The Center's work on 'Process' Issues


Chairman Ryan’s Obfuscation: Part 2

April 10, 2014 at 2:10 pm

I explained earlier today the hollowness of House Budget Committee Chairman Paul Ryan’s attempt to deny that his budget cuts low-income programs deeply.  Ryan’s defense was that since total federal spending grows under his budget, how can we say it contains cuts, rather than merely slowing the rate of growth?  We disposed of this in my earlier post, but I want to dig deeper here to expose a budget trick Chairman Ryan is playing.

Sure, total federal spending grows under his budget in nominal dollars.  But that’s driven in large part by increases in Social Security and Medicare — whose costs rise with inflation and the aging of the population, among other factors — and interest payments on the debt.  Ryan cites trends for overall federal spending to mask the fact that his budget contains hefty cuts — even in nominal (non-inflation-adjusted) dollars — in key low-income programs like Medicaid and SNAP (formerly food stamps).

In his attempt to deflect our finding that 69 percent of his budget cuts come from programs targeted on Americans of limited means, Ryan says that Medicaid would receive over $3 trillion during the coming decade under his budget and that its costs would grow in all years after 2016.  Here’s what his too-clever-by-half response conceals:

  • Under the Ryan budget, expenditures for Medicaid, the Children’s Health Insurance Program (CHIP), and a few small related programs (i.e., expenditures for “budget function 550”) would fall — not grow — in nominal dollars between 2014 and 2016, from $357 billion to $311 billion.
  • While this figure would grow in nominal dollars after 2016, that would be from this shrunken starting point.
  • And it wouldn’t return to its 2014 level, even in nominal dollars, until 2022 — by which time health care costs will be substantially higher than in 2014, the population will be considerably larger, and the number of poor, elderly people in nursing homes will have risen considerably given the aging of the baby boomers.  That’s partly why, as my earlier post explained, tens of millions of less-fortunate Americans would lose health coverage and become uninsured under the Ryan budget.

A similar pattern marks the Ryan plan for the part of the budget that includes SNAP, Supplemental Security Income (SSI) for poor people who are elderly or have serious disabilities, the Earned Income Tax Credit, and other such programs.  In this part of the budget, as well, nominal spending wouldn’t return to its 2014 level until 2022.

Chairman Ryan has every right to propose severe cuts in any program he chooses.  But he should be straightforward about what he is proposing.

Chairman Ryan’s Response to the Center’s Analysis Doesn’t Hold Water

April 10, 2014 at 10:26 am

House Budget Committee Chairman Paul Ryan took exception to our finding that 69 percent of the non-defense spending cuts in his new budget come from programs for people with low and moderate incomes.  But he makes no attempt to refute our calculations, and his response both defies logic and conflicts with his own budget and even his own words.

For starters, we derived the 69 percent figure from the cuts that Chairman Ryan displays in his budget.  We added up his cuts in mandatory and non-defense discretionary programs, calculated how much of them would apply to low- and moderate-income programs, and derived the 69 percent figure.  Chairman Ryan was explicit that his budget makes substantial cuts in various programs — like SNAP (formerly food stamps), Medicaid, Pell Grants, and health reform’s subsidies to help people afford insurance — that are targeted on people with low or moderate incomes.

Responding to the 69 percent figure, the Chairman shifted direction in a new piece that he inserted this week in the Congressional Record.  He claimed these cuts aren’t really “cuts” at all; instead, they are simply smaller spending increases than would otherwise occur.  “A smaller increase is not a spending cut,” he wrote.

Well, two problems:

First, the Chairman is trying to have it both ways.  At the very start of his “Pathway to Prosperity,” he writes, “The House Republican budget cuts spending by $5.1 trillion over the next ten years.”  Apparently, he wants to brag to congressional budget cutters that his plan cuts spending deeply, while convincing critics of his budget cuts that they aren’t really “cuts” at all.

Second, the latter argument — that a cut isn’t really a “cut” — makes little sense.  For many programs, it costs more to provide the same services for its beneficiaries from year to year, because of inflation.  In addition, the population is aging and, thus, more people qualify for programs for elderly Americans each year.  For these reasons, the cost of providing the same level of benefits and services to people who qualify rises for various programs from year to year in nominal dollars — that is, in dollars not adjusted for inflation, population growth, or the population’s aging.

