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

October 29, 1995|John Heilemann | John Heilemann is Washington correspondent for the Economist

WASHINGTON — 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.

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