Ryan’s Plan Could Decimate the Social Safety Net
Policy + Politics

Ryan’s Plan Could Decimate the Social Safety Net

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Mitt Romney said he wasn’t worried about the very poor because they have a government social safety net, and “If it needs repair, I’ll fix it.” The Republican presidential frontrunner was talking about the hundreds of billions of dollars the federal government spends annually on food stamps, Medicaid benefits, and education and job training for middle and low-income Americans.

But, if House Budget Committee chairman Paul Ryan and other congressional Republicans have their way this year, the social safety net will undergo intense scrutiny – and likely shredding – as GOP budget cutters seek long-term deficit reduction without raising taxes. 

“The safety-net system created in the last century is in dire need of a new round of reforms,” Ryan said in the fiscal 2013 budget blue print he unveiled on Tuesday. “Republicans, Democrats and independents all believe in a sturdy safety net for those who, through no fault of their own, have fallen on hard times. The debate is over how best to strengthen and improve it. In particular, it is essential to prevent benefit structures from becoming barriers to upward mobility.”

Tens of millions of Americans have turned to these safety net programs in recent years as they have attempted to weather one of the worst recessions of modern times. But Ryan contends that Medicaid health services for the poor and other programs are growing at an unsustainable rate and must be curtailed.

Medicaid for example has been growing on average of 9 percent a year – far faster than the overall economy, while federal spending on food stamps has quadrupled over the past ten years.
“The strains that many of these well-intentioned programs have placed on the nation have reached a breaking point,” he says.

But the Obama administration and liberal budget advocacy groups voiced alarm on Tuesday that in the name of deficit reduction, House Republicans were seeking to repeal  the president’s health care reform law, slash overall Medicaid spending 30 percent or more by 2022, and cut spending for food stamps, college aid and education and job training.

Too Much, Too Soon
Gene Sperling, director of the president’s  National Economic Council, said that while the administration is committed to long term deficit reduction, “It was extremely disappointing that there is just some of the harshest  [House GOP] reductions and cuts  I think that have ever been proposed that impact the most vulnerable in our society.”  

Neera Tanden, president of the Center for American Progress, said, “It’s hard to take [Ryan’s] lectures on political courage seriously when you’re talking about massive slashes to Medicaid, food stamps, and programs that the most vulnerable among us rely on the most.”

By contrast, conservative Heritage Foundation budgetary experts Patrick Louis Knudsen and Alison Fraser said that while the Ryan budget was a good start, “It should be bolder in implementing its entitlement reforms. It should strive for more aggressive spending reductions.”

The new GOP plan, which has little if any chance of advancing, is certain to draw sharp distinctions between Republican and Democratic budget and social policy heading into the teeth of the 2012 presidential and congressional election campaigns. House Democrats will almost universally oppose the measure, according to House Democratic whip Steny Hoyer of Maryland, and Senate Majority Leader Harry Reid, D-Nev., has said he would not bring up any major budget plan for a vote this year.

Ryan’s budget blue print calls for deep domestic spending cuts, an overhaul of the tax code (including substantial reductions in rates), and not a single dime of new tax revenues. Republicans insisted the plan would spur economic growth and eliminate complexity and unfair tax deductions. But Democrats immediately dismissed the plan as a trillion dollar tax cut for wealthier Americans financed on the backs of lower income taxpayers and the poor.

Much of this change would be achieved converting Medicaid, food stamps and other federal programs for the poor to block grants and shifting responsibility from the federal government to the states, and giving recipients deadlines to get off government programs – much as Congress did back in the 1990s in overhauling the federal welfare system.

The plan would also consolidate and “modernize” the federal education and job training program, and reduce spending on Pell Grants and other college assistance, except for the neediest.  Overall, the Ryan budget would cut federal spending by $5.3 trillion over the next decade compared with President Obama’s latest budget blueprint, with the biggest savings taken from health programs.

Unsustainable Costs
Medicaid spending has grown from a mere $400 million in 1966, the first year of its operation, to $378.6 billion by 2009. Without fundamental change, total annual costs are estimated to reach a total of $804 billion by 2019, according to the budget document.

Ryan’s new budget would add tens of millions of Americans to the ranks of the uninsured and underinsured, according to an analysis by the left-leaning Center on Budget and Policy Priorities. Repealing the Obama Affordable Care Act’s Medicaid expansion means that 17 million people would no longer gain Medicaid coverage, while the large and growing cut in federal Medicaid funding would almost certainly force states to sharply scale back or eliminate Medicaid coverage for the millions of low-income people who rely on it today, according to the analysis.

Under the Ryan plan, the federal government would no longer pay a fixed share of states’ Medicaid costs.  Instead, states would get a fixed dollar amount that would rise annually only with inflation and population growth.

The Supplemental Nutrition Assistance Program, better known as food stamps, has also seen an explosion in costs in the past decade – going from less than $18 billion in 2001 to over $80 billion today. Much of this is due to the recession, and enrollment grew from 17.3 million recipients in 2001 to 23.8 million in 2004, to 28.2 million in 2008 to 46.6 million today.