The Ryan Budget: Notes from a Briefing

On April 8, as the nation faced a possible government shutdown, several social service organizations—including the Coalition on Human Needs, Service Employees International Union (SEIU), and the Vietnam Veterans of America—sponsored a briefing on the next big issue on the horizon: the fiscal year 2012 budget. 

The “Ryan Budget”, proposed by House budget committee chairman Paul Ryan (R-WI), includes deep cuts to social safety nets like Medicare and Medicaid, Pell grants, and the SNAP program (formerly called food stamps). 

Experts at the briefing reported that two thirds—$2.9 trillion—of the cuts in the Ryan Budget come from low-income programs, while the wealthiest Americans and corporations are given $4.2 trillion in tax breaks. In the final analysis, according to speakers, the Ryan Budget is about ideology, messaging and a long-term strategy to shift the focus of American funding and policy.

Bob Greenstein, the founder and Director of the Center on Budget and Policy Priorities, kicked off the briefing with a breakdown of the impact of the Ryan budget resolution.

"Reverse Robin Hood": Two-thirds of the proposed cuts, or $2.9 trillion, come from low-income programs, causing a disproportionate effect on Americans with the greatest need. This would effectively redistribute wealth from low and middle income Americans to the wealthiest, increasing already stark disparities in U.S. income. 

The budget resolution claims to cut $5.8 trillion in spending from the federal budget, but Greenstein contends that number is really closer to $4.3 trillion.  Additionally, the spending cuts outlined in the Ryan Budget are almost completely negated by $4.2 trillion in tax cuts for the rich.  That puts the overall deficit reduction at $0.16 trillion over the next decade, not $1.6 trillion as Ryan claims.  By the 10th year of the Ryan Budget, Mr. Greenstein said, one-third of domestic discretionary spending would be cut from low-income programs.

Medicare: Changes to Medicare would essentially end the program as we know it today, Greenstein said. 

• Along with an age increase from 65 to 67, the Ryan Budget would double by 2022 the amount an average 65-year-old is required to spend out-of-pocket (from $6,150 now to $12,500 in 2022) by implementing a voucher system requiring seniors to buy private health insurance. 

• By 2030, that out-of-pocket expense will be nearly triple what it is now.  Yet the amount Medicare currently pays ($8,600) would only be reduced by $600.  Mr. Greenstein explained this is largely because public health care is considerably less expensive than private health insurance -- 27% less for children and 20% less for adults.

Why the Debt Ceiling Matters: For advocates concerned about social programs, theres is more to pay attention to than just the House or Senate budget resolutions. Our rising debt is quickly approaching the debt ceiling, or limit,  which would mean a possible default. (For a great explanation of the debt ceiling, check out this National Public Radio Planet Money post.)

Before May, the President will have to sign a bill increasing the debt ceiling in order to avoid defaulting on our debt. Some analysts, including Robert Greenstein, are concerned that in exchange for agreeing to raise the debt ceiling, House leadership may ask for something in return to demonstrate government's commitment to limiting spending and reducing the deficit: a flat spending cap of 26 percent of Gross Domestic Product (GDP).  This means that the government has to fit all spending -- discretionary and mandatory -- within the limit set by this cap.

In order to meet this spending cap, the government would almost certainly have to make cuts like those within the proposed budget resolution.

Thus, even if the Ryan Budget does not make it beyond the House (as members of the Senate have asserted), its cuts may still become policy if this spending cap is enacted. Mr. Greenstein urged social service agencies to be vocal and active in emphasizing the need for reasonable deficit reduction that is strategic and reflects the priorities of the American people.

Co-sponsors of the briefing include:

• AFSCME
• Center for American Progress
• Center on Budget and Policy Priorities
• Coalition on Human Needs
• Leadership Conference on Civil and Human Rights
• National Association of Counties
• SEIU
• Vietnam Veterans of America

Read part two of the Briefing Blog: messaging around deficit reductions.

Tara James is SparkAction's outreach & engagement associate. You can reach her at tara@sparkaction.org.