Let's soak the rich, GOP-style


Paul Ryan

President Obama is campaigning for reelection by casting Republicans as the party of the rich because they oppose his plan to raise tax rates on wealthy Americans. "If you've done well," Obama declared in Cincinnati last week, "then you should do a little something to give something back."

One person who agrees with that sentiment is Rep. Paul Ryan, the Republican chairman of the House Budget Committee--though not in the way Obama means it. Ryan wants the wealthy to give something back: the billions of dollars in government benefits, taxpayer subsidies and corporate welfare they receive each year and do not need. Instead of raising taxes, which would hurt growth and job creation, Ryan told me: "We want to stop subsidizing corporations. We want to stop subsidizing [wealthy] individuals. And you can get more money for savings to reduce the deficit without damaging the economy this way."

Call it "soak the rich" economics, GOP-style.

What government spending on the wealthy would Ryan target? "Everything," he says. He would start with entitlements. The two biggest and fastest-growing areas of federal spending are Social Security and Medicare, both of which provide the richest Americans with growing benefits. To help stabilize both programs, Ryan wants to scale back those benefits for the wealthy. On Social Security, he says, "you can get the bulk of your way to solvency without tax increases by indexing benefits so that they don't grow as fast for wealthier people." As for Medicare, his reform plan would provide wealthier seniors with lower subsidies, while "focusing the benefits on the people who need it and away from those who need it the least."

Ryan is not alone in his call for means-testing entitlements. Means-testing has the strong support of House Speaker John Boehner, who earlier this year told Wall Street billionaire Pete Peterson at a forum in New York, "Pete, I love you to death, but I don't think the taxpayers ought to be paying your Medicare premium." The two leading GOP presidential candidates, Rick Perry and Mitt Romney, have also expressed support for means-testing. In May the Heritage Foundation put forward a plan that would reduce Social Security and Medicare benefits for well-off retirees and eliminate them entirely for the wealthiest seniors.

Some Republicans would apply means-testing to other government programs, such as unemployment benefits. Sen. Tom Coburn says that some 2,804households that reported incomes of $1 million or more on their tax returns were paid a total of $18.6 million in unemployment benefits in 2008--including more than 800 individuals earning between $2 million and $10 million. "Why should someone struggling to make ends meet . . . pay into a system that provides benefits to someone not working, yet earning millions of dollars a year?" he asks.

Ryan would also institute means-testing for the D.C. Tuition Assistance Grant Program--a program that provides Washington residents with grants of up to $50,000 to make up the difference between in-state and out of-state college tuition. The program is currently available to individuals with annual family incomes of up to $1 million. Ryan would eliminate grants for the wealthy and use the savings to fund the D.C. Opportunity Scholarships for poor District children to attend private or parochial schools.

Ryan would also means-test farm subsidies. He points out that, while the rest of the economy struggles, the American agricultural sector is booming. Yet the government continues to make agriculture support payments to farmers with joint-incomes as high as $2.5 million. Ryan sees no reason why the federal government should be making direct cash payments to multimillionaires. He would limit agricultural support to those making less than $250,000 and has proposed cutting $30 billion over the next decade in price supports and other agriculture subsidies.

In addition to cutting cash payments to wealthy individuals, Ryan wants to end what he calls "wasteful welfare for corporations such as Fannie Mae and Freddie Mac, big agribusinesses, well-connected energy companies, and others that have gotten a free ride from the taxpayer for too long." He points out that the president's stimulus spending bill allocated $80 billion specifically for politically favored renewable energy businesses, such as the now-bankrupt solar panel manufacturer Solyndra, which received $500 million in federal loan guarantees from the Obama administration. "I mean, Solyndra, that's half a billion dollars in one company," Ryan says. He would do away with such loan-guarantees and "stop subsidizing businesses with industrial policy and crony capitalism."

On the campaign trail, Obama talks constantly about Republican support for special tax breaks for "corporate jet owners, or oil and gas producers, or people who are making millions or billions of dollars," citing these as proof that Republicans want "to keep tax breaks for the wealthiest Americans." Not so, says Ryan. "We'd be willing to get rid of all that for a better tax code." The GOP's difference with Obama, Ryan says, is that the president "sees closing tax expenditures as just raising revenues," while Republicans want to "use that revenue to reduce tax rates so we can get faster economic growth and job creation."

With all the benefit cuts he has proposed for wealthy Americans, is Paul Ryan a "soak the rich Republican"? "No," he says with a smile, "I just don't spend money on them."

Marc A. Thiessen is a visiting fellow at AEI.

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About the Author


Marc A.
  • A member of the White House senior staff under President George W. Bush, Marc A. Thiessen served as chief speechwriter to the president and to Secretary of Defense Donald Rumsfeld. Prior to joining the Bush administration, Thiessen spent more than six years as spokesman and senior policy adviser to Senate Foreign Relations Committee chairman Jesse Helms (R-N.C.). He is a weekly columnist for the Washington Post, and his articles can be found in many major publications. His book on the Central Intelligence Agency's interrogation program, Courting Disaster (Regnery Press, 2010), is a New York Times bestseller. At AEI, Thiessen writes about U.S. foreign and defense policy issues for The American and the Enterprise Blog. He appears every Sunday on Fox News Channel's "Fox and Friends" and makes frequent appearances on other TV and talk radio programs.

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