The Budget Showdown - What's Really at Stake

1. Paul Ryan's Plan, the Coming Shutdown, and What's Really
   at Stake (Robert Reich)

2. Ryan plan to slash Medicaid will cost the economy nearly
   two million private sector jobs (Ethan Pollack - Economic
   Policy Institute (EPI))

==========

Paul Ryan's Plan, the Coming Shutdown, and What's Really at
Stake

by Robert Reich

April 5, 2011

http://robertreich.org/post/4371884779

I was there in 1995 when the government closed because of a
budget stalemate. I had to tell most of the Labor
Department's 15,600 employees to go home and not return the
next day. I also had to tell them I didn't know when they'd
next get a paycheck.

There were two shutdowns, actually, rolling across the
government in close succession, like thunder storms.

It's not the way to do the public's business.

Newt Gingrich got blamed largely because his ego was (and
is) so big he couldn't stop blabbing that Clinton should be
blamed. (Gingrich's complaint of a bad seat on Air Force One
didn't help.)

But the larger loss was to the dignity and credibility of
the United States government. When average Americans saw the
Speaker of the House and the President of the United States
behaving like nursery school children unable to get along,
it only added to the prevailing cynicism.

Cynicism about government works to the Republicans'
continued advantage.

Case in point. House Budget Chair Paul Ryan unveiled a plan
today that should make every American cringe. It would turn
Medicare into vouchers whose benefits are funneled into the
pockets of private insurers. It would make Medicaid and Food
Stamps into block grants that allow states to ignore poor
people altogether. It would drastically cut funding for
schools, roads, and much else Americans need. And many of
the plan's savings would go to wealthy Americans who'd pay
even lower taxes than they do today.

Ryan's plan has no chance of passage - as long as Democrats
are still in control of the Senate (even Democratic deficit
hawks like Kent Conrad and Ben Nelson are appalled by it)
and the White House.

But this so-called "blueprint" could be a blueprint for
America's future when and if right-wing Republicans take
charge.

Which is where the cynicism comes in - and the shutdowns.
Republicans may get blamed now. But if the shutdowns
contribute to the belief among Americans that government
doesn't work, Republicans win over the long term. As with
the rise of the Tea Partiers, the initiative shifts to those
who essentially want to close it down for good.

That's why it's so important that the President have
something more to say to the American people than "I want to
cut spending, too, but the Republican cuts go too far." The
"going too far" argument is no match for a worldview that
says government is the central problem to begin with.

Obama must show America that the basic choice is between two
fundamental views of this nation. Either we're all in this
together, or we're a bunch of individuals who happen to live
within these borders and are mainly on their own.

This has been the basic choice all along - when the Founding
Fathers wrote the Constitution, in the Civil War, when we
went through World War I and World War II and the Great
Depression in between, during the Civil Rights movement and
beyond.

The President needs to remind us that as members of the same
society we have obligations to one another - that the
wealthiest among us must pay their fair share of taxes, that
any of us who loses our jobs or homes or gets terribly sick
can count on the rest of us, and that we have collective
obligations to our elderly, our children, and the rest of
the planet.

This is why we have government. And anyone who wants to shut
it down or cut it down because they say we can't afford it
any longer is plain wrong. We are the richest nation in the
world, richer than we've ever been. We can afford to remain
a society whose members are in it together.

[Robert Reich is Chancellor's Professor of Public Policy at
the University of California at Berkeley. He has served in
three national administrations, most recently as secretary
of labor under President Bill Clinton. He has written
thirteen books, including The Work of Nations, Locked in the
Cabinet, Supercapitalism, and his most recent book,
Aftershock. His "Marketplace" commentaries can be found on
publicradio.com and iTunes. ]

==========

Ryan plan to slash Medicaid will cost the economy nearly two
million private sector jobs

by Ethan Pollack

Economic Policy Institute (EPI)

April 6, 2011

http://www.epi.org/analysis_and_opinion/entry/ryan_plan_to_slash_medicaid_will_cost_the_economy_nearly_two_million_privat/

Currently, Medicaid provides comprehensive health coverage
to the elderly, disabled, children, and low-income
adults.[1]  The cost of providing health care coverage is
split between the federal government and the states.  House
Budget Committee Chairman Paul Ryan (R.-Wisc.) released a
budget resolution this week that would "block grant"
Medicaid, meaning that it would give states a fixed amount
of money rather than provide a fixed share of the total
costs.  Because these grants would grow more slowly than the
expected inflation rate for health care costs, this proposal
would have the federal government shift an increasing amount
of the coverage costs onto states, who will be in turn
forced to cut health benefits and other services, cut public
investments such as education and transportation, or raise
taxes.

