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Published: Wednesday, 4/6/2011 - Updated: 3 years ago

GOP 10-year plan slashes $5 trillion

Budget would revamp health programs

BLADE NEWS SERVICES
House Budget Committee Chairman Paul Ryan (R., Wis.) works with Republican members of the committee on Capitol Hill Tuesday. He is flanked by Rep. Tom McClintock (R-Calif.), right, with Rep. Bill Flores (R., Texas). House Budget Committee Chairman Paul Ryan (R., Wis.) works with Republican members of the committee on Capitol Hill Tuesday. He is flanked by Rep. Tom McClintock (R-Calif.), right, with Rep. Bill Flores (R., Texas).
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WASHINGTON -- House Republicans unveiled plans Tuesday to slash the federal budget deficit by $5 trillion or more over the upcoming decade, blending unprecedented spending cuts with a fundamental restructuring of taxpayer-financed health care for the elderly and the poor.

The decade-long plan outlined by House Budget Committee Chairman Paul Ryan (R., Wis.) far exceeds the $1 trillion-plus in budget cuts outlined in President Obama's February budget and is on par with recommendations from Mr. Obama's bipartisan deficit commission in December.

The 2012 budget blueprint would not touch Social Security, the single largest federal program, which provides income support to nearly 60 million seniors, disabled people, and others.

Under the congressional budget process, the GOP plan is not actual legislation but provides a nonbinding, theoretical framework for future action in Congress.

With Democrats controlling the Senate, the GOP plan serves more to frame the debate heading into next year's election than represent a program with a chance of passing Congress and becoming law.

Despite cuts already deemed draconian by Democrats, Mr. Ryan's plan can't claim a balanced budget by the end of the decade -- getting the deficit to the $400 billion range after six years -- because of promises not to increase taxes or change federal retirement benefits for people 55 and older.

But he said the measure would stabilize the nation's finances and prevent a European-style debt crisis that could force far harsher steps.

"We're actually saving Medicare and Medicaid, making them solvent for future generations," Mr. Ryan said. "And, yes, we're cutting spending. We're cutting a lot of spending, because government is spending way beyond its means."

Compared with Mr. Obama's budget, the Ryan plan would cut $6.2 trillion over 10 years.

But measured against Congressional Budget Office estimates that assume permanent extension of the Bush-era tax cuts, Mr. Ryan's budget would cut $5.8 trillion.

However, $1 trillion of saving comes from the unrealistic assumption -- also made by Mr. Obama -- that overseas military operations would soon cost just $50 billion a year -- less than half those requested by Mr. Obama for 2012.

Mr. Ryan's plan features a controversial proposal to convert the traditional Medicare health plan for the aged into a system in which the government would provide payments for private health insurance plans -- a fundamental shift from the traditional Medicare program that directly pays doctors and hospitals.

Current Medicare beneficiaries or workers age 55 and older would stay in the existing system.

But for people now under the age of 55, the Medicare program would operate like a voucher system that provides subsidies that are unlikely to keep pace with medical inflation, critics say.

Meanwhile, Republicans propose to sharply cut projected spending on the Medicaid state-federal health program for the poor and disabled and transform it into a block grant program that gives governors far less money but more flexibility.

The savings from Medicaid would top $700 billion over the coming decade. That's before another $1.4 trillion would be reaped over the same period by repealing Mr. Obama's health-care law.

In the first decade, the plan barely touches overall Medicare spending.

Legions of critics of the curbs to both Medicare and Medicaid say the moves would inevitably lead to poorer quality coverage. Future Medicare beneficiaries are likely to pay more out of their own pockets while states seeking to preserve Medicaid would have to provide more state taxpayer money to replace federal cuts.

Mr. Ryan counters that the spiraling growth of Medicare and Medicaid are unsustainable, a view shared by Democratic deficit hawks such as Alice Rivlin -- a White House budget director during the Clinton administration -- who helped design Mr. Ryan's Medicare plan as a member of Mr. Obama's deficit panel.

On taxes, Mr. Ryan's plan would rescind all tax increases in both the new health-care law and in Mr. Obama's proposed 2012 budget.

The plan would extend Bush-era tax cuts for taxpayers at every income level, including the wealthy. Mr. Ryan's plan would reject Mr. Obama's call