Sen. DeMint's deficit-cutting plan targets poor people

Dec. 19, 2011
Sen. DeMint's deficit-cutting plan targets poor
James Rosen | McClatchy Newspapers

last updated: December 19, 2011 03:51:40 PM

WASHINGTON — A plan by Republican U.S. Sen. Jim DeMint of South Carolina to slash the federal budget deficit would hit the poorest Americans especially hard, directing 70 percent of its $4.2 trillion in spending cuts at safety-net programs intended to help tens of millions of low-income people.

The plan proposes $20 billion in cuts that would affect the affluent. It suggests almost $3 trillion in cuts that would affect low-income Americans, leading one liberal economist to call the plan "cruel."

But DeMint, a leading figure in the national tea party movement, says the cuts — including eliminating the earned income-tax credit and child tax credit for Americans who don't earn enough money to owe federal income taxes — are needed.

"During the Clinton years, during the Bush years, even when the economy was booming, we were still adding to the welfare rolls," DeMint said. "We have not helped the people we're supposedly helping. Poverty has gone up in America.

"We have trained several generations of Americans to be dependent on government rather than trying to get them off welfare."

DeMint's plan won't pass this Congress. Democrats, who control the Senate, easily could kill it if it came up for a vote.

However, the budget cuts proposed by DeMint — known as Sen. Tea Party — provide insight into the thinking of one of the Senate's most archconservatives and his tea party allies. DeMint helped raise money for many of the tea party-backed GOP freshmen in Congress.

DeMint released the plan last month alongside Republican Sens. Rand Paul of Kentucky and Mike Lee of Utah, though the bulk of its spending cuts would come from the Welfare Reform Act, a bill that DeMint also introduced last month.

Paul and Lee are first-year senators who are indebted to DeMint because he helped them win election by contributing a combined $603,520 to their campaigns from his Senate Conservatives Fund.

Three economists in Washington who examined the trio's proposal — including two who formerly worked for prominent Republicans on Capitol Hill and at the White House — agreed that poor folks would bear the brunt of the plan DeMint put forward to aid a special deficit-reduction panel set up by Congress.

"This plan places a disproportionate burden on low-income groups," said Alan Viard, a budget analyst at the American Enterprise Institute policy group who sat on the White House Council of Economic Advisers under Republican President George W. Bush.

Patrick Louis Knudsen, who was a GOP analyst on the House Budget Committee before he joined the conservative Heritage Foundation earlier this year, praised DeMint's plan but agreed that poor people would feel most of its spending cuts.

"This would be a stronger set of proposals if it did something on Medicare, particularly for upper-income people," Knudsen said. "One of the big flaws of Medicare is you can be a millionaire and get your X-rays paid for by the government. That doesn't make sense."

DeMint's plan doesn't provide such an income test for Medicare, which will cost the government $549 billion this year.

But it would end Social Security benefits for people with $1 million or more a year in income. That would save the government $17 billion over a decade. DeMint would save an additional $3 billion by stopping commodity-support payments to wealthy farmers.

Those cuts are the only ones he proposed that are directed at affluent Americans. He proposed almost $3 trillion in cuts aimed at low-income people.

DeMint said in an interview that poor people would be far worse off if the U.S. economy sank under a mountain of federal debt — currently $15 trillion — and the country went the way of Greece and other European nations that were facing forced austerity measures.

"The picture I'm trying to paint is, we're in a big raft headed for Niagara Falls," he said. "There is no sense of urgency in Washington to deal with the problem. We can't help the poor — we can't help anyone — if the country goes down the tubes or we start massive inflation."

DeMint said his plan represented only the first round of necessary spending cuts. Other rounds need to be far greater and would have more of an impact on better-off Americans, he said.

He defended reducing benefits for the poor and adding work requirements for food stamp recipients, some of whom, he said, have abused the program.

"A lot of middle-class people are now using food stamps," he said. "Many Americans are sick of seeing the guy in front of them in the grocery line using food stamps to buy steaks."

Beyond the $4.2 trillion in spending cuts, the plan would narrow the deficit by saving $660 billion in interest payments on the reduced debt that would result from a lower budget deficit. DeMint's plan would net an additional $203 billion through sales of government property.

"It's comprised completely of spending cuts and no tax increases, but then targets the lower-income programs while sparing the big middle-class programs," Viard said. "They could have designed a spending-cut program that was more balanced, but they obviously were not willing to incur the political cost of taking on Social Security and Medicare."

Andrew Fieldhouse, a budget expert with the liberal Economic Policy Institute, was more critical.

"It's cruel," Fieldhouse said. "It's inexcusable to cut supports that help those adversely affected by the economic downturn."

The plan's single biggest cut, which would come from DeMint's welfare bill, would save the government $1.7 trillion over a decade. That would happen by dropping Medicaid benefits to 2007 levels if the national unemployment rate falls to 7.5 percent. The current rate is 8.6 percent.

DeMint's plan angered House Assistant Democratic Leader Jim Clyburn, D-S.C., who sat on the bipartisan 12-member debt panel that failed to meet its congressional mandate to reduce the federal deficit by at least $1.5 trillion.

"These cuts would decimate low-income and middle-income families," Clyburn said. "They are inhumane and un-American."

But Robert Rector, a Heritage Foundation economist who advised DeMint in crafting his Welfare Reform Act, said the plan was reasonable.

"It's not like he's trying to do away with the welfare state," Rector said. "He's just saying that the welfare state, like any other set of programs, has to face overall budgetary restraints."