Assuming states responded by cutting Medicaid benefits, this
plan would certainly inflict enormous hardship on the most
vulnerable populations in society by depriving them of
access to basic health care.[2]  But it would also have a
significant jobs impact.

Over the next five years (during which time CBO projects
that the economy will still be below potential), Chairman
Ryan's Medicaid proposal would cut the program by $207
billion, which includes both eliminating the Medicaid
expansion under the Affordable Care Act and even deeper cuts
to the Medicaid program.  Using a standard macroeconomic
model that is consistent with private- and public-sector
forecasters, we find that a $207 billion cut would result in
a loss of 2.1 million jobs over the next five years, or 2.9
million full-time equivalent jobs.[3]  These figures are in
job-years, which refer to a job held for a single year,
meaning that five jobs lost in a single year is the
equivalent to one job lost over five years.

Furthermore, the job loss would overwhelmingly be in the
private economy.  Medicaid has very low overhead, as about
96% of the program's funds go toward benefits which are
spent in the private sector.  Assuming the 96% ratio is
relatively constant across states (or at least not
systematically biased in one direction), Medicaid cuts of
this magnitude would result in the loss of just under 2
million private-sector jobs, or 2.8 million full-time
equivalent jobs.

This estimate is conservative for two reasons.  First,
because Medicaid is a program that generally benefits low-
income households-who out of necessity are much more likely
to consume rather than save-a larger-than-normal share of
these cuts will undermine demand in the private sector.
This suggests that the cut to Medicaid would have an even
larger impact on the economy than we estimate here.  Second,
it is likely that an even larger share of the job loss would
fall on the private sector because overhead includes not
only labor but equipment and supplies as well, which are
provided by private companies.

The economy still reels from the largest recession since the
Great Depression.  Over 24 million workers are either
unemployed or underemployed-nearly double the 2007 level. In
terms of simple joblessness, we are 11.1 million jobs short
of pre-recession unemployment levels after factoring in
population growth.  Getting back to those levels in three
years would require that the economy add 400,000 each month-
almost twice the amount added last month-for the next 36
months straight. Congress should act now to create jobs, not
drive the economy even further into a ditch by slashing
basic health care access to children, the elderly, and the
disabled.

Sources:

[1]  In order to be consistent with Chairman Ryan's budget
resolution, this analysis considers SCHIP to be part of
Medicaid.

[2] This is not an altogether unreasonable assumption-after
all, if national Republicans have found that the politically
easiest savings are by cutting health care for the poor,
elderly, and disabled, it is quite possible that state
Republicans (who control a disproportionate amount of state
houses) might come to the same conclusion.

[3] In this analysis, we employ CBO's assumptions of a 1.5
fiscal multiplier for direct government spending and that a
1% drop in GDP corresponds to a 1.2 million job loss.

[Ethan Pollack joined the Economic Policy Institute in July
2008. Prior to joining EPI, he worked at the Office of
Management and Budget and the George Washington Institute of
Public Policy. Recently, he also worked as a Staff Economist
for President Obama's National Commission on Fiscal
Responsibility and Reform. His areas of research include
budget and tax policy, public investments such as
transportation and energy, and macroeconomics.  His work has
been used in numerous publications, and he has appeared as a
guest on CNN, Fox News, BBC World News, Canada TV, Russia
Today, and WNYC.]

==========

___________________________________________

Portside aims to provide material of interest to people
on the left that will help them to interpret the world
and to change it.

Submit via email: [log in to unmask]

Submit via the Web: http://portside.org/submittous3

Frequently asked questions: http://portside.org/faq

Sub/Unsub: http://portside.org/subscribe-and-unsubscribe

Search Portside archives: http://portside.org/archive

Contribute to Portside: https://portside.org/donate