"The Alterna-Budget" Rep Paul Ryan (R-WI) and Conservatives in Congress
Rep. Paul Ryan (R-WI) and Conservatives in Congress Wednesday unveiled their alternative to President Barack Obama’s budget. According to the Washington Post, the proposal “would cut taxes for business and the wealthy, freeze most government spending for five years, halt spending approved in the economic stimulus package and slash federal health programs for the poor and elderly.”
1. Tax Cuts: Millionaires 1; Minimum Wage Workers 0.
The Ryan legislation would extend the Bush tax cuts and provide another set of large tax cuts for wealthy Americans and corporations, but do nothing for Americans who make minimum wage. The Plan: Ryan’s plan would cut the top three tax brackets to 25% and cut capital gains taxes to zero through 2010. Analysis: “Under Ryan’s plan, the average CEO’s $6.5 million in paid income would drop from a marginal tax rate of 35% to 25% and his $6.3 million in stock gains would go from being taxed at 15% to being totally tax free. This tax change would save these CEO’s over $1.5 million every year. A minimum wage worker, however, making around $15,000/year, would see no benefit at all from these proposed tax changes. They already only pay federal income taxes in the 10% marginal tax bracket, are unlikely to have any capital gains, and would thus see no change under the conservative budget plan.” [The Wonk Room] [The Wonk Room]
2. Tax Cuts: Millionaires 1; Stimulus 0
Although Rep. Ryan claims reducing the capital gains tax rate would “create an incentive for risk-taking and investment,” experts say it would do just the opposite: encourage wealthy people to cash out of their holdings, discouraging new long-term investing. According to John Fout of The Street, who explained the consequences of Sen. John McCain’s similar proposal during the campiagn, cutting the capital gains tax rate would not stimulate the economy, but instead would “encourage investors to make one-time sales to capture lower capital gains and increased tax write-offs. Such equities sales would facilitate capital flight.” [The Wonk Room]
3. Privatizing Medicare: Insurance Companies 1; Seniors 0
The new budget would privatize the successful Medicare program, taking Americans under 54 out of Medicare and putting into the hands of private insurers, a system experts say would benefit insurers but not do much to control costs. Members of the Bipartisan Commission on the Future of Medicare members who examined similar proposals “expressed concerns that this approach would undermine the basic protections offered by Medicare as a social insurance program, by relegating lower-income beneficiaries to lower-cost, and possibly lower-quality, plans.” [The Wonk Room]
4. Privatizing Medicare: Higher Costs 1; Cost-Savings 0
Medicare (the Breaux/Frist proposal) concluded that premiums would increase for seniors in the traditional Medicare program. That analysis found, “[A] by-product of moving to the Breaux-Frist premium support system will be higher premiums for beneficiaries who remain in a government-run fee-for-service system than would be the case under current law. They estimate the total beneficiary premium under the Breaux-Frist plan in 2003 would be 47 percent higher than would be the Part B premium.” [The Wonk Room]
5. Freezing Discretionary Spending: GOP 1; Kids, Poor, Unemployed, Parks 0
Freezing all discretionary spending freezes spending on programs like: Funding to the 908,412 children in the federal Head Start program. Funding for the 6 million students who receive federal Pell Grants for college. The $5.1 billion spent on the Low-Income Home Energy Assistance Program (LIHEAP), which provides households with financial “assistance for their home energy bills.” Unemployment benefits, even though unemployment is at a seven-year high of 8.1%. The $24.6 million currently funding “110 national park improvement projects and programs.” [The Wonk Room]
Read Additional Resources
“House GOP Offers More Detailed Alternative Budget Plan.” Lori Montgomery, Washington Post, 04-01-09. [Washington Post]
Excerpt: “...House Republicans today unveiled a more complete proposal that would cut taxes for business and the wealthy, freeze most government spending for five years, halt spending approved in the economic stimulus package and slash federal health programs for the poor and elderly…”
“The GOP’s Alternative Budget.” Rep. Paul Ryan (R., WI), Wall Street Journal, 04-01-09. [WSJ]
Excerpt: “...Specifically, we provide for a trigger that would make small adjustments in the benefits for higher-income beneficiaries if the Social Security Administration determines the Social Security Trust Fund cannot meet its obligations…”
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