Everything Is About The Budget Control Act

Or, Republicans are now getting screwed by the forced austerity they created.

Every so often, I come across a piece arguing that Il Trumpe isn’t that different from Reagan. While I agree in many ways–is Betsy DeVos any more ridiculous than James Watt?–there is one key difference: Reagan could run deficits. Yes, Reagan et alia did slash a lot of programs (with the help of conservative Democrats), but they could appease the middle class, since those programs the middle class liked could still be funded, even in the face of massive tax cuts.

But in 2011, Republicans, in an effort to make sure Obama would not be able to pass another deficit spending package (because party and faction are more important to Republicans than country), passed the Budget Control Act, which restrains both budget deficits and the total deficit (obviously, the two are related). In other words, we have imposed austerity on ourselves.

For Republicans, whose primary goal is to provide the wealthy lots of tax cuts, this has created a real problem, in that they are now expected to provide results to their donors. To create these tax cuts, they have to cut spending. Of course, if they want to increase spending elsewhere (without raising taxes), they need further cuts. This is why they proposed massive, foolish cuts in science spending and, yes, healthcare:

What they do want is to lower federal spending–and this is where payback is a bitch. In 2011, Republicans, in an effort to ensure that Democrats wouldn’t be able to deficit spend the economy back to health, forced Democrats to agree to the Budget Control Act. This has various spending and deficit caps. So?

If Republican want to pass huge tax cuts for the rich–and nothing gives Republicans HUMONGOUS BONERS like tax cuts for the rich–they need to cut spending. They can’t really cut Social Security, since their geriatric, Fox News-watching Uruk-hai base would run them over with their scooters (probably while screaming, “Keep the government out of my Social Security!”). They’re not going to cut military spending, so the only big ticket item left is gummint healthcare (they could always remove the mortgage interest tax deduction…STOP LAUGHING! STOP LAUGHING NOW!).

This is the ‘problem’ Republican Rep. Paul Ryan is trying to solve: how to cut enough stuff to give rich people and corporations BIGLY tax cuts.

Like I said, it has everything and nothing to do with healthcare.

(humongous boners is a highly technical phrase).

Matt O’Brien describes this ‘problem’ further (boldface mine):

But it’s also because only by rushing to reshape a full sixth of the American economy without knowing exactly how they would be reshaping it would Republicans be able to use health care to pave the way for the rest of their agenda, including tax reform. In other words, the GOP didn’t want to let a detail like tens of millions of people losing their health insurance get in the way of two tax cuts for the rich….

Anyone, you see, can pass a tax cut that expires after 10 years. But if you want to make it last — and you don’t have 60 votes in the Senate — then you need to find a way to pay for it (or at least look like you did). Taking health insurance away from poor and sick people would have done just that for the Obamacare taxes, which primarily hit people in the top 1 or 2 percent. Indeed, as you can see below in the chart from the Urban Institute, the combination of tax cuts for the rich and benefit cuts for the poor that was the GOP health-care plan would have been a reverse Robin Hood that redistributed income from people making $50,000 or less to mostly those making $200,000 or more.

Now, the crazy thing is that this first tax cut for the rich (in the form of Obamacare “repeal and replace”) would have made a second one (this one coming in the form of “tax reform”) look more affordable.

That’s because, due to parliamentary rules, tax revisions can’t lose any revenue outside the 10-year budget window if it’s going to be permanent. The question, though, is lose revenue compared to what. If Republicans had repealed the Affordable Care Act’s $1 trillion worth of taxes before they revised taxes, that’s $1 trillion less they’d have to come up with to make it look like money wasn’t being lost. Now, without those phantom savings, tax restructuring, Speaker of the House Paul D. Ryan (R-Wis.) admitted, will be “more difficult.” Not that it was ever going to be easy. After all, the $1 trillion they were trying to save with a “border adjustment tax” seems to be on political life support, since every major retailer, including big GOP donors such as Walmart, is opposed to it. And, as you might have guessed, there aren’t an extra $2 trillion of savings lying around for them to replace the ones they thought they were going to get from this and repealing the Affordable Care Act.

Which is to say that Republicans will either have to scale back their ambitions for how deeply they will cut taxes or how long they will. Whatever they choose, though, the top tax rate isn’t going to stay under 30 percent.

And for the GOP, that’s the real tragedy of 24 million people keeping their health insurance.

Had the GOP been able to pass $1 trillion of healthcare costs (over ten years) off the government ledger (and on to people who couldn’t afford to pay) before they brought up taxes, they would have additional $1 trillion of tax cuts they could give to the rich.

And that’s what Republicans, despite the heartland, real America crapdoodle, are all about.

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