qualify for programs for elderly Americans each year.  For these reasons, the cost of providing the same level of benefits and services to people who qualify rises for various programs from year to year in nominal dollars — that is, in dollars not adjusted for inflation, population growth, or the population’s aging.

A budget allocation that doesn’t cover cost increases due to these factors means either that eligible recipients will see their services or benefits cut, or that some people who would otherwise qualify for those services or benefits are turned away.

So if Rep. Ryan himself is comfortable calling it a cut, so are we.  Because that’s what it is.

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4 comments in reply to "Rep. Ryan: It’s Only a Cut When I Say It’s a Cut!"

  1. Robert Buttons says:

    We need across the board sequester-like cuts to avoid these class warfare arguments about what income groups are gaining or losing.

  2. Joe says:

    So that would mean government payments/transfers must have a cost of living increase built into them? Can’t the government agencies at least find productivity gains in providing those services (leaving the cash transfers on the side)? Why not leave cash transfer in place (flat, no COLA. Pensioners and people living on fixed income have no COLA why should people who “qualify” for a government program get that level of security?) but require the agency to come up with say a 5% cost reduction in their cost?

    It is absurd to think that reducing the growth rate of a program is somehow reducing the program. It is as if government programs are never required to get cost savings or productivity gains.

    With regards to an aging population that speaks to two things in particular. First, with respect to Social Security, the level of benefits has grown significantly yet the payroll tax % has not increased in more than 20 years. Shouldn’t increases in benefits be paid for with a payroll tax increase? SS does have a COLA built in yet again the payroll tax % has not changed to pay for it. Why no increase? Too hard politically since it would hit everyone working. Second, Medicare is in the same position. We continue to make promises with just some vague hope that “it will all work out”. Even those advocating entitlement reform never touch a payroll tax increase. Instead they see more inclined to means test benefits. Now that is fair. People responsibly save and prepare for a comfortable retirement and then will get told “too bad you have been so diligent, no SS for you”. Meaning, all those payroll taxes you paid, ostensibly for your retirement, are being delivered to someone else!!!

    • Bruce Webb says:

      Joe Social Security admin costs are just under 1% of cost (less than that for the OAS (Old Age/Survivors) more for DI). How exactly you could come up with offsets for even 2% COLAs from this 1% base doesn’t make arithmetic sense.

      And FICA hasn’t increased because Republicans ruled it out. See the Guidelines of the Bush CSSS of 2001 (Commission to Strengthen Social Security). In contrast progressives have been willing to embrace phased in FICA increases as at least part of the solution (see the Virginia Reno (of NASI) proposal or the Northwest Plan for a Real Social Security Fix.

      So your claims are at least somewhat off base. Few progressives embrace means testing. On the other hand most ‘Sensible’ ‘Centrist’ ‘Third Way’ers’ are all over them.

    • Tom in MN says:

      Payroll tax percents are against current dollars so they have inflation built in as wages get inflated. Plus as the population grows there are more people paying payroll taxes. And the SS payroll tax cap on income goes up with inflation as well. So there is no need to change the payroll percent to account for inflation or population growth.

      The only correct way to look at any program income/cost/spending over many years is in real (inflation adjusted) terms. Our amusing Governor Jesse Ventura complained when he left office that state spending had gone up 25% over his 4 years. Well it does not take much inflation and population growth to account for that, it’s less than 6% a year.