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Republican Budget Proposal Offers Nothing New

Photo courtesy of Gage Skidmore

Republican congressional leaders offered their budget counter-proposal Monday in response to President Obama's proposal, but it does little more than rehash previous offers that were clearly rejected by the voters in November's election. 

AFL-CIO President Richard Trumka criticized the proposal:

Republicans in Congress are not in touch with their constituents. They do not seem to understand that they lost the last election because voters rejected their agenda.

And now they are recycling more of the same agenda that was overwhelmingly rejected in November: lower tax rates for the richest Americans and benefit cuts for Social Security and Medicare.

Speaker of the House John Boehner's counter-offer, which he made in a letter to the president, is short on details, and the math he uses doesn't seem to work. 

He specifically offered:

  • $800 billion in unspecified "pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates."
  • $600 billion in Medicare savings that would include raising the eligibility age and "structural Medicare reform." That may be a euphemistic reference to Rep. Paul Ryan's voucher ("coupon care") system, but it's not clear from the information available if that's the case.
  • $300 billion in other "mandatory" savings, including farm subsidies and the Supplemental Nutrition Assistance Program, which provides food subsidies to low- and no-income Americans. No further details on these proposed cuts are available.
  • $200 billion through lowering the cost of living adjustments for all federal beneficiaries, including Social Security recipients. This is the "chained CPI" we've been hearing about for the past year and a half that would cut benefits over time.
  • $300 billion in further unspecified cuts to discretionary spending.

The New York Times raised several serious concerns about the validity of the Boehner plan.

Which programs would be cut? The letter doesn’t say, and Republicans don’t seem to care, as long as they blindly achieve their goal of cutting a big chunk out of government. The offer was a transparent attempt to appear responsive to Mr. Obama’s detailed proposal from last week, without doing any actual math or hard work.

If Mr. Boehner had used a calculator, for example, he would have discovered it is impossible to produce $800 billion in revenue from eliminating deductions without severely curtailing the deduction for charitable donations, which is vital to the nonprofit sector. Doing so without limiting the charitable deduction would inevitably raise taxes on the middle class, as nonpartisan analysts have concluded, and would have a much greater effect on the upper middle class than on the very rich.

Senate Republican Leader Mitch McConnell is proposing cuts to Social Security cost-of-living-adjustments, raising the eligibility age for Social Security and Medicare and increasing premiums for higher-income Medicare beneficiaries.  Boehner is also floating the idea of raising the Medicare eligibility age from 65 to 67.

Cutting benefits or raising the eligibility age for these earned benefits is a proposal that will directly harm millions and could weaken the economy and jobs markets that are on the road to recovery. Raising the Medicare eligibility age, for instance, would lead to seniors spending $3.7 billion more, at a minimum. And 65- and 66-year-olds who earned less than 133% of the federal poverty line would be left without any affordable health insurance options, since they would not be eligible for either Medicare or subsidies under the Affordable Care Act.

Boehner is attempting to portray his offer as a compromise that shows his side is giving up some of what it wants so a deal can be reached. In reality, it is the same offer Mitt Romney and Republicans made before the election. Boehner also likens his offer to that of Democrat Erskine Bowles. Bowles was quick to reject that claim, saying that what Republicans are offering has little to do with his plan or the plan offered by the commission he co-chaired with Republican Alan Simpson.

Trumka is clear on what Congress should do:

We challenge Republicans in Congress to heed the lesson of the November election and work with us to put America back to work, raise wages, restore tax fairness and rebuild the middle class.

Trumka and the AFL-CIO have been consistent in calling on Congress to reject any benefit cuts to Social Security, Medicare and Medicaid and for letting the George W. Bush tax cuts for the wealthiest 2% of Americans expire. Trumka made clear that the proposal by House Republicans is therefore a non-starter:

Specifically, we reject cuts in Social Security COLAs, increases in the Medicare eligibility age, increases in Medicare premiums and any reduction in the top individual income tax rates below 36% and 39.6%. 

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