A budget allocation that doesn’t cover cost increases due to these factors means either that eligible recipients will see their services or benefits cut, or that some people who would otherwise qualify for those services or benefits are turned away.

For instance, Chairman Ryan claims in the piece he inserted in the Congressional Record that his budget spends more than $3 trillion in Medicaid over the next decade, with spending rising every year starting after 2016.  But his budget would repeal the Medicaid expansions that 26 states and the District of Columbia have adopted under the Affordable Care Act, thereby returning millions of low-income people to the ranks of the uninsured.  And his budget cuts Medicaid by $732 billion on top of that, relative to what the program would otherwise cost, which translates into a 26 percent cut by 2024.  An Urban Institute analysis of a similar cut in a past Ryan budget found that it would cause 14 to 20 million additional people to lose coverage.  Just ask the millions who’d lose Medicaid and end up uninsured whether they consider that a cut.

What’s true in government is true in life.  If a worker gets a 1 percent wage increase in a year in which inflation is 5 percent, that worker has suffered a 4 percent cut in living standards.  He or she has 4 percent less to cover the costs of food, housing, health care, and other necessities. Ask that person whether he or she has suffered a cut in living standards.

We stand by our analysis.

Ryan’s Medicare Proposals: the Latest

April 9, 2014 at 4:42 pm

House Budget Committee Chairman Paul Ryan’s Medicare proposals — summarized in a new CBPP analysis — have evolved since Ryan issued his Roadmap for America’s Future in 2010, but much is still the same in the budget plan he released last week.

The centerpiece of Ryan’s Medicare plan remains premium support — replacing Medicare’s guarantee of health coverage with a flat payment, or voucher, that beneficiaries would use to purchase coverage.  But the details have changed significantly over the years.

  • Ryan now retains a form of traditional fee-for-service Medicare as an option.  His earliest proposals would have phased out traditional Medicare, which would have substantially increased health care costs, since traditional Medicare has lower administrative expenses and payment rates than private insurance plans.
  • Ryan now bases the amount of the premium-support payment on a weighted average of bids by private plans and traditional Medicare.  In last year’s proposal, the payment would have been set below the average bid.
  • Ryan no longer mentions a limit on the annual growth of the premium-support voucher, as did his previous proposals.

Even with these modifications, Ryan’s premium-support proposal would disadvantage beneficiaries in at least two ways.  First, in many regions, traditional Medicare would cost more than the premium-support voucher, and, in these regions, beneficiaries who chose to enroll in traditional Medicare would have to pay higher premiums than under current law.  Second, beneficiaries who enrolled in a private plan would not receive the federally subsidized supplemental benefits that enrollees in private Medicare Advantage plans receive under current law.

Moreover, premium support could cause traditional Medicare to unravel — not because it was less efficient than the private plans, but because it was competing on an unlevel playing field in which private plans captured the healthier beneficiaries and incurred lower costs as a consequence.

The Ryan budget again proposes to raise Medicare’s eligibility age — now 65 — by two months per year, starting in 2024, until it reaches age 67 in 2035.   (Ryan’s Roadmap proposed raising the eligibility age to 69½.)  At the same time, the plan would repeal health reform’s coverage provisions.  Consequently, 65- and 66-year-olds would have neither Medicare nor access to health insurance marketplaces in which they could buy coverage at an affordable price and receive subsidies to help them secure coverage if their incomes are low.  Many would end up uninsured.

Finally, the Ryan budget includes other Medicare proposals from past years — increases in income-tested premiums, a cap on medical malpractice awards, and repeal of the benefit improvements in health reform (including closure of the prescription drug “donut hole”) — as well as a new proposal to increase Medicare cost sharing.  For more details, see our new paper.

