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An Unbalanced Budget: Response to the House FY 2012 Budget (Path to Prosperity)

Updated April 26, 2011

On April 6, the House revealed its proposal for spending in 2012, with the appropriations plan through 2021. NETWORK most vehemently disagrees with Chairman Ryan’s “Path to Prosperity,” as he is calling his House budget proposal. We’ve seen some aspects of this budget before; it keeps effective tax rates low for corporations and millionaires, continues limitations on supports for those who are most vulnerable, and eliminates life-saving regulations. However, never in the history of the nation has such a destruction of the social safety-net been proposed.

The most dangerous proposals, which differ the most from NETWORK’s values – and Catholic Social Teaching – are in healthcare, defense, income security, revenue and community development.  These encompass the most drastic transformations in Ryan’s proposal. 

Who gains, and who loses in Ryan’s budget?

 

Healthcare

Federal government expenditures for healthcare include community clinics, vaccinations for children in poverty, and the already-enacted parts of the Affordable Care Act. The cuts would deny health insurance to children with pre-existing conditions, increase the amount seniors would have to pay for medications, eliminate the possibility of young adults remaining on their parent’s insurance and dismantle other very popular elements of the healthcare law. The proposed budget takes significant aim at dismantling the Affordable Care Act - the House majority’s primary legislative goal. 

Also proposed are structural changes to Medicaid and to Medicare. Medicaid is the means-tested program making it possible for those with little or no resources to acquire necessary medical care. Seniors who have no assets are able to receive basic care in nursing facilities through Medicaid. Some of the services that allow children with serious health problems to be educated come through Medicaid to schools, which could not afford these on their own. 

Medicare is a very successful means of providing healthcare for seniors who have paid into it through their working years. Even though its costs have escalated in recent years, it is more cost efficient than care under private insurers. The costs of all healthcare are reflected in the costs of Medicare. 

Who gains?  Insurance companies, pharmaceutical companies, states that will become responsible for the health of their citizens, ...

Who loses? Children, those without insurance who rely on community clinics, the elderly, those who are unemployed, who have lost insurance, or are unable to afford private insurance...

Income Security

“Income Security” includes human needs categories across both the discretionary and “mandated” areas of the budget. It includes Supplementary Security Income (SSI), Unemployment Insurance, housing assistance, SNAP (Food Stamps), Women Infants and Children nutrition (WIC), federal employee retirement, home energy assistance, child care, Temporary Assistance for Needy Families (TANF), and more.

Proposed cuts would cut in half the housing vouchers for the elderly and persons with special housing needs. It would eliminate the program which educates and helps homeowners facing foreclosure. It would drastically reduce the housing vouchers available to veterans. 

SNAP is proposed to become a block grant program, meaning that those eligible for this most successful anti-poverty program would no longer be guaranteed food assistance.  Nutritional programs such as WIC (Supplemental Program for Women, Infants and Children) and the Commodity Food Program (food boxes for the elderly) would be drastically cut.

LIHEAP (Low-Income Home Energy Assistance Program) would be cut below half, although it currently reaches only 40% of those eligible. As energy prices skyrocket, those on low- and fixed-incomes have no recourse in heating, cooling and lighting their homes.

Who gains?  Does anyone?

Who loses? Children, people with long-term disabilities, families using housing vouchers, the unemployed, retirees, food production and transportation workers and store keepers, the most vulnerable members of our communities. 

Revenue

The United States is borrowing about 40 cents for every dollar we expend. Therefore, our debt to those from whom we borrow (U.S. entities and foreign nations and corporations) continues to grow. At the same time, revenue is at the lowest level ever. The effective tax rates for corporations (what is actually  paid) is one of the lowest among developed nations, due to loopholes, exclusions, deductions and credits. Individuals also have one of the lowest effective tax rates across nations, again due to deductions and credits. The federal government is taking in too little revenue for what needs to be spent, if we value the ability of all people to live in dignity.

Who gains? Corporations and millionaires

Who loses? Children, poor families, seniors and all vulnerable people

Chairman Ryan’s budget certainly is a “Path to Prosperity,” for those who are already the wealthiest in the nation. There is no time in the next ten years during which Ryan’s Budget proposes bringing in revenue to match spending. So long as we continue to give tax benefits to corporations and to millionaires, we will not make a dent in the deficit – even if we were to eliminate ALL non-defense, discretionary spending. 

Total Spending and Revenues (in Billions of Dollars)

 

2011

2012

2013

Total Spending

3,540

3,440

3,484

Total Revenues

2,230

2,533

2,860

Surplus/Deficit

-1,388

-995

-699

NETWORK believes that our tax structures need to support a revenue stream that allows all members of our communities to live in dignity. We believe that revenue must ensure that healthcare is available and affordable to all, that an appropriate home is available and affordable, that no child goes goes to bed hungry at night (approximately 25% of our children do now). These are responsibilities of the federal government, in response to the preamble statement: to promote the general welfare.

Defense spending

Chairman Ryan claims that defense spending has not increased. This does not ring true in looking at budget comparisons – even excluding the cost of ongoing wars.  According to the Project on Defense Alternatives and others, Pentagon spending in 2000 was approximately $380 billion.  In 2010, that spending was over $540 billion. This seems to be rapid growth, which he denies in the “Path to Prosperity.”

Who gains? The Military-Industrial Complex, Haliburton, General Electric, and many more

Who loses? People who value peace over bombs, the environment near nuclear facilities

(See http://www.peace-action.org/costs%20of%20militarization12.ppt)    

Chairman Ryan and the House Budget committee have proposed an unbalanced budget, not unlike many in our recent past. Overall winners continue to be the most privileged and wealthiest among us – individuals and corporate entities. Power continues to be on the side of wealth and those who are currently in power. This budget proposal continues, indeed expands, the inequality in our nation.