Republicans have apparently taken a cue from presidential loser Mitt Romney on how to put together a budget plan: Explain nothing. House Speaker John Boehner's latest offer, issued Monday, proposes serious reductions in spending, but fails to specify exactly how those cuts would play out in reality, according to the non-partisan Center on Budget and Policy Priorities.
CBPP did the wonk work for Boehner, and concluded "the health care cuts in the Republican offer will likely be draconian":
For months, we have studied options to generate savings in this part of the budget, and we can’t get close to $600 billion...with items that wouldn’t seriously hurt low-income and vulnerable individuals.... Some news accounts report the House Republican leaders would raise the Medicare eligibility age to 67 and increase Medicare premiums for more affluent beneficiaries, although those items are not mentioned anywhere in the new offer. But if so, those measures would raise only about one quarter of the $600 billion.
Republicans' most recent budget offer also includes $300 billion in blanket cuts to "non-health mandatory programs," which includes things like disability benefits and Food Stamps. There are no specifics there, either.
"The proposal is an exercise in 'look Ma, no hands' budgeting," CBPP director Robert Greenstein said in a statement.
An additional $300 billion is slashed from discretionary spending, including education, childcare, and research. Here the CBPP says they can better assess what the damage will be. As the CBPP's James Horney explains, since Republicans aren't going to make any more defense cuts, low-income programs will inevitably be on the table. Conclusion: "Adding large further cuts on top of the steep cuts that [last year's deficit reduction pact] requires would be most unwise," according to Greenstein.
So why the reluctance to include the nuts and bolts on how spending cuts will work out? Math. The CBPP says there isn't enough revenue in Boehner's plan to cover all the spending—not even the cost of keeping Bush tax cuts for the rich and keeping estate taxes low. As a middle-school pre-Algebra teacher might say, "Show your work."
Remember when Wall Street got $700 billion after destroying the economy, and the tens of millions of people who took out crappy home loans didn't? Well, homeowner problems didn't go away. And though the Obama administration has a pretty abysmal record of assisting homeowners so far, the president could soon make his biggest move yet to help them—by replacing the housing agency head who has blocked attempts to write off some Americans' mortgage debt.
Prominent economists say cutting home loan balances is the single most important thing the administration could do to revive housing, but Obama and Co. only recently began to heed this advice. Treasury Secretary Timothy Geithner regularly blocked efforts to use TARP bank bailout funds for a mortgage relief program that could have had a real impact on the economy. In 2009, Geithner invoked "moral hazard," claiming that reducing Americans' mortgage debts would incentivize delinquency.
It's one thing to expand executive powers when your guy is in the White House—but what if the other party holds the Oval Office? That's what elite conservative legal minds were mulling at an American Enterprise Institute event Friday headlined "Founders betrayed? New threats to US democracy and rule of law." Conservative luminaries, including Bush-era torture-justifier John Yoo, warned of a grave constitutional threat in the Obama administration's use of executive power.
CATO institute fellow Nicholas Rosenkranz said Obama had seized a "vast amount of executive power" by allowing people who entered the country illegally as children to stay (though as my colleague Adam Serwer pointed out last summer, presidents from both parties have long claimed the authority to grant stays of deportation). He was also concerned about the possibility that the DOJ may decline to enforce federal drug laws in states that recently legalized pot. (This coming from the same school of thought that says the 10th amendment allows states to ignore federal laws they don't like.) "For those of you who are nervous about some of the tendencies of of this particular president," Rosencranz said, "I would keep your eye on the executive choices like declining to execute law."
He said Congress should clarify that the president must enforce federal laws. Would this, then, apply to Obamacare under a "President Ryan in 2017," asked moderator Henry Olson, director of AEI's National Research Initiative. Well, yes, Rosencranz said—yes, it would.
Each year, ALEC ranks the states on how tightly they adhere to the group's policy recommendations—from personal and corporate tax rates, to public sector employment levels, to right-to-work laws—as a predictor of their economic growth. The study released Wednesday, by the Iowa Policy Project and Good Jobs First, two policy groups that promote economic growth at the state level, introduces those rankings to reality. It concludes: "A hard look at the actual data finds that the ALEC…recommendations not only fail to predict positive results for state economies—the policies they endorse actually forecast worse state outcomes for job creation and paychecks." (Though the report is careful to maintain that though ALEC policies are correlated with less prosperous state economies, that doesn't necessarily mean the policies caused economic decline.)
Let's take a look. In six key measures of economic growth, ALEC's "Economic Outlook Rankings" fail to coincide with the actual economic outlook of a state over time. On the horizontal axis we have all 50 states' ALEC economic grades from 2007, when ALEC started its ranking system. The vertical axis shows the percent change in actual economic performance from 2007 until last year. If ALEC's fortune-telling were correct , the plotted points would form an upward, rightward line, with a better score corresponding with a better economy. But what happens is pretty much the opposite:
Note the downward slope:
Whoa, downward slope:
A better economy means higher incomes, means more tax revenue, right?
Aaaaand upward slope:
Instead of boosting states' fortunes, the report finds that ALEC's preferred policies seem to provide "a recipe for economic inequality, wage suppression, and stagnant incomes, and for depriving state and local governments of the revenue needed to maintain the public infrastructure and education systems that are the true foundations of long term economic growth and shared prosperity."
As the fiscal cliff looms, there's a consensus that, one way or another, the rich are going to have to pay up. But that doesn't mean the poor are home free. Any "grand bargain" budget deal will be just that—a deal, which means that even though Democrats want to shield social programs from cuts, they will inevitably end up as bargaining chips on the table.
Obama's starting point for negotiations is the deficit plan that came out of the 2011 debt-ceiling showdown. It already contains heavy cuts in discretionary spending, which is spending on stuff that is not entitlements, including military and domestic programs. And 25 percent of that domestic spending goes to programs that help low-income people, according to Richard Kogan, a federal budget expert and senior fellow at the Center on Budget and Policy Priorities (CBPP). Obama and the Democrats have been pretty set against cuts to Social Security, Medicare, Medicaid, food stamps, and long-term unemployment benefits. However, Rep. Paul "62-percent-of-my-proposed-budget-cuts-come-from-poor-people-programs" Ryan will likely be leading the charge on the other side of the aisle. He won't be able to chop up the safety net to his liking, but he and his fellow Republicans will do what they can.
Kogan says that even though a final budget deal is likely not to eliminate tax benefits for the poor, it will almost certainly include deeper cuts to lots of social programs. Here are 12 possible targets (program costs are from 2012 unless otherwise noted):
Medicaid ($258 billion): Though Obama has largely targeted providers for potential Medicaid cuts, Republicans want beneficiaries to fork over more. In which case, says Kogan, patients might be forced to make copayments, or program costs may be shifted to the states, which could decide to scale back coverage.
Food Stamps ($78 billionin 2011): The Supplemental Nutrition Assistance Program serves about 45 million people. It is not part of discretionary spending, but Ellen Nissenbaum, senior vice president for government affairs at CBPP, told The Nation it faces a real prospect of being cut in negotiations.