Ky. Voices: GOP plans for health care would hurt the elderly, poor

Marty  Solomon, a  retired University of Kentucky professor, can be reached at mbsolomon@aol.com.
Marty Solomon, a retired University of Kentucky professor, can be reached at mbsolomon@aol.com.

The Republican Party's economic plan purports to save Medicare and Medicaid, create millions of jobs through tax cuts and deregulation and remove loopholes in the tax code. Unfortunately, not one of these claims is valid. Let's examine them, one at a time.

First, Medicare is unsustainable and can only be saved through a reduction in the rate of growth in costs. The Republican plan does nothing in that regard. Instead, it would provide Medicare payments or vouchers to individuals under 55 to purchase health insurance. But the amount paid would not be enough to cover the increasing costs.

While health care costs increase by 6 percent per year, the value of vouchers to seniors would increase by about 2 percent annually. So instead of attempting to reduce medical costs, the Republican plan reduces the rate of growth of government spending while passing on the increasing rate of growth to health care recipients.

If the Republican plan were coupled with mechanisms to reduce the rate of growth of costs and if vouchers were means-tested, it might have a chance of success. But without those features, the plan is likely to bankrupt middle-class Americans. The Republican solution to save Medicaid is to turn the program over to the states by block-granting the money and then let the states fund the future increases, which would be an unfunded mandate.

The Republicans say their plan would not affect anyone over the age of 55. But that's not true either. Since the Republicans plan to repeal the Affordable Care Act, then current seniors' prescription drug costs would increase, they would be denied insurance for pre-existing conditions and their cost for preventive services would rise.

Second, Republicans promise that additional tax cuts and more deregulation will produce 2.8 million new jobs in the first four years. But tax cuts can only be effective in creating jobs if there is existing, strong pent-up demand.

Since that's not possible in the near future, tax cuts in the face of weak demand, together with spending cuts, will increase unemployment rather than create jobs and, at the same time, balloon the deficit.

Thus, the Republican claim seems a fantasy. Bush-era tax cuts, the largest in history, combined with sweeping government deregulation resulted in the largest drop in GDP ever. Can't people see that we just tried this and while the rich got richer, it almost bankrupted average Americans?

The definition of insanity is ...

If tax cuts and deregulation would create millions of new jobs, as the Republicans promise, then we would be at full employment today instead of the economic malaise in which we find ourselves.

Finally, our tax code is riddled with loopholes and special-interest provisions. But if the Republicans have their way, they would replace loopholes for the middle class and the poor with new loopholes for the wealthy.

As income disparity between rich and poor has risen to the highest level in history and as the middle class in America is disappearing, the Republican plan would increase this disparity further. Mitt Romney says he wants to eliminate taxes on interest, dividends and capital gains for people making less than $200,000.

To paraphrase Virgil, "Timeo Danaos et dona ferentes" (I fear Republicans, even those bearing gifts) because Paul Ryan's 2010 budget eliminated these taxes for everyone and that appears to be the ultimate aim and the nose under the tent that Republicans are really after.

Most work-a-day citizens receive salaries which are taxed at normal rates, but the wealthiest Americans receive almost all of their income in the form of capital gains, interest and dividends. Therefore, if Republicans get their way, fabulously rich people such as Warren Buffett and Romney would pay no federal taxes. Do you see a Greek horse galloping toward you?

To pay for these cuts, the Republicans would cut funding for Pell grants, student loans, highway construction, education, children's services, mortgage deductions and earned income tax credits.

At the same time, they would not reduce the defense budget, which is already larger than almost all other countries' combined and the most wasteful arm of government.

If it looks like a Trojan Horse and acts like a Trojan Horse, it's probably a Trojan Horse.