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Tax VOX

Rx for a double-dip recession: Cut government spending by 15 percent

Republicans in Congress have proposed to cut federal spending by an unreasonable amount next year. What would such a huge reduction across the board look like?

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What would $550 billion in across-the-board spending cuts mean? A 15 percent reduction in Social Security benefits would cut monthly payments for a typical retiree by $180. It is hard to imagine the air traffic control system functioning with its budget cut by 15 percent. Does anybody think doctors would treat Medicare patients or that nursing homes would accept Medicaid residents in the wake of a 15 percent payment cut? While the RSC opposes any tax increases, its plan is silent on, say, Medicare premiums. So, it could keep provider payments flat—by doubling premiums.

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The RSC would not return my calls so there is a lot we don’t know about its plan. If, however, it exempts defense and homeland security from deep cuts—a key element of the House GOP budget plan– the reductions elsewhere would be even steeper. Instead of a 15 percent reduction in spending, the RSC would have to cut everything else by about 20 percent.

There is, believe it or not, some good news in this document. The best may be that barely 40 percent of House Republicans signed it, showing an unusual bit of discord for a group that normally governs with the same discipline that the Rockettes dance. One the other hand, 103 elected members of Congress did sign this bizarre letter. Maybe they were hoping nobody noticed, what with Anthony Weiner’s tweets and all.

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