Ryan Budget a Path to Adversity for Millions — and Maybe for the Economy Too

April 9, 2014 at 9:49 am

In my latest US News & World Report post, I reprise CBPP analysis showing that House Budget Committee Chairman Paul Ryan’s “Path to Prosperity” budget is, in fact, as CBPP President Robert Greenstein described it, a path to adversity for tens of millions of Americans.  I then discuss why it also could be a path to adversity for the economy as a whole.

Ryan can balance his budget within ten years with help from an analysis he requested from the Congressional Budget Office (CBO), which shows that the aggressive deficit-reduction path he outlines in his budget — while it would initially slow economic growth and reduce the actual deficit reduction achieved — would eventually encourage somewhat more growth and additional deficit reduction.

CBO’s analysis reflects mainstream economic thinking about deficit reduction’s effects on the economy:  it hurts by further reducing demand for goods and services when the economy is weak, but it helps by increasing national saving and investment when the economy is strong.  As I point out, CBO includes important caveats about the limitations of this analysis,

…stating, “The projections do not represent a cost estimate for legislation or an analysis of the effects of any specific policies.” Nor, did the budget office consider “whether the specified paths are consistent with the policy proposals or budget numbers that Chairman Ryan released.” And, finally, CBO emphasized that such estimates of budgetary and economic projections “are highly uncertain.”

In my post, I add a further consideration:

But what if the short-run negative effects of budget austerity are larger than CBO assumes, the economy’s underlying ability to sustain an ongoing recovery is weaker than CBO projects, and the economic effects from further delaying the recovery (such as suppressed business investment and worse long-term unemployment) have persistent adverse effects on the economy’s longer-term growth potential?

Former Treasury Secretary Lawrence Summers made a compelling case for each of these propositions at a recent CBPP conference on “The Path to Full Employment.” As Summers argues, “lack of demand creates, over time, lack of supply.” That effect is not in reflected in CBO’s analysis of the Ryan plan — and it’s not yet broadly embraced among economists. But if Summers is right, Ryan’s aggressive deficit-reduction plan would not only weaken the economy in the short term but also sap its longer-term growth potential and revenue-generating capacity.

That would defeat the whole purpose of Ryan’s exercise in austerity.

Click here to read the full US News post.

Ryan Roundup 2014: Everything You Need to Know About Chairman Ryan’s Latest Budget

April 8, 2014 at 9:52 am

We’ve compiled CBPP’s analyses and blog posts on House Budget Committee Chairman Paul Ryan’s budget.  We’ll update this roundup as we issue additional analyses.

  • Analysis: Ryan Block Grant Proposal Would Cut Medicaid by More Than One-Quarter by 2024 and More After That
    April 4, 2014
    “The Medicaid block grant proposal in the budget plan proposed by House Budget Committee Chairman Paul Ryan on April 1 would cut federal Medicaid (and the Children’s Health Insurance Program, or CHIP) funding by 26 percent by 2024, because the funding would no longer keep pace with health care costs or with expected Medicaid enrollment growth as the population ages….  These cuts would come on top of repealing the health reform law’s Medicaid expansion.”

    Blog Post: Ryan Budget Again Proposes a Medicaid Block Grant, Adding Millions to the Ranks of the Uninsured and Underinsured

  • Blog Post: Ryan Budget Mischaracterizes Housing Vouchers, Then Sets the Stage to Cut Them
    April 4, 2014
    “House Budget Committee Chairman Paul Ryan used a faulty number to argue that ‘Section 8’ Housing Choice Voucher program costs have risen excessively.  His budget documents also float a proposed expansion of the Moving to Work (MTW) demonstration that could lay the groundwork for deep, harmful cuts in the voucher program in years to come.  That program, which helps 2.1 million low-income families rent modest units of their choice in the private market, is just beginning to recover from the loss of 70,000 vouchers due to sequestration budget cuts last year.”

  • Analysis: Ryan Budget Would Slash SNAP by $137 Billion Over Ten Years: Low-Income Households in All States Would Feel Sharp Effects
    April 4, 2014
    “House Budget Committee Chairman Paul Ryan’s budget plan includes cuts in the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program) of $137 billion — 18 percent — over the next ten years (2015-2024),  which would necessitate ending food assistance for millions of low-income families, cutting benefits for millions of such households, or some combination of the two.  Chairman Ryan proposed similarly deep SNAP cuts in each of his last three budgets.”

