President Obama on the GOP's "Ryan Budget":
In this country, broad-based prosperity has never trickled down from the success of a wealthy few. It has always come from the success of a strong and growing middle class.
That’s how a generation who went to college on the G.I. Bill, including my grandfather, helped build the most prosperous economy the world has ever known. That’s why a CEO like Henry Ford made it his mission to pay his workers enough so they could buy the cars that they made. That’s why research has shown that countries with less inequality tend to have stronger and steadier economic growth over the long run.
Now, the problem for advocates of this theory is that we’ve tried their approach -- on a massive scale. The results of their experiment are there for all to see.
We were promised that these tax cuts would lead to faster job growth. They did not. The wealthy got wealthier -- we would expect that. The income of the top 1 percent has grown by more than 275 percent over the last few decades, to an average of $1.3 million a year. But prosperity sure didn't trickle down.
Instead, during the last decade, we had the slowest job growth in half a century. And the typical American family actually saw their incomes fall by about 6 percent, even as the economy was growing.
It was a period when insurance companies and mortgage lenders and financial institutions didn’t have to abide by strong enough regulations, or they found their ways around them. And what was the result? Profits for many of these companies soared. But so did people’s health insurance premiums. Patients were routinely denied care, often when they needed it most. Families were enticed, and sometimes just plain tricked, into buying homes they couldn’t afford. Huge, reckless bets were made with other people’s money on the line. And our entire financial system was nearly destroyed.
So we tried this theory out. And you would think that after the results of this experiment in trickle-down economics, after the results were made painfully clear, that the proponents of this theory might show some humility, might moderate their views a bit. You'd think they’d say, you know what, maybe some rules and regulations are necessary to protect the economy and prevent people from being taken advantage of by insurance companies or credit card companies or mortgage lenders.
Maybe, just maybe, at a time of growing debt and widening inequality, we should hold off on giving the wealthiest Americans another round of big tax cuts. Maybe when we know that most of today’s middle-class jobs require more than a high school degree, we shouldn’t gut education, or lay off thousands of teachers, or raise interest rates on college loans, or take away people’s financial aid.
But that’s exactly the opposite of what they’ve done...
So here’s what this "marvelous" budget does. Back in the summer, I came to an agreement with Republicans in Congress to cut roughly $1 trillion in annual spending.
Some of these cuts were about getting rid of waste; others were about programs that we support but just can’t afford given our deficits and our debt. And part of the agreement was a guarantee of another trillion in savings, for a total of about $2 trillion in deficit reduction.
This new House Republican budget, however, breaks our bipartisan agreement and proposes massive new cuts in annual domestic spending –- exactly the area where we’ve already cut the most. And I want to actually go through what it would mean for our country if these cuts were to be spread out evenly. So bear with me. I want to go through this -- because I don’t think people fully appreciate the nature of this budget.
Investments in clean energy technologies that are helping us reduce our dependence on foreign oil would be cut by nearly a fifth.
If this budget becomes law and the cuts were applied evenly, starting in 2014, over 200,000 children would lose their chance to get an early education in the Head Start program. Two million mothers and young children would be cut from a program that gives them access to healthy food. There would be 4,500 fewer federal grants at the Department of Justice and the FBI to combat violent crime, financial crime, and help secure our borders. Hundreds of national parks would be forced to close for part or all of the year. We wouldn’t have the capacity to enforce the laws that protect the air we breathe, the water we drink, or the food that we eat...
This is not conjecture. I am not exaggerating. These are facts. And these are just the cuts that would happen the year after next.
If this budget became law, by the middle of the century, funding for the kinds of things I just mentioned would have to be cut by about 95 percent. Let me repeat that. Those categories I just mentioned we would have to cut by 95 percent. As a practical matter, the federal budget would basically amount to whatever is left in entitlements, defense spending, and interest on the national debt -- period. Money for these investments that have traditionally been supported on a bipartisan basis would be practically eliminated.
And the same is true for other priorities like transportation, and homeland security, and veterans programs for the men and women who have risked their lives for this country...
