GOP budget plan cuts $5.8T in 10 years

House Republicans on Tuesday offered a budget for 2012 that would cut spending by $5.8 trillion over 10 years but still fail to balance the federal budget for at least two more decades.

The blueprint, written by House Budget Committee Chairman Paul Ryan (R-Wis.), would not reduce public debt by as much as the plan presented by President Obama’s debt commission, which included tax increases and would end George W. Bush-era tax rates for wealthier taxpayers.

At a press conference, Ryan on Tuesday sought to defend the budget from criticism that it did not go far enough. He said the fact he cannot balance the budget anytime soon is a sign of the problems the U.S. faces.

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“This just shows you how deep a hole our country is in,” he said.

The budget includes major reforms to Medicaid and Medicare but largely leaves Social Security alone. And on Medicare, big reforms would not be introduced for more than a decade, meaning Ryan’s budget would cut Medicare spending by comparatively little for a decade.

While Ryan's budget has virtually no chance of making it through the Democratic-controlled Senate, Ryan said he believes elements of his proposal could become law before the 2012 election, particularly if they are tied to a bill that would raise the nation's debt limit. Congress is expected to take up such legislation within the next six weeks.

“On the debt limit, we think it gives you a great menu of options and policies to pick from,” he said.

Ryan said he hopes the White House takes a sincere look at the plan, which contains elements proposed by Democrats, the president’s fiscal commission and the Government Accountability Office. 

Rep. Jason Chaffetz (R-Utah) noted at the same news conference that the GOP proposal will reduce the federal work force by 10 percent over three years and put in place a 50-year pay freeze that also freezes step increases.

Ryan is presenting his budget, called “The Path to Prosperity,” as a jobs plan.

Citing a Heritage Foundation study, the budget says it would create nearly 1 million private-sector jobs in 2013 and bring unemployment down to 4 percent by 2015. It also claims to boost income by $1,000 per year per family. Much of the growth comes from bringing the highest individual tax rate and the corporate tax rate down to 25 percent from 35 percent.

As reported in The Hill last week, the plan proposes that Medicaid be transformed into a block-grant program that would give states a larger say in how to spend their Medicaid dollars. Compared to the Congressional Budget Office’s baseline, Ryan’s changes to Medicaid would cut $771 billion over the next decade.

Ryan’s budget would change Medicare into a type of voucher system, but not for more than a decade. It would only trim Medicare spending by $30 billion over the next 10 years.

After 2021, seniors would buy private plans and have the premium costs paid for by the government. Increases in both the Medicaid block grant and Medicare premium support would be capped in order to reduce the deficit.

Democrats are already targeting Ryan’s Medicare reforms for criticism, saying they would force the poor and elderly to pay more for healthcare.

“Everyone agrees we must cut spending and tighten our belt, but House Republicans have chosen to do so on the backs of America’s seniors, not the oil companies making record profits and getting tens of billions in taxpayer subsidies,” Democratic Congressional Campaign Committee Chairman Rep. Steve Israel (D-N.Y.) said in a statement.

“House Republicans should be honest with the American people and repeal giveaways to the oil companies and tax breaks for the ultra wealthy before forcing seniors to clip coupons if they need to see a doctor,” he added.

Asked to respond, Ryan said Israel and Democrats should be ashamed to be making distorted claims about the GOP plan. He argued that by increasing patient choice in Medicare and state flexibility in Medicaid, Republicans are preserving the programs and will increase access to affordable care.

Ryan’s budget also contains welfare reform components that seek to extend 1990s reforms to encourage recipients to work. The plan limits federal spending on food stamps.

As expected, the Ryan budget would repeal the Obama healthcare law and cut energy subsidies.

Ryan's budget does not propose major reforms to Social Security, but encourages the president and Congress to fix that entitlement program in the future.

Ryan said his party is well aware of the political risks it is undertaking by proposing to cut entitlements, and he said Republicans believe "we ought to have a social safety net."

“Look at these new people,” he said, pointing to freshman lawmakers on his panel who joined him at the press conference. “They came here for a cause. … We could all do something else with our lives.”

Ryan said the nation's debt crisis was caused by unsustainable spending, and is the most predictable crisis in history. He blamed Obama for failing to lead by presenting a budget the doubles the national debt.

Ryan's budget could end up as an opening negotiating position with the so-called Senate “Gang of Six” that is working to put Obama’s debt commission recommendations into legislation.

Maya MacGuineas of the New America Foundation said Ryan’s budget plan is important, but needs to include other pieces — such as defense spending — to move forward in the Senate.

“This is an important and courageous plan that addresses healthcare, the major driver of the debt, and generates significant savings,” said MacGuineas, who is advising the Gang of Six.

“Nonetheless, in order for a plan to be workable, it will have to address all parts of the budget, and the missing pieces — specifically revenues and defense — are likely to keep this approach from moving forward,” she said.

Andrew Moylan of the National Taxpayers Union, however, said he expects the document to serve more as a party platform going into the next elections, rather than the basis for a deal with Democrats. 


—This story was initially posted at 10 a.m. and last updated at 2:26 p.m.