LaborTalk for April 15, 2011

Republican Plan to Cut Medicare and Medicaid
Could Cost the Economy Nearly 2 Million Jobs

By Harry Kelber

Republicans and Democrats in Congress will begin to square off this week on the size and content of the federal budget for 2012. Last Friday, negotiators for the two political parties came to a last-minute agreement that provides $38 billion in tax cuts for the remaining six months of the2011 budget, while the Democrats succeeded in preventing cuts in Planned Parenthood and the Environment Protection Agency (EPA).

This week, the stakes are considerably higher. The Republicans hope to cut trillions of dollars, not billions, from the federal budget of 2012 under a plan proposed by Rep. Paul Ryan (R.-Wis.), which, according to the Congressional Budget Office (CBO), would limit education, infrastructure, law enforcement, job creation, workplace safety and defense spending to only 3.5 percent of the Gross National Product (GNP). It would shrink public spending to its lowest level since 1951.

Ryan's budget proposals would retain the tax cuts for the wealthy while cutting Medicaid by $207 billion in the next five years. It would give a fixed amount to states each year instead of the current system, where the federal government picks up 50 percent of the total cost. Medicaid provides health-care for children, low-income adults, people with disabilities and about 90 percent of seniors in nursing homes.

The Ryan plan to slash Medicaid will cost the economy nearly two million private sector jobs over the next five years, says Ethan Pollack, senior policy analyst for the Economic Policy Institute (EPI).

The Republicans want to cut Medicare by 8.5 trillion dollars between now and 2050, by replacing Medicare with a voucher system. Seniors will be left at the mercy of private insurance companies, with only an inadequate voucher to cover their costs if they incur a serious illness.

Obama's 'Mix' of Budget Cuts Challenges Republicans

In his nationwide address on April 13, President Obama proposed a "mix" of spending cuts that would be painful to Americans, but would retain investments in education, infrastructure and social programs that serve the poor and elderly. The President proposed to cut federal budget deficits by $4 trillion over 12 years, while rejecting changes in Medicare and Medicaid that the Republicans were demanding.

In his opposition to renewing the Bush tax cuts for the wealthy, Obama declared: "There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. There's nothing courageous about asking for sacrifice from those who can least afford it and don't have clout on Capitol Hill."

The White House is requesting cuts of $400 billion in military spending — twice what Defense Secretary Robert Gates told Congress was the largest cut he could recommend. Pentagon officials believe that such deep spending cuts would adversely affect the United States' military capability in the wars in Iraq and Afghanistan.

The debate between Democrats and Republicans over the size and content of the 2012 budget will intensify and include how to raise the ceiling on the federal debt, which stands at $14.3 trillion dollars.

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Significantly, neither the Democrats nor the Republicans had anything to say about how the problem of unemployment would be treated in the continuing budget and deficit reduction battles. With the economy showing only modest increases toward recovery, the plight of the unemployed appears to be ignored even though there are still more than 6 million people who have been without a job for 27 weeks or more.

The AFL-CIO should be involved in the budgetary negotiations to make sure that in the final agreement, investment in job-creating projects are given he attention it deserves. It won't happen unless our unions press the White House and Congress on this issue

It's immoral, as well as wrong-headed government policy, to ignore the unemployed as "collateral damage," innocent victims of a Wall Street- induced economic recession. Can the AFL-CIO revive its campaign for jobs— lots of them?— Harry Kelber

LaborTalk will be posted here on April 22, 2011 and on our two web sites and on

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