Columns » Ernest Dumas

The GOP's budget for the rich



Every election season one party or both test the limits of H.L. Mencken's theory that no one ever loses money by underestimating the intelligence of the voters.

The Republican-controlled House of Representatives raised the stakes last week by adopting the budget plan of their budget chairman, Paul Ryan.

Few voters will ever know what the Ryan plan does and how it would affect them. What they get is the simple message that it would "save" Medicare, control budget deficits and cut and simplify taxes. Who could be against that? Congressman Tim Griffin immediately issued a statement saying all those things. GOP congressmen from sea to sea did likewise.

That is the flimflam. The Ryan blueprint would do none of those things, at least not in a way that would make anyone but the very rich happy. The devil, as always, is in the details, but who has the time and patience for that?

The House plan would reduce personal income taxes to two brackets, 10 and 25 percent, and corporate taxes to a rate of 25 percent, whopping cuts for high earners. Supposedly, closing "loopholes" and eliminating all or most deductions and exemptions so that everyone would file a short form would offset the vast loss of government revenue from lower rates.

Griffin's short statement cleverly did not say working people's taxes would be cut, only that they would be simpler. If they really did eliminate deductions, exemptions and credits, most poor and middle-class workers would pay more, not less, in taxes.

Millionaires? Their average tax cut would be something more than $187,000 a year. The super-rich, those clearing more than $10 million, would get a tax cut averaging $1.4 million a year.

If the polls are accurate, that scenario is despised by a vast majority of Americans. But they'll never know.

See, the Ryan plan would not eliminate one tax benefit — the special 15 percent tax rate on investment profits, the tax gimmick that left Mitt Romney paying an effective tax rate last year of not 35 percent but less than 14 percent on dividends, capital gains and interest totaling $21 million.

Corporations supposedly would lose their "loopholes" although the Ryan plan identifies none of them, but you wonder if that would ever happen. Ninety-eight percent of sitting members of Congress have taken campaign gifts from the biggest tax-avoiding corporations. Since 2006, the GOP speaker and majority leader in the House have together taken $657,000 from the 30 largest corporations that avoided taxes altogether. While Ryan and his party said they would close corporate loopholes, his plan includes one little feature that belies it. It would adopt the "territorial" tax system, which would exempt corporations' offshore profits from taxes, thus encouraging every corporation to move jobs and income to favorable spots overseas.

And that deficit reduction: The nonpartisan Joint Committee on Taxation has already concluded that eliminating literally all tax advantages would cost the treasury heavily unless the offsetting corporate tax rate was at least 28 percent. So there would be no deficit reduction unless Congress took many trillions out of Medicare, Medicaid and Social Security.

Which brings us to saving Medicare. That is the biggest flimflam of all. Ryan's bill applies Obamacare for seniors, without its humanity or its assurances that everyone will get the care they were promised. Last year, Ryan proposed and the House adopted a plan that would phase out the current Medicare for new enrollees in 2023, after voters who are 55 or over now and thus beginning to worry about their health care are into the system. Every new enrollee would have to buy health insurance from a company with help from the government to pay the premiums. But that was the dreaded "individual mandate" for which Republicans have been decrying Obamacare. People also seemed to get it that they would be losing the Medicare guarantee of coverage for all their illnesses.

So this version would allow a "public option" like the original health bill in the House of Representatives in 2010 did for people under 65 — the elderly could choose to buy the standard government Medicare plan although they might get less government help than if they bought from one of the carriers in the exchanges.

Whatever their choice, seniors would have the same system that Obamacare provides people under 65 without health insurance, but without Obamacare's guarantee of a full range of medical care at an affordable price.

Unless health-care costs stopped rising like they have for 75 years, your out-of-pocket costs and premiums would rise, probably sharply, every year.

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