His plan promises a balanced budget in ten years even as it reduces the top tax brackets to 20%. However, that would require more revenue than he gets from cutting only lower-class benefits. He would need also to reduce very popular upper-class subsidies (aka tax expenditures). His plan mentions this in passing (p.84), but doesn't dare to be specific.
House Republicans know that the Ryan plan is DOA in the Democratic-controlled Senate. But it will serve as a platform for GOP candidates in the fall elections, highlighting their principles and values.
The plan slashes the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program) by $137 billion over ten years. Some people see this as cruel--increasing the numbers of hungry and malnourished children in affected families. But Ryan's motive has a Christian pedigree.
Part of the rationale for Ryan's Food Stamp cut was articulated by British clergyman Joseph Townsend in A Dissertation on the Poor Laws (1786): "Hunger is not only peaceable, silent, unremitting pressure but, as the most natural motive to industry and labour, it calls forth the most powerful exertions." Rev. Townsend said that hunger is a motive worthy of a free man. Only slaves should be forced to work; the "free man should be left to his own judgment, and discretion." Presumably, the effects of hunger on his family will intensify the free man's desire to work.
Yet Rev. Townsend's heart was soft around the edges, which made him inconsistent: he also advocated compulsory membership of laborers in a health insurance plan. Ryan's heart is purer and harder. His plan would abolish Obamacare, defund the extension of Medicaid to the working poor, change Medicare to a voucher system, and cut funding for school lunches and Pell Grants to low-income students.
As the Center on Budget and Policy Priorities (CBPP) explains in a recent report , over the next decade "Some 69 percent [$3.3 trillion] of the cuts in House Budget Committee Chairman Paul Ryan's new budget would come from programs that serve people of limited means." According to Ryan, social programs that give stuff away create a '"tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value and the culture of work." America needs workers, not takers.
But what about the hundreds of billions that the government annually extracts from ordinary taxpayers to subsidize corporations and wealthy individuals? Don't these subsidies create a culture of entitlement in the upper classes?
Many of these subsidies are known collectively as "tax expenditures." For the government budget, every dollar lost to revenue through tax expenditures is the equivalent of a dollar spent on welfare or defense. Tax expenditures really are government SPENDING, as much as $1.1 trillion per year ( CBPP ). They just don't attract as much public notice as the appropriations fought over in Congress each year for programs and departments.
Here are three well-known kinds of tax expenditures (for individuals):
exclusion of certain kinds of income from taxation (e.g. employer contributions to health care/insurance)
deductions from taxable income (e.g. mortgage interest)- Advertisement -
preferential tax rates (e.g. long-term capital gains taxed at half the rate of ordinary income for very wealthy individuals)
These illustrate why tax expenditures favor high-income taxpayers:
Example (1) According to Gallup , only 56.8% of full or part-time workers in the private sector have employer-paid health insurance. Moreover, low-wage workers in this group usually get low-quality, low-premium coverage. So the exclusion is worth much more to high-income workers.
Example (2) According to the Joint Committee on Taxation , in 2012 only 3% of the benefits of the mortgage interest deduction went to homeowners with incomes under $50,000, while 77% went to those with incomes over $100.000.