Ryan’s Redemption: Deficit Cuts Aid Poor

It must be a bit intimidating for a good Catholic kid from Janesville, Wis., to have most of the bishops in the country displeased with you, but House Budget Committee Chairman Paul Ryan is handling it with no obvious distress.

Ryan has proposed a budget that over 10 years would cut $800 billion from Medicaid (which helps the poor afford health care) and other health programs, $200 billion from education and worker training programs, $800 billion from income security programs, and it would cap the growth rate in government spending on Medicaid and food stamps.

In an interview with the Christian Broadcasting Network, Ryan defended his budget choices by citing the Catholic social teaching known as subsidiarity, which says that to the extent possible “nothing should be done by a larger and more complex organization which can be done as well by a smaller and simpler organization,” as David A. Bosnich put it in the journal Religion & Liberty.

Ryan told CBN that subsidiarity helps the poor “by not having big government crowd out civic society, but by having enough space in our communities so that we can interact with each other and take care of people who are down and out in our communities.”

The U.S. Conference of Catholic Bishops disagreed with Ryan’s understanding of the church’s social teachings. The conference said the church requires “a circle of protection” around the poor through programs “that meet their basic needs and protect their lives and dignity.” In letters to Congress, bishops said that “a just spending bill cannot rely on disproportionate cuts in essential services to poor and vulnerable persons.” They called on Congress to find savings “in programs that target more affluent and powerful interests.”

Ryan replied in a speech at Georgetown University, a Jesuit institution, “The Holy Father, Pope Benedict, has charged that governments, communities and individuals running up high debt levels are ‘living at the expense of future generations’ and ‘living in untruth.’ ” He clarified his view of subsidiarity. “Simply put, I do not believe that the preferential option for the poor means a preferential option for big government,” Ryan said.

The bishops quote Matthew Chapter 25, that Jesus commanded us to care for “the least of these my children.” Jesus also addressed the politics of congressional budget making, in Matthew Chapter 6. “For where your treasure is, there will your heart be also.” Budgeting requires choices, and choices are an expression of values.

Ezra Klein of The Washington Post recently wrote that Ryan had no choice in designing his budget because of the values he and the Republican Party hold — that taxes must be cut, defense spending must be increased, changes in Social Security and Medicare are necessary but shouldn’t affect current retirees, and short-term deficits endanger the economy.

“The first three budget premises means that taxes and defense will contribute more to the deficit, and Medicare and Social Security aren’t available for quick savings,” Klein said. “That leaves programs for the poor as the only major programs available to bear cuts. But now cuts to those programs have to pay for the deficit reduction, the increased defense spending, and the tax cuts. That means the cuts to those programs have to be really, really, really deep.”

If the bishops aren’t prepared to accept that subsidiarity is the way to build a circle of protection around the poor, Ryan might still get into their good graces by demonstrating his budget would in fact help the poor. The Congressional Budget Office, using assumptions provided to it by Ryan’s staff, estimated that the nation’s economic output might be a percentage point higher in 2030 or 2040, mostly because Ryan’s smaller deficit means the government won’t have to borrow so much, leaving more capital on the table for business to utilize for investment.

Other choices follow from different values that are informed by a different understandings of the facts.

Try this thought experiment. The CBO observes that access to capital improves economic activity. New research from the Census Bureau and the National Bureau of Economic Research finds that it isn’t small businesses that create most of the new jobs in America; it is new businesses that contribute “substantially” to job creation. MIT economist and Nobel laureate Peter Diamond’s research into labor markets essentially says Intel’s decision to add workers has nothing to do with the marginal tax rates paid by the chairman of the board.

The job creators in the United States are people who start news businesses, whether they are wealthy or not. Among the entrepreneur’s biggest problems is access to capital. Wealthy people already have capital, and raising their taxes won’t change that. Therefore, create a tax or fiscal policy to help the nonwealthy entrepreneur access capital, and you’ve created new jobs, some of which presumably end up helping the poor.

This doesn’t solve Ryan’s subsidiarity problem, but it could put some people to work.

UpFront is a daily front-page news and opinion column. Comment directly to Winthrop Quigley at 823-3896 or wquigley@abqjournal.com.
> — This article appeared on page A1 of the Albuquerque Journal