What's in the Republican budget plan?
House Budget Chairman Paul Ryan unveiled a budget today that looks extremely similar to last year's plan with one major difference: it eliminates the budget deficit in 10 years rather than the 25+ years in his past plans.
Democrats predicted that acceleration to balance the budget to lead to an even more divisive budget filled with unpopular cuts to domestic programs that benefit the poor.
Ryan's budget blueprint for fiscal year 2014, titled "The Path to Prosperity," does include the same cuts and reforms to Medicaid, food stamps and education programs that were in his last budget and limits future spending growth to just 3.4 percent down from 4.9 percent.
The plan claims deficit reduction over the next 10 years totaling $4.6 trillion, which is really accomplished by curbing that future spending instead of actual new cuts, is also similar to his last plan that Democrats painted as too severe.
"Our opponents will shout austerity, but let's put this in perspective," Ryan wrote in an op-ed published today in the Wall Street Journal. "On the current path, we'll spend $46 trillion over the next 10 years. Under our proposal, we'll spend $41 trillion. On the current path, spending will increase by 5% each year. Under our proposal, it will increase by 3.4%. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy."
Ryan admitted in an interview Sunday that the budget will balance faster largely due to the last-minute fiscal cliff deal reached earlier this year. That gave Ryan's deficit-cutting efforts a boost by raising over $600 billion in new revenue through higher taxes on families making over $450,000 a year and individuals making $400,000.
House Speaker John Boehner, R-Ohio, has vowed that President Obama will not get any more tax revenue from House Republicans and Ryan's budget sticks to that. His blueprint once again proposes closing tax loopholes and using the savings there to lower rates for all individuals and businesses instead of putting that money towards deficit reduction.
Ryan also included language once again proposing to defund the President's health care law despite the Supreme Court upholding the law. And on Medicare, Ryan stuck to his controversial proposal to overhaul the health program for seniors for everyone now under 55. The budget chairman had toyed with the idea of raising that age level to accomplish more savings, but did not find members willing to break their promise that any Medicare changes would only hit people now under the age of 55.
The budget would also shield the Defense Department from the sequester for the next 10 years.
One thing is clear, this budget is very different from what is expected from Senate Democrats tomorrow or from the president next month. Senate Budget Committee chairman Patty Murray, D-Wash., plans to introduce a budget that raises taxes on the wealthy and does not aim to balance the budget deficit.
Below are 10 major elements of Ryan's 2014 budget proposal:
1. Repeal Obamacare
"The Path to Prosperity" explicitly states that the budget "repeals the President's onerous health-care law. Instead of putting health-care decisions into the hands of bureaucrats, Congress should pursue patient-centered health-care reforms that actually bring down the cost of care by empowering consumers." Ryan specifically laments both the massive Medicaid expansion in the health care law and the subsidies provided by government to help individuals purchase health insurance. He calls the subsidies an "enormous market distortion."
Repealing the health care bill would account for $1.8 trillion in Ryan's deficit reduction. Ryan defends including health care repeal in the budget despite the Supreme Court upholding the law and the fact that President Obama would veto any repeal bill. Ryan told "Fox News Sunday" that it was included because Republicans "believe that Obamacare is a program that will not work. We believe Obamacare will actually lead to hospitals and doctors and health care providers turning people away."
Ryan proposes repealing "Obamacare and "enacting medical-liability reform, ensuring Americans can purchase quality coverage across state lines, and expanding access to consumer-directed healthcare options."
2. Tax reform
The Ryan budget aims to simplify the tax code for individuals, families and businesses by closing tax loopholes and ending special interest subsidies and using the savings to bring down tax rates for everyone. This proposal is not new, but is getting more attention since this year lawmakers say they will make a real effort on tax reform. House Ways and Means chairman Dave Camp, R-Mich., wants to move on a broad package this year as does Senate Finance chairman Max Baucus, D-Mont. The Ryan budget does not specify which loopholes would be closed in the tax code, that will be up to Ways and Means to take on that politically perilous task, but it does lay out some specifics on the individual and corporate tax rates.