    Blog Post: Ryan’s SNAP Cuts Would Hit Millions of Low-Income Americans

  • Analysis: Medicare in Ryan’s 2015 Budget
    April 8, 2014
    “The Medicare proposals in the 2015 budget resolution from House Budget Committee Chairman Paul Ryan (R-WI) are much the same as those in Ryan’s previous budgets. Once again, Chairman Ryan proposes to replace Medicare’s guarantee of health coverage with a premium-support voucher and raise the age of eligibility for Medicare from 65 to 67. Together, these changes would shift costs to Medicare beneficiaries and (with the simultaneous repeal of health reform) leave many 65- and 66-year-olds without health coverage.”Blog Post: Ryan’s Medicare Proposals: the Latest
  • Analysis: Ryan Plan Gets 69 Percent of Its Budget Cuts From Programs for People With Low or Moderate Incomes
    April 8, 2014
    “House Budget Committee Chairman Paul Ryan’s new budget cuts $3.3 trillion over ten years (2015-2024) from programs that serve people of limited means. That’s 69 percent of its $4.8 trillion in total non-defense budget cuts. Not much has changed on this front from Chairman Ryan’s budget plan of a year ago, or the year before that. Then, too, Chairman Ryan proposed very deep cuts, the bulk of which were in programs that serve low- and moderate-income Americans.The deficit reduction plan that Fiscal Commission co-chairs Erskine Bowles and Alan Simpson issued in late 2010 established as a basic principle that deficit reduction should not increase poverty or widen inequality. The Ryan plan charts a radically different course, imposing its most severe cuts on people on the lower rungs of the income ladder.”

    Blog Post: Ryan Budget Gets 69 Percent of Its Cuts From Low-Income Programs [Updated]

  • Blog Post: Obama, Ryan Miles Apart on Non-Defense Discretionary Funding
    April 8, 2014
    “One especially stark difference between the recent budgets from President Obama and House Budget Committee Chairman Paul Ryan is in non-defense discretionary (NDD) funding, the budget category that includes key investments in the economy, such as education and basic research; support for low-income families, such as Head Start and housing assistance; and essential services that Americans expect, such as veterans’ medical care and food safety inspections.  Obama and Ryan are roughly $1 trillion apart on total NDD funding over the next decade.”
  • Blog Post: Ryan Budget a Path to Adversity for Millions — and Maybe for the Economy Too
    April 9, 2014
    In his latest US News & World Report post, CBPP Chief Economist Chad Stone reprises analysis showing that House Budget Committee Chairman Paul Ryan’s “Path to Prosperity” budget is, in fact, as CBPP President Robert Greenstein described it, a path to adversity for tens of millions of Americans.  He then discusses why it also could be a path to adversity for the economy as a whole.
  • Blog Post: Chairman Ryan’s Response to the Center’s Analysis Doesn’t Hold Water
    April 10, 2014
    “House Budget Committee Chairman Paul Ryan took exception to our finding that 69 percent of the non-defense spending cuts in his new budget come from programs for people with low and moderate incomes.  But he makes no attempt to refute our calculations, and his response both defies logic and conflicts with his own budget and even his own words.”
  • Blog Post: Chairman Ryan’s Obfuscation: Part 2
    April 10, 2014
    “In his attempt to deflect our finding that 69 percent of his budget cuts come from programs targeted on Americans of limited means, Ryan says that Medicaid would receive over $3 trillion during the coming decade under his budget and that its costs would grow in all years after 2016.  [This blog post explains] what his too-clever-by-half response conceals.”
  • Statement: Robert Greenstein, President, On the House Passage of Chairman Ryan’s Budget Plan
    April 11, 2014
    “House Budget Committee Chairman Paul Ryan’s “Path to Prosperity” budget, which the House has now passed, is anything but that for most families and individuals.  Affluent Americans would do quite well, but for tens of millions of others, the Ryan plan — which gets 69 percent of its cuts from programs that serve people of limited means — is a path to more adversity.”