House Republicans unveiled their new budget proposal today, advocating sharp cuts in both tax rates and domestic spending levels to eliminate our nation’s deficit by 2040.
First, a breakdown of the plan:
Taxes: The plan proposes $3 trillion in tax cuts.
Tax Technicalities: The plan eliminates the capital gains, estate and alternative minimum taxes completely, cuts the corporate tax rate by 29 percent and leaves tax loopholes intact for large industries like oil and finance.
Medicare: The plan creates a voucher program that gives seniors a subsidy to purchase private insurance on the open market. The traditional version of Medicare remains an option, but seniors whose Medicare plans cost more than a private alternative will be forced to pay the difference.
Medicaid: The plan calls for $1.4 trillion in cuts to program benefits for low-income families over the next ten years.
Education and Infrastructure Investments: Under the Republican plan, spending for such programs will be cut by 45 percent and 24 percent, respectively. Many economists argue that of all forms of spending, education and infrastructure provide the greatest economic return on investment. Cuts to projects such as Pell Grants and highway construction would immediately impact the lives of millions of Americans.
Military Spending: Despite drastic cuts in nearly every other area of the budget, the proposal would increase the military’s budget by over $203 billion over the next ten years.
Due to the Republican rule against raising taxes in any form, their only path to a balanced budget is a cuts-only strategy, as opposed to the widely endorsed position that any deficit reduction strategy requires a combination of both spending cuts and revenue increases. In light of this, the proposal balances the budget on the backs of those who can least afford it, namely seniors, children and working-class families. As if that weren’t enough, it does so while drastically re-structuring the tax code for the benefit of the wealthy. But such dogmatic ideology concerning tax increases raises a problematic question: what counts as a tax?
Taxes in the traditional sense are considered harmful because they take money out of the hands of consumers, leaving them with less spending power in the private market. It therefore follows that cutting taxes takes money away from the government and puts it in the hands of people, thereby increasing economic opportunity as there is more money in the economy.
But what makes government spending any different? If a tax is simply any governmental action that takes money away from consumers for the sake of providing the government with additional resources, then how does cutting $5.3 trillion that would otherwise go directly to American citizens amount to anything more than a $5.3 trillion tax increase? When Americans say that deficit reduction must include both spending reductions and revenue increases, they acknowledge that, one way or another, taxes as measured by the amount of money taken out of the market are going to increase, whether the increase comes via the government taking more or giving less.
With this in mind, it becomes obvious that if one is serious about balancing the budget, the critical question to ask is not if, but who you are going to tax. Sadly, it’s painfully clear how House Republicans answer that question.
Given the option to either protect working families or pad the pockets of oil executives, the Republican budget shields the oil executives. Faced with a choice between asking Mitt Romney to put off doubling the size of his mansion and cutting necessary aid to single mothers and ailing seniors, House Republicans are asking the 99 percent to help pay for Governor Romney’s remodeling. Asked whether they wanted to finance golf trips or highways and diplomas, the Republicans opted for golf. In a country already experiencing near-oligarchic levels of income inequality, the House Republican budget proposal could not do much more to damage the American Dream.