Radical Budget Proposals Will Harm Economy and Hurt Women & Families

BACKGROUND:

As budget negotiations unfold and the debt ceiling vote looms, the economic well-being of women hangs in the balance. Although the Senate defeated the House Budget (H. Con. Res. 34) for the 2012 fiscal year, the battle is far from over. Conservatives in the House are now proposing measures that are even more harmful than their failed 2012 budget draft. In addition to legislation that would fast-track Social Security benefit cuts, convert Medicare to a private voucher system and make deep cuts in Medicaid, they are hoping to force through long-term plans to cut federal expenditures to the bone through spending caps and a radical balanced-budget amendment to the U.S. Constitution.

Balanced-Budget Amendment
The Hatch-Lee balanced-budget amendment is absolutely not the answer, and it is sure to cause great damage to the economy over the long-term. The measure (S.J. Res. 10, introduced in the House as H.J. Res. 56) would limit annual spending to 18 percent of the previous year's Gross Domestic Product (GDP). The House Republican majority is pushing hard for it or a similar version, even though many economists have said it would create havoc with the economy.

Soon to be reported out of the House Judiciary Committee and voted on in July, the proposal requires a two-thirds vote for passage, which could be accomplished with only 45 Democrats joining with all Republican members to vote in favor. The amendment language requires that a super-majority vote of two-thirds of both the House and Senate -- which would be nearly impossible in practice -- would be needed to increase any taxes. This is the not-so-hidden agenda of congressional conservatives to virtually eliminate taxation of the rich -- even if that means cratering our economy and harming the well-being of the middle and lower classes.

Proposed Federal Caps
Several proposals have been suggested to adopt a spending cap on the federal budget; one would hold spending to 21.5 percent of GDP, or three percentage points lower than it is right now. This proposal is even more radical than the House-passed budget. It would cause catastrophic cuts in Social Security, Medicare and Medicaid and all other domestic spending.

Chained CPI
Also being advocated by conservative lawmakers is the "chained consumer price index (CPI)," which would drastically reduce cost-of-living adjustments in Social Security benefits. The chained CPI is designed to restate consumer prices as if they are lower than they actually are. This is justified by some economists' claim that we can ignore an increase in the price of a product if a substitute product is available and hasn't gone up.

The chained CPI thus focuses on hypothetical possibilities about prices while ignoring the actual, real-life increases in prices that Social Security beneficiaries have to pay -- like rent, health care, medication, transportation, etc. As it is, the cost-of-living adjustment (COLA) for Social Security has not been updated for two years.

With Social Security checks averaging only $1,000 a month for women, how can we expect women to live on less? For many women, especially women of color and lifetime low-income earners, Social Security is their sole source of income for retirement.

The chained CPI is a cold-hearted recipe for pushing millions into poverty; this would disproportionately affect women, especially women of color, elderly women, lifetime low-income earners, and persons with disabilities. Along with the proposals to turn Medicare into a private voucher system and slash Medicaid, the chained CPI would all but dissolve the economic safety net, devastating current and future Social Security beneficiaries.

Dangerous Long-Term Consequences
The proposals being considered in the House are NOT realistic, cautious and well-formulated. They are reckless, anti-democratic and will have long-term consequences. Spending caps, deep cuts to vital social safety net programs, the chained CPI and a balanced-budget amendment to the constitution are all ill-advised. If adopted, these measures would devastate our government's ability to stabilize the economy and maintain a strong middle class while aiding lower-income families. They are radical right-wing, empower-the-rich and to-hell-with-everyone-else ideas about how to run this country -- and run it badly!

Infringement of Home Rule in the District of Columbia
In addition to proposing reprehensible outcomes for the entire country, the House budget also attempts to overrule the District of Columbia's local authority to fund abortion care for low-income women residents. NOW also condemns the attempt in this bill to overrule D.C.'s needle exchange program, which has been proven to reduce transmission of HIV/AIDS.

Take action NOW by sending a message to your House member.

Sources
» http://www.cbpp.org/cms/index.cfm?fa=view&id=3509
» http://www.strengthensocialsecurity.org/media/blog/2011/chained-cpi-cuts-benefits-more-with-each-passing-year-a-new-analysis
» http://www.nwlc.org/our-issues/tax-%2526-budget/federal-budget
» http://www.nwlc.org/resource/current-proposals-balanced-budget-amendment-are-more-extreme-and-dangerous-earlier-versions

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