Epiphanyblog

All about ideas…

New House GOP Pay-Go Rules. Really?

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You just gotta love those House Republicans, ready to cut the deficit and debt as their TEA Party voters demanded.

[T]he CBO [led by Republican, deficit hawk GOP House Solutions to the National Debt Doug Elmandorf], in what it called a preliminary analysis, said that thelaw’s repeal would cost $145 billion by 2019 and $230 billion by 2021, then swell after that, because various money-saving and revenue-raising provisions would be undone. The 32 million uninsured Americans refers to the number predicted to gain coverage under the law.

Specifically, the CBO analysis states:

– 32 million Americans will lose coverage compared to current law: “Under H.R. 2, about 32 million fewer nonelderly people would have health insurance in 2019, leaving a total of about 54 million nonelderly people uninsured. The share of legal nonelderly residents with insurance coverage in 2019 would be about 83 percent, compared with a projected share of 94 percent under current law (and 83 percent currently).” (p. 8-9)

– Increases deficit by $230 billion over 10 years: “Consequently, over the 2012–2021 period, the effect of H.R. 2 on federal deficits as a result of changes in direct spending and revenues is likely to be an increase in the vicinity of $230 billion, plus or minus the effects of technical and economic changes to CBO’s and JCT’s projections for that period.” (p. 5)

– Huge deficit increases over next decade: “Correspondingly, CBO estimates that enacting H.R. 2 would increase federal deficits in the decade after 2019 by an amount that is in a broad range around one-half percent of GDP, plus or minus the effects of technical and economic changes that CBO and JCT will include in the forthcoming estimate. For the decade beginning after 2021, the effect of H.R. 2 on federal deficits as a share of the economy would probably be somewhat larger.” (p. 7)

– Individuals would pay more for health insurance: “Although premiums in the individual market would be lower, on average, under H.R. 2 than under current law, many people would end up paying more for health insurance— because under current law, the majority of enrollees purchasing coverage in that market would receive subsidies via the insurance exchanges, and H.R. 2 would eliminate those subsidies.” (p. 9-10)

– Average health care benefits would be worse: “In particular, if H.R. 2 was enacted… the average insurance policy in this market would cover a smaller share of enrollees’ costs for health care and a slightly narrower range of benefits.” (p.9)

– Premiums for employer-sponsored insurance would increase: “Premiums for employment-based coverage obtained through large employers would be slightly higher under H.R. 2 than under current law, reflecting the net impact of many relatively small changes.” (p. 10)

But let’s not get caught up what in the those additional health care cost will mean to the budget deficit. What’s another $100 billion or so added to the deficit anyway? Ideological purity is far more important, right? Let’s instead focus on the rest of the new GOP House Cutgo rules, designed to replace the Democratic Paygo rule.

As ThinkProgress reports (pdf) from various independent deficit concerned watchdog groups:

In fact, the new rules would largely benefit some of the richest Americans and biggest corporations who benefit from tax havens, loopholes, and cuts found in the federal tax code. Here are some of the people that will benefit at the expense of the deficit:

– Rich People And Corporations Who Benefit From Offshore Tax Havens: As U.S. PIRG’s Nichole Tichon notes, under the new rules, “attempts to shut down off-shore tax havens cannot be considered in discussions of deficit reduction. These havens cost taxpayers an estimated $100 billion per year and go to those who benefit from access to American markets, workforce, security and infrastructure but pay little or nothing as they ship profits overseas.” According to the GAO, over 80 percent of “of the biggest U.S corporations maintain revenues in offshore tax haven countries. The names on the list are familiar: American Express, A.I.G, Boeing, Cisco, Dow, Hewlett-Packard, J.P. Morgan Chase and Pfizer – among others.”

– Big Corporations That Benefit From Tax Expenditures: Under the new rules, “tax expenditures that flow to BP, Exxon and others in the oil and gas industry are off the table.” The government has currently set up a network of tax expenditures and other subsidies to Big Oil that cost the American taxpayer billions of dollars every year. Ending these subsidies would save an estimated $45 billion over ten years. The CAP paper “Cracking the Code: A Closer Look at Tax Expenditure Spending” notes that “special credits, deductions, exclusions, exemptions, and preferential tax rates provide more than $1 trillion in subsidies intended to support public objectives,” yet are ineffective and should be reduced or eliminated.

– Rich People That Benefit From Loopholes In The Tax Code: Under the new rules, “ill-advised loopholes carved out of the tax code that let multi-millionaire hedge fund managers pay dramatically reduced tax rates – far less than the average American – are exempt from discussions on solving our deficit problem.” In 2008, these loopholes “that largely benefit rich taxpayers and companies cost the government $20 billion a year even as the pay gap between chief executives and employees has widened.”

– Rich People That Benefit From Huge Tax Cuts: The new rules direct “lawmakers to ignore the budgetary impact of making permanent the income-tax cuts that Congress extended for two years in a compromise with President Barack Obama last month.” The Bush tax cuts for the richest 2 percent are expected to cost $690 billion over the next ten years.

Hey, but who cares about adding to the debt if taxes are cut. I mean never mind that historically, under both GOP or Democratic administrations, the revenues required and used by the federal government amount to ~24–26% of GDP while current federal revenues amount to 15% of GDP, largely as a result of the recession.

Never mind that cutgo, which states that tax cuts do not have to be paid for because they pay for themselves, when that ideology is led to its’ penultimate, logical conclusion means cutting taxes to zero will still bring in enough federal revenue to pay for the Federal governments current bills and its already spent debt. Led to its ultimate conclusion, cutgo is like saying you don’t need an income to pay your bills…or your debt. But only if you have lots of pull…everyone else doesn’t matter.

So where’s the logic? Especially if you leave, as the GOP House currently promises, off the table Defense, Homeland Security, Medicare and Social Security. Those portions of the budget amount to approximately 80% or more of the federal budget. The remaining 20% covers airline safety, product safety, drug safety, transportation safety, highways, emergencies (Katrina), and a large host of other programs and policies that Americans unanimously demand from the Federal government.

I mean let’s forget that there is no free lunch. Or that average voters have to actually pay for those things which voters overwhelmingly demand of the Federal government…just like you have to pay for the things you demand of your own lifestyle.

Let’s all just party over all the many tax cuts in the new House cutgo rules and leave the bills for later.

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Written by Valerie Curl

January 7, 2011 at 8:21 AM

One Response

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  1. cool

    jim

    January 7, 2011 at 4:21 PM


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