By Erik Wasson - 04/06/11 12:31 AM EDT
The House Republican budget for fiscal 2012 would reduce the deficit by $1.6 trillion over the next 10 years by cutting spending by $5.8 trillion.
The blueprint, which attracted strong criticism from the White House, sets federal discretionary spending in 2012 below 2008 levels and freezes it for five years. President Obama, meanwhile, has proposed freezing non-security spending at 2010 levels for five years.
Under the GOP plan, the federal budget comes into balance by about 2040.
The Republican plan, crafted by House Budget Committee Chairman Paul Ryan (R-Wis.), would not reduce public debt as fast as the proposal presented by Obama’s bipartisan debt commission.
Here are the details of Ryan’s blueprint:
• Spending caps: Establishes a binding cap on all spending to bring spending down to 20 percent of gross domestic product from the current level of 24 percent.
• Medicare: This part of the proposal is generating the most news — and controversy. It is based on the plan Ryan introduced with former Clinton budget director Alice Rivlin in November. Seniors after 2021 would choose from a “selection of guaranteed health coverage options” and receive government support payments to purchase coverage. Ryan calls it “premium support,” while Democrats label it a voucher system. Ryan argues that under a true voucher system, seniors would be using the government premium support in the open market, rather than under a set group of plans regulated by the government. The government support is capped, leading liberals to argue that if healthcare costs rise dramatically, seniors will be forced to make up the difference.
• Medicaid: The budget converts Medicaid to a block-grant system where the federal share of the program is capped. The GOP argues that giving states greater flexibility to administer the program and reducing red tape will lead to better care for patients. Liberals argue that states, constrained by balanced-budget amendments, will simply have to cut back on Medicaid. Cuts to Medicare, compared to the status quo, total $771 billion over 10 years.
• Social Security: The plan contains a trigger whereby once the Board of Trustees certifies that the program will not be solvent, the president must submit a reform plan to Congress. The legislation is subject to fast-track procedures and floor consideration within 60 days.
• Defense: The budget leaves it relatively untouched. Inefficiencies are reduced by $178 billion.
• Federal workforce: Ryan would reduce the federal workforce by 10 percent over three years through attrition and put in place a five-year pay freeze that also freezes step increases.
• Food stamps and housing aid: Converts food stamps to a block grant and makes it more contingent on work or job training. Housing aid is capped and also linked to work.
•Job Training: Ends dozens of competing programs to establish “career scholarships” program. Reduces Pell Grants to lower “tuition inflation.”
• Agriculture: Goes after direct farm payments and crop insurance, to save $30 billion. Ryan received immediate pushback from commodity lobbyists who are decrying the 20 percent cut to agriculture spending over 10 years. In a statement, House Agriculture Committee Chairman Frank Lucas (R-Okla.) emphasized that his committee, not Ryan, will be writing the 2012 farm bill.
• Energy: Assumes revenue from opening up drilling in Alaska, the Rockies and along the Gulf Coast. Ends subsidies for energy technologies the market does not support.
• R&D: Ends subsidies for applied research, while retaining some for basic research.
• Obama’s healthcare reform law: The single biggest savings item in the budget is the repeal of the healthcare reform law. The budget estimates this saves $1.4 trillion over 10 years. Democrats note that the nonpartisan Congressional Budget Office has estimated that repealing healthcare reform would add $230 billion to the deficit. The GOP is proposing to keep cuts to Medicare that passed as part of Obama’s bill, but to eliminate all spending associated with the program.
• Tax reform: Lowers the top individual and corporate tax rate to 25 percent from 35 percent by eliminating $1 trillion in annual tax earmarks. This is a major difference from the fiscal commission, which used such streamlining to raise revenue to reduce the deficit.
• Waste: Retains the ban on earmarks and goes after $100 billion in savings identified in a recent Government Accountability Office report on duplicative programs.