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Robert Reich: Ryan the Redistributionist

March 14, 2013

Paul Ryan's budget proposal sends wealth straight to the top of the economic hierarchy.

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Image from Flickr via Gage Skidmore

By Robert Reich
By arrangement with Robert Reich

“Who is going to end up making all the money in the end if Obamacare continues to be in place?” Republican National Committee chairman Reince Priebus growled Monday on Sean Hannity’s Fox News show. “It’s going to be the big corporations, right? And who gets screwed? The middle class.”

The Republican Party makeover is breathtaking. Now, suddenly, instead of accusing Democrats of being “redistributionists,” the GOP is posing as defender of the middle class against corporate America—and it’s doing so by proposing to do away with the most progressive piece of legislation in well over a decade.

Paul Ryan’s new budget purportedly gets about 40 percent of its $4.6 trillion in spending cuts over ten years by repealing Obamacare, but Ryan’s budget document doesn’t mention that such a repeal would also lower taxes on corporations and the wealthy that foot Obamacare’s bill.

According to an analysis by the non-partisan Tax Foundation, Obamacare redistributes income from the wealthy to the middle class. This is mainly because it hikes Medicare taxes on the top 2 percent (singles earning more than $200,000 and couples earning more than $250,000, including their investment income).

This year, for example, families in the top 1 percent will be paying about $52,000 more in Medicare taxes, on average, than they paid in 2012.

If Obamacare were repealed, who would end up making all the money? Big corporations and the wealthy. Who would get screwed? The middle class.

And where will the money go? Not to pay for the healthcare of poor families; most of them already receive Medicaid. The rich will be helping middle and lower-middle class Americans.

Obamacare also imposes some taxes and fees on insurance companies, drug makers, and manufacturers of medical devices. Here again, most of this will be borne by affluent Americans, who own most shares of stock (assuming the taxes and fees come out of corporate profits). And, again, beneficiaries are in the middle and lower-middle class.

In other words, Mr. Priebus has it exactly backwards. If Obamacare were repealed, who would end up making all the money? Big corporations and the wealthy. Who would get screwed? The middle class.

The rest of Ryan’s budget plan also runs counter to the new Republican thematic. Not only does it turn Medicare into vouchers (“premium support” in Republican-speak) whose value can’t possibly keep up with rising healthcare costs but it also dramatically reduces spending on education, infrastructure, and much else the middle class depends on.

Meanwhile, it redistributes upward, cutting the top tax rate for individuals down to 25 percent—a bigger tax cut for the top than even Mitt Romney proposed—and the corporate tax rate down to 25 percent, from 35 percent today.

The reality, of course, is that the only possible way Ryan could pay for his proposed tax cuts for the wealthy and corporations would be to raise taxes on the middle class.

Ryan would pay for these tax cuts by “closing tax loopholes,” but—where did we hear this before?—his budget doesn’t say which loopholes, or even hint at what it would do with rates on capital gains and dividends. Like Romney’s plan, it leaves all the heavy lifting to Congress.

The reality, of course, is that the only possible way Ryan could pay for his proposed tax cuts for the wealthy and corporations would be to raise taxes on the middle class.

Don’t expect the Chairman of the Republican National Committee, or other Republicans reading from the same talking points, to admit any of this.

But if you look at what they’re proposing rather than what they’re saying, the GOP isn’t really interested in balancing the budget at all. It’s out to redistribute income and wealth—to the best-off Americans, from everyone else.

If any party is into redistribution, it’s the Republicans. And Paul Ryan is leading the charge.

Robert B. Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School 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.

Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations: Preparing Ourselves for 21st Century Capitalism which has been translated into 22 languages; and his newest, an e-book, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.

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