Welfare for the Wealthy

Republican administrations always cut taxes on the rich to cut benefits for the poor.

U.S. House Speaker Paul Ryan (R-WI) speaks to reporters ahead of an expected vote in the Republican-led U.S. House of Representatives on a short-term budget measure that would avert a rerun of last month's three-day partial government shutdown, on Capitol Hill in Washington, U.S., February 6, 2018.
House Speaker Paul Ryan speaks to reporters on Capitol Hill in Washington on Feb. 6. Joshua Roberts/Reuters

After years of demanding balanced budgets from President Obama—despite a stagnant economy in need of investment—conservatives have reversed course. Under President Trump, Republicans have enacted trillions of dollars in tax cuts and spending hikes, busting the federal budget at a time of growth and low unemployment. On Monday, the White House made their new posture official, with a budget proposal that will no longer seek to eliminate the deficit.

This is only hypocrisy if you fix your view at the past 10 years, when GOP leaders warned darkly of a “debt crisis” and figures like Mick Mulvaney—now Trump’s budget director—pushed radical austerity plans like “Cut, Cap, and Balance.” Look with a slightly broader lens and you’ll see two recent Republican presidents took much the same approach. The administrations of Ronald Reagan and George W. Bush spent freely, unconcerned with debt or deficits, and the latter even invoked the former in its defense. “Reagan proved deficits don’t matter,” said Vice President Dick Cheney in one now-infamous exchange. But there’s more than opportunism at work.

The profligate spending of Republican administrations is strategic and ideological. It’s meant to boost favored constituencies like wealthy donors, large corporations, and entrenched business interests, and to curtail Democratic efforts to expand the welfare state, using large deficits and reduced revenue to block new programs under the guise of fiscal limits. We can’t afford it. Like all policies, Republican spending priorities are a statement of purpose and belief: Spending for the rich is necessary, spending on the poor is illegitimate. The interests and priorities of the powerful are paramount, the needs of ordinary Americans are at best negotiable.

The Trump tax cuts are the latest example of this dynamic. By 2027, more than half of all Americans will pay higher taxes under the new baseline established by President Trump and congressional Republicans, while the vast majority of the bill’s benefits goes to large corporations and the wealthiest earners. Additionally, millions of Americans will either lose or forgo health insurance due to the repeal of Obamacare’s individual mandate. More immediately, the tax cut slashed federal revenues, punching a large hole in the government’s budget. The Congressional Budget Office projects a $1 trillion deficit for 2018, more than double its expectation at the start of this fiscal year, before Trump and Congress signed the tax cuts into law.

The response from Republican lawmakers is not a broad plea to reduce spending across the board, but a specific call for “welfare” and “entitlement” reform, meaning cuts to retirement programs and social insurance for the poor and elderly. “We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” said House Speaker Paul Ryan in the wake of passing the tax cuts. His colleagues echoed that view. “If someone wants to get serious about debt, come talk to me about entitlements,” said Rep. Tom Cole of Oklahoma. “Tax cuts produce growth; entitlement spending doesn’t.”

In their defense, the tax cuts aren’t entirely without benefit for ordinary Americans. Last weekend, Ryan touted the $1.50 weekly pay increase that a secretary at a public high school would receive as a result of the bill. The speaker later deleted that tweet, but it reflected at least a modicum of concern for those without inherited fortunes or considerable financial holdings. By contrast, the new White House budget dispenses with the idea of any redistribution toward the bottom.

Instead, Trump wants deep cuts to safety net programs, echoing the Republican call to “repeal and replace” the Affordable Care Act (projected to save $700 billion), as well as more than $200 billion in cuts to the Supplemental Nutrition Assistance Program and $266 billion in cuts to Medicare. But the Trump budget also wants trillions of dollars in new spending. Trump proposes hundreds of billions in new funding for the military and $200 billion to jump-start private-public partnerships for new infrastructure, although the latter would be offset by cuts to federal departments like the Environmental Protection Agency. Overall, Trump plans more than $3 trillion in cuts to federal spending. But these savings are consumed by higher spending on select priorities, as well as his tax cuts, leading to an overall price tag of $4.4 trillion and large annual deficits, and to $7 trillion in new debt over the next decade.

In other words, when Republican lawmakers say they oppose “spending,” they don’t mean a blanket opposition to all federal expenditures. What they mean is a focused opposition to programs that assist the poor, serve the public good, and direct the fruits of a market economy into insurance programs for people who need income and medical care. Tea Party Republicans who opposed Barack Obama so much that they imposed spending cuts on the military might have sung a different tune if, instead of expanding health insurance, Obama had pushed for large tax cuts for those at the top of the economy.

Republicans’ upward redistribution—shrinking the safety net and the administrative state to finance tax cuts and subsidies for high earners and large businesses—has an obvious short-term impact, goosing an already humming economy and delivering at least a few bucks to voters in an election year. But it also plays a longer-term role in constraining action for future Democratic majorities and presidential administrations. Debt accumulated during Republican administrations is used to plead poverty when Democrats, and liberals in particular, attempt to expand social services. That charge is amplified by deficit hawks in Washington, who—in placing equal blame on both parties for the accumulation of debt—obscure the scale of Republican spending. Democrats, in the name of bipartisanship, too often give into demands to cut spending on their own priorities as a result.

Democrats in Congress are blasting Trump and the Republican Party for their hypocritical rhetoric. But in substance, the GOP is consistent, following the same template it has under presidents past: big government for the powerful, small for everyone else.