* Individual tax reform: The Ryan budget once again would consolidate the current seven individual tax rates to just two. The top rate would be 25 percent and the lower would be 10 percent. The current top tax rate is 39.6 percent.
* Corporate tax reform: Ryan proposes bringing down the corporate tax rate from 35 percent to 25 percent. It also proposes moving to a system that does not tax profits earned and taxed overseas when that money is brought back to the United States. Republicans believe this would encourage business to invest more in the United States while Democrats believe it's incentive to move jobs overseas.
3. Medicare
Ryan stays true to his controversial Medicare reform proposal that he calls a "premium support" model, but that his opponents call a "voucher program" that would lead to the end of the popular health care plan for seniors.
Like his proposal last year, this budget calls for a complete overhaul of the Medicare system for everyone currently under 55-years old. Starting in 2024, eligible seniors would have an array of plans to choose from including private plans and a traditional Medicare option provided by the government. The senior would choose a plan and the government would subsidize their premium (that subsidy is the "voucher" or "premium support" part depending on someone's perspective). That subsidy would be higher for low-income and very sick seniors and lower for the wealthy. Ryan says the competition among insurers would help keep costs down.
4. Medicaid
The plan would give states a fixed amount of money based on population and allow the states to administer the health care plan for the poor and disabled. It would also stop the expansion of the program mandated by the President's health care law that is expected to allow anyone with income at 133 percent of the federal poverty level to join the Medicaid rolls. Ryan's budget plan says Congress should allow states to design their own Medicaid systems rather than "be shackled by federally determined program requirements and enrollment criteria. Instead, each state would have the freedom and flexibility to tailor a Medicaid program that fit the needs of its population."
5. Social Security
Ryan would require both the president and Congress to submit plans to shore up the Social Security Trust Fund and ensure the program's solvency. He suggests that lower income seniors should receive more than higher income individuals, but offers no other specifics.
6. Food stamps
The Ryan budget would scale back the food stamp program, change it to a block grant system and encourage states to get people off the rolls and reduce waste, fraud and abuse. It also calls for a limit on the amount of time someone can receive benefits and would add a work requirement.
The Ryan plan states that the total price tag for the federal food stamp program has more than tripled in the last decade and that "enrollment has grown from 17 million recipients in 2001 to over 46 million today." States currently get more federal money the more people in the program, but Ryan says that only incentivizes expanding the program. The food stamp changes would go into effect when the unemployment level goes down from its current level.
7. Education
Ryan writes that the federal college financing program, the Pell Grant, is "on an unsustainable path" after numerous award increases and easing of eligibility requirements during the recession. The blueprint would keep the current maximum Pell award for college students in need of financial assistance at $5,645 per year for the next 10 years rather than continuously increasing the award. It also would stiffen requirements for eligibility. The budget also calls for a congressional review of K-12 education programs to ferret out wasteful and duplicative education programs.
8. Defense and the sequester
The Ryan budget provides $579.2 billion for the military next year and prevents the scheduled sequester cuts from being implemented for the next 10 years by adding an additional $500 billion in funding over the decade. Ryan states in the budget that "the House of Representatives, on multiple occasions, passed responsible replacements to the sequester. Unfortunately, the administration refused to take action, and the sequester took effect for the current fiscal year. This budget puts us on a better course to ensure our troops and military families don't pay the price for Washington's failure to budget responsibly."
9. Federal Workers
Ryan says he saves $132 billion by requiring federal workers to contribute more to their own pensions. He also claims to save $49 billion by reducing the federal workforce by 10 percent by 2015.
10. Energy
Ryan's budget would force the president to approve the Keystone XL pipeline to allow oil to travel from Canada to the Gulf of Mexico. It would also end many of the subsidies for renewable energy companies that were included in the Democrats' stimulus bill. Ryan would promote policies that would favor conventional domestic energy sources including oil, natural gas and coal. Especially by allowing drilling and exploration on federal lands and the Outer Continental Shelf.
