How to Slam the Brakes on Economic Growth and the Door on Opportunity
This op-ed was originally published in The Hill on March 27.
This week, every senator and representative will receive a letter signed by more than 1,300 organizations from every state. Under the heading Strengthening America’s Values and Economy (SAVE) for All, the groups urge Congress to pass a budget that protects low-income people, invests in broadly shared prosperity, increases revenues from fair sources, and seeks responsible savings from reducing waste in the Pentagon and elsewhere. Congress needs to hear this message, because the budgets reported out of the House and Senate Budget committees do exactly the opposite. Instead of protecting low-income people, both House and Senate budget proposals would make more people poor.
Budgets have a way of separating reality from rhetoric. Republican leaders including Rep. Paul Ryan (R-Wis.) have voiced support for tax credits for low-income working families. Last year, for example, Ryan said the Earned Income Tax Credit “…gives workers a boost without hurting their prospects…It gives families flexibility – it helps them take ownership of their lives.” Sens. Cruz (R-Texas), Paul (R-Ky.) and Rubio (R-Fla,) have talked about rising inequality and poverty. But the budget resolutions that will be on both the House and Senate floors during the week of March 23 assume reductions in low-income tax credits that will push 16 million people into (or more deeply into) poverty. Such cuts seriously undercut the conservative leaders’ professed commitment to supporting families and encouraging work as a route out of poverty.
The House and Senate budget drafts also cut health care, nutrition supports, education, and pretty much everything else except the Pentagon, by trillions of dollars over the next decade. The real life consequences of these choices will be millions of people left without health insurance, college education even further out of reach for low-income students, and increased poverty and hunger as millions of the poor workers and families lose some or all of their SNAP/food stamps. These are just a few examples of numerous cuts that punish underpaid American workers, seniors, children and families. Education from preschool to college would be cut; home heating assistance, nutrition for the elderly, job training, environmental and consumer protection, and public health programs would be hit as well. The list goes on.
Balancing the budget by cutting these critical supports while refusing to raise revenues is cloaked as “fiscal responsibility” in the House and Senate Committee plans. But all these disinvestments are far from responsible; they will jeopardize our future prosperity by slamming the door on opportunity for millions of workers whose talents we need.
The budgets’ drafters use language carefully. They have apparently concluded that the term “block grant” doesn’t sell. So the House plan calls its block grants “State Flexibility Funds.” Medicaid and SNAP/food stamps funds are both turned over to states, but there’s a catch. The House plan cuts Medicaid by $913 billion over 10 years and SNAP benefits by $125 billion. The Senate plan cuts $400 billion from Medicaid; its SNAP cut isn’t made clear. Having been handed full responsibility and reduced funding for these vital nutrition and health programs, states will find that their only “flexibility” is to cut – by reducing benefits, eligibility, or, in the case of Medicaid, health providers’ reimbursements. Millions of low-income families with children, people with disabilities, and seniors will be significantly worse off.
Unsurprisingly, these budgets cut taxes for powerful groups even as they reduce tax credits for low-income workers. The House budget, for instance, would get rid of all the taxes that fund the health care law and proposes to end the Alternate Minimum Tax, which is applied to upper-income tax filers. The budgets also talk more vaguely about reducing tax rates for high-income individuals and corporations, and once again extending corporate tax breaks worth hundreds of billions of dollars. To achieve the stated goal of bringing the budget into balance within the decade, they must replace the lost revenues with other new sources, but they are silent about what these new revenues might be.
Poverty and inequality will inevitably rise if these budgets become federal policy. The consequences will be profoundly harmful – and worse yet, completely unnecessary.
There is a better way. The Congressional Progressive Caucus budget not only protects against cuts to protections low-income people need, it also invests in repairing our infrastructure and improving access to education and health care. It pays for these job-creating expansions by stopping tax dodging at the top. It shows we can afford to restore opportunities for economic progress and reduce poverty. It is the Republican budgets that cost too much, holding back economic growth for most of us while those with high incomes continue to pay less in taxes than their share.