THE NATION / POLITICS : The Poor, Not New Deal, Are GOP's Real Target

John Heilemann is Washington correspondent for the Economist

It's almost a year now since the words Republican and revolution were joined together as one--like presidentialhopeful --in America's common political lingo. Almost every day since then, the GOP's maximum leader, House Speaker Newt Gingrich of Georgia, has insisted that what he and his minions are up to is nothing less than destroying "the failed liberal welfare state" and returning Washington to what he calls the "pre-New Deal model that, before 1933, made America the most decentralized and least governmental society in the world."

You might almost have believed him last week, as both the House and Senate took up their huge reconciliation bills, which promise to balance the federal budget by 2002. For here, rolled up inside each chamber's version of the legislation, was a sweeping set of GOP policy changes--tough curbs on the growth of Medicare and Medicaid, deep cuts in domestic spending, radical reform of the welfare system, a fat tax cut for the wealthy--that seemed designed to wreck what Franklin D. Roosevelt wrought.

But the truth is that Gingrich and his fellow-travelers are not trying to repeal the New Deal. They aren't repealing Lyndon B. Johnson's Great Society, either. Instead, the Republicans are tearing down only selected parts of those political edifices--the parts that benefit citizens who don't typically vote for, or donate money to, the GOP: poor people. Meanwhile, Republicans are leaving largely undisturbed the entitlements, tax breaks and subsidies that go chiefly to their middle-class constituents and contributors--and that are cornerstones of both Roosevelt's and Johnson's legacies.

So the right wing is trying to screw the worst-off--what's new? Yet, even given the Republican Party's congenital lack of compassion (apologies to bleeding-heart conservatives such as former Housing and Urban Development Secretary Jack Kemp), the stomping the poor are receiving from Gingrich's long march is faintly breathtaking. "I had no idea how profoundly what used to be known as liberalism was shaken by the last election," says Sen. Daniel Patrick Moynihan (D-N.Y.). Now he does.

Start with the end of welfare--and Medicaid--as we know it. On welfare, last week saw the beginning of congressional negotiations to iron out differences between the "harsh" House bill and the "moderate" Senate version.

But these adjectives are useless. The Senate measure is as moderate as Sen. Phil Gramm (R-Tex.) is subtle. Like its House counterpart, it ends the federal government's 60-year-old commitment to provide a safety net for the poor.

Meanwhile, cuts in Medicaid, which provides health care for 25 million poor adults and their children, are so Draconian (spending in 2002 will be 30% less than under current law), even some GOP governors fear the prospect of seeing sick people literally turned out into the streets.

Nobody sensible disputes that spending on these entitlements--especially on Medicaid, which is, in the true sense of a debased adjective, out of control --needs to be brought to heel. But taken together, welfare and Medicaid account for fully a quarter of the $1 trillion in savings for the GOP's seven-year balanced-budget plan. Republicans insist their hacking is about principle, about "devolution," and not just about saving money. Hearing this, skeptics need only reply with four words: earned-income tax credit (EITC).

It is, perhaps, the most stunning example of GOP expediency on the budget. For 20 years, the EITC, which uses the tax system to boost the wages of around 20 million poor or near-poor working families, was one of those rare economic policies that both parties ardently supported; Ronald Reagan described it as "the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress." But now the GOP wants to slash it by as much as $43 billion over seven years. The alleged reason: The program is riddled with errors and fraud.

Unfortunately, the Republicans' own Joint Committee on Taxation estimates only 4% of that $43 billion in savings comes from proposals to curb errors and fraud. The rest comes from what is, in effect, a tax increase on the working poor. In fact, for a majority of taxpayers (that is, for everyone earning less than $30,000 a year) taxes will rise and not fall under the GOP tax plans--an exceedingly awkward position for the party of tax cuts, and one its leaders vehemently denied until the joint committee forced them to come clean a few days ago.

The list goes on. Food Stamps, public housing and a wide array of other social programs are all being pared back, too. The point is that it's impossible to deny that Republicans are trying to reverse the egalitarian ethos instilled in government by Roosevelt and Johnson. This would seem harsh in any circumstances, but at least it would be justifiable if it were part of a broader project to shrink the role of government in modern American life: which is what Republicans say they're doing. If they were serious--if they were really trying to roll back the New Deal and Great Society--Republicans would be wielding their scalpels just as feverishly on programs that affect the middle class. But they're not.

That it was a fantasy to believe otherwise was clear from the start. Within weeks of storming the marble steps and occupying the palace, Gingrich declared the one program his revolutionary guard would not touch was Social Security.

Let's get this straight: On the one hand, the Speaker says he wants to tear down the "failed liberal welfare state"; on the other, he says the very foundation of that state, the crowning glory of Roosevelt's reign, is sacrosanct. Either Gingrich is a hypocrite, or he's not quite the historian he claims to be.

Bet on the former. How else to explain the way Gingrich's queasiness on Social Security has played out repeatedly on programs that touch people more apt to vote Republican than unwed teen mothers living in poverty? Consider the mortgage-interest deduction. By lowering the mortgage ceiling from $1 million to $300,000, Republicans could have scored $21 billion over five years for deficit reduction, while only affecting 5% of homeowners. Did they even consider it? No.

Even more egregiously, the party decided to ignore the calls of many of its most hawkish members to wage war on "corporate welfare"--government subsidies to a wide assortment of industries, most of which emanate from the agencies that Roosevelt built and Johnson made mammoth. This spring, the libertarian Cato Institute identified $86 billion worth of such corporate pork in 1995 alone. How much is getting the chop? Hardly a penny. Amazingly, Republicans have hiked spending on some of these programs and even cooked up some new bits of pork, including highway projects, to feed to the middle class.

The main exception to these profiles in anti-courage, of course, is Medicare. Here, Republicans are making substantial cuts in a program that goes to Main Street. They are even talking of means-testing benefits at the upper end of the income scale. This is laudable. But GOP budgeteers admit they wouldn't have done it if they hadn't been forced. First, they decided to balance the budget by 2002; then to cut taxes by $245 billion; then to squeeze every other program as hard as possible, and then, when they were still $270 billion short, they turned to Medicare.

So there is more than a grain of truth to the demagogic-sounding Democratic claims that Republicans are using Medicare cuts to finance tax cuts. More to the point, however, is that many health-care experts reckon the structure of the cuts in Medicare will lead to a multitiered health system for the elderly--where the wealthy get superior coverage; the middle-class get better benefits in return for some restrictions (choosing doctors, say), and the poor wind up far worse off.

If so, it would be fitting. According to the Democratic staff of the Joint Economic Committee, the overall impact of the reconciliation bills passed last week is this: 50% of the spending cuts fall on the bottom fifth of American workers and 22% fall on the second-to-bottom fifth. The upper two-fifths, by contrast, absorb a combined total of just 16%.

"We want no class warfare," intones Gingrich--and some had hoped that, when he said similar things all year long, he was serious. But now the evidence is in: He wasn't. The big lie in U.S. politics has long been that "welfare state" refers to vast sums of money flowing to the shiftless and the destitute. The truth is, middle-class programs have always been responsible for the deficit: We're all on the dole.

Instead of living up to their rhetoric and facing up to that fact, the GOP is punishing people who have never voted for them while asking few sacrifices of those who usually do. But that's not being revolutionary. It's being Republican.*

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