Saturday, March 31, 2012 at 12:14 AM by Tamarine Cornelius
Ryan Budget Would Drive a Giant Wedge into the Growing Gap between the Rich and Poor
More evidence of the widening divide between the rich and poor was reported in a March 25th New York Times article. It noted that 93 percent of income growth in 2010 (relative to 2009) went to the top 1 percent of taxpayers, those with at least $352,000 in income. That amounted to an average single-year pay increase of 11.6% for each of those households. (See The Rich Get Even Richer.)
Yet despite all of the evidence of the growing income divide, and of the role of government policy in that divergence, the Ryan budget plan seeks to drive a wedge into that gap and make it far wider. In a March 21 statement, the president of the Center on Budget and Policy Priorities, Robert Greenstein, described the Ryan plan as “Robin Hood in reverse — on steroids.” Greenstein went on to say of the Ryan plan:
“It would likely produce the largest redistribution of income from the bottom to the top in modern U.S. history and likely increase poverty and inequality more than any other budget in recent times (and possibly in the nation’s history). It also would stand a core principle of the Bowles-Simpson fiscal commission’s report on its head — that policymakers should reduce the deficit in a way that does not increase poverty or widen inequality.”
A new analysis by the Urban-Brookings Tax Policy Center (TPC) finds that people earning more than $1 million a year would each receive an average of $265,000 in new tax cuts, above and beyond the $129,000 they would receive from the Ryan budget’s extension of the Bush tax cuts. They found that the tax cuts would result in increases in after-tax income of 12.5% among millionaires, but just 1.9% for middle-income households.
The Ryan plan would make $5.3 trillion of cuts from non-defense spending over the next 10 years, and 62% ($3.3 trillion) of that would come from programs serving low-income Americans. That $5.3 trillion is on top of the cuts resulting from funding caps in last August’s Budget Control Act. Chairman Ryan’s $5.3 trillion in new cuts would be on top of those reductions. According to a CBPP analysis, the $3.3 trillion of additional cuts in low-income programs would include:
- $2.4 trillion in reductions from Medicaid and other health care for people with low or moderate incomes;
- $134 billion from the Supplemental Nutrition Assistance Program (known as SNAP or food stamps);
- at least $463 billion in cuts to mandatory programs serving low-income Americans (other than Medicaid and SNAP); and
- at least $291 billion in cuts in low-income discretionary programs.
We’ll follow up with additional information about various components of the new Ryan Plan, which was passed in the House on Thursday, by a vote of 228 to 191. No Democrat voted for it, while ten Republicans voted against it. The House plan isn’t going anywhere in the Senate, and it doesn’t bring us any closer to the development of a bipartisan budget that can be approved in both houses. Instead, it sends a clear message that the priority of Congressional Republican is to sharply reduce taxes for the wealthiest Americans while slashing Medicare, Medicaid and other spending for low-income and vulnerable families.
Read more in today’s New York Times editorial: A Cruel Budget.