And this is to say nothing about what the budget does to health care. We’re told that Medicaid would simply be handed over to the states -- that's the pitch: Let's get it out of the central bureaucracy. The states can experiment. They'll be able to run the programs a lot better. But here's the deal the states would be getting. They would have to be running these programs in the face of the largest cut to Medicaid that has ever been proposed -- a cut that, according to one nonpartisan group, would take away health care for about 19 million Americans -- 19 million.
Who are these Americans? Many are someone’s grandparents who, without Medicaid, won't be able to afford nursing home care without Medicaid. Many are poor children. Some are middle-class families who have children with autism or Down’s Syndrome. Some are kids with disabilities so severe that they require 24-hour care. These are the people who count on Medicaid.
Then there’s Medicare. Because health care costs keep rising and the Baby Boom generation is retiring, Medicare, we all know, is one of the biggest drivers of our long-term deficit. That’s a challenge we have to meet by bringing down the cost of health care overall so that seniors and taxpayers can share in the savings.
But here’s the solution proposed by the Republicans in Washington, and embraced by most of their candidates for president: Instead of being enrolled in Medicare when they turn 65, seniors who retire a decade from now would get a voucher that equals the cost of the second cheapest health care plan in their area. If Medicare is more expensive than that private plan, they’ll have to pay more if they want to enroll in traditional Medicare.
If health care costs rise faster than the amount of the voucher -- as, by the way, they’ve been doing for decades -- that’s too bad. Seniors bear the risk. If the voucher isn’t enough to buy a private plan with the specific doctors and care that you need, that's too bad.
So most experts will tell you the way this voucher plan encourages savings is not through better care at cheaper cost. The way these private insurance companies save money is by designing and marketing plans to attract the youngest and healthiest seniors -- cherry-picking -- leaving the older and sicker seniors in traditional Medicare, where they have access to a wide range of doctors and guaranteed care. But that, of course, makes the traditional Medicare program even more expensive, and raise premiums even further.
The net result is that our country will end up spending more on health care, and the only reason the government will save any money -- it won’t be on our books -- is because we’ve shifted it to seniors. They’ll bear more of the costs themselves. It’s a bad idea, and it will ultimately end Medicare as we know it.
Now, the proponents of this budget will tell us we have to make all these draconian cuts because our deficit is so large; this is an existential crisis, we have to think about future generations, so on and so on. And that argument might have a shred of credibility were it not for their proposal to also spend $4.6 trillion over the next decade on lower tax rates.
We’re told that these tax cuts will supposedly be paid for by closing loopholes and eliminating wasteful deductions. But the Republicans in Congress refuse to list a single tax loophole they are willing to close. Not one. And by the way, there is no way to get even close to $4.6 trillion in savings without dramatically reducing all kinds of tax breaks that go to middle-class families -- tax breaks for health care, tax breaks for retirement, tax breaks for homeownership.
Meanwhile, these proposed tax breaks would come on top of more than a trillion dollars in tax giveaways for people making more than $250,000 a year. That’s an average of at least $150,000 for every millionaire in this country -- $150,000.
Let’s just step back for a second and look at what $150,000 pays for: A year’s worth of prescription drug coverage for a senior citizen. Plus a new school computer lab. Plus a year of medical care for a returning veteran. Plus a medical research grant for a chronic disease. Plus a year’s salary for a firefighter or police officer. Plus a tax credit to make a year of college more affordable. Plus a year’s worth of financial aid. One hundred fifty thousand dollars could pay for all of these things combined -- investments in education and research that are essential to economic growth that benefits all of us. For $150,000, that would be going to each millionaire and billionaire in this country. This budget says we’d be better off as a country if that’s how we spend it.
This is supposed to be about paying down our deficit? It’s laughable.
This congressional Republican budget is ... a Trojan Horse. Disguised as deficit reduction plans, it is really an attempt to impose a radical vision on our country. It is thinly veiled social Darwinism. It is antithetical to our entire history as a land of opportunity and upward mobility for everybody who’s willing to work for it; a place where prosperity doesn’t trickle down from the top, but grows outward from the heart of the middle class. And by gutting the very things we need to grow an economy that’s built to last -- education and training, research and development, our infrastructure -- it is a prescription for decline.