Republican House Speaker John Boehner’s new budget proposal would require deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, the repeal of health reform’s coverage expansions, or wholesale evisceration of basic assistance programs for vulnerable Americans, according to a top Washington budget analyst.
Boehner’s plan also would still reportedly probably result in a downgrade of the the federal government’s AAA credit rating.
With just a week left before the federal government is expected, for the first time, fail to pay all of its bills, Boehner and Democratic Senate Majority Leader Harry Reid continue to craft separate budget plans.
The Boehner plan calls for large cuts in discretionary programs of $1.2 trillion over the next 10 years, and it then requires additional cuts that are large enough to produce another $1.8 trillion in savings to be enacted by the end of the year as a condition for raising the debt ceiling again at that time. It contains no tax increases. The entire $1.8 trillion would come from budget cuts.
“The plan is, thus, tantamount to a form of ‘class warfare,'” says Robert Greenstein, president of the Center for Budget and Policy Priorities, an independent left-leaning Washington think tank. “If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history. This may sound hyperbolic, but it is not. The mathematics are inexorable.”
The Boehner plan would force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor, Greenstein says. It would do so even as it shielded all tax breaks, including the many lucrative tax breaks for the wealthiest and most powerful individuals and corporations, he adds.
“President Obama has said that, while we must reduce looming deficits, we must take a balanced approach. The Boehner proposal badly fails this test of basic decency,” Greenstein says. “The President should veto the bill if it reaches his desk. Congress should find a fairer, more decent way to avoid a default.”
Meanwhile, despite all of the financial pain it would inflict, the Boehner plan may well lead to a downgrade of the federal government’s top-of-the-line credit rating, according to a separate CNN report.
Correspondent Erin Burnett reported that she spoke with an investor who talked directly with the credit ratings agency Standard & Poor’s. According to the Standard & Poor’s source, Boehner’s debt plan would probably still lead to a downgrade of U.S. debt by the ratings agencies, raising interest rates for all Americans. Reid’s plan, however, would preserve America’s AAA credit rating.
Washington policymakers have until August 2 to resolve their longstanding budget standoff. If they fail to reach an agreement to raise the federal debt limit by then, the government is expected to default on its current financial obligations.
A variety of experts have warned that that could damage the struggling U.S. economy, throwing hundreds of thousands of Americans out of work and returning the nation to economic recession.
Obama and Boehner each addressed the nation on the debt issue in separate speeches televised in primetime Monday night.
Scott Nance is the editor and publisher of the news site The Washington Current. He has covered Congress and the federal government for more than a decade.