Cutting Medicaid Will Hurt at the Polls, Eventually

It is widely believed that Paul Ryan chose to exact his most severe spending cuts on Medicaid because its low-income beneficiaries vote Democrat if they even turn out for elections, so cutting a program that benefits them won’t hurt the GOP too much at the polls. Unfortunately, eliminating $207 billion in spending, the amount Ryan’s plan will cut, kills jobs and hurts the economy, no matter what program it comes from. According to newly released numbers from the Economic Policy Institute, the plan will eliminate 2.1 million jobs within five years. That’s almost as many as Ryan projected his plan would create in 10 years, based on a study from the Heritage Foundation that it has since admitted was a bit too optimistic.

These job losses won’t be the cushy public-sector jobs Republicans deride, with their generous pensions and high wages (which, in reality, are 6 percent lower than the private sector). Because Medicaid doesn’t have a lot of administrative costs or overhead, 96 percent of the job losses will come from the private sector. As Ethan Pollack at EPI explains, the 2.1 million job-loss projection doesn’t even include the multiplier effect that will result from taking this money out of the economy:

This estimate is conservative for two reasons. First, because Medicaid is a program that generally benefits low-income households—who out of necessity are much more likely to consume rather than save—a larger-than-normal share of these cuts will undermine demand in the private sector. This suggests that the cut to Medicaid would have an even larger impact on the economy than we estimate here. Second, it is likely that an even larger share of the job loss would fall on the private sector because overhead includes not only labor but equipment and supplies as well, which are provided by private companies.

These projections are also just for a single component of the Ryan budget. It’s fair to assume that the trillion in cuts to government spending will cut at least as many jobs, as will decreased spending on Medicare. Ryan may think he has picked a safe demographic to target with cuts, but once his constituents start losing their jobs, this budget will play right into Democrats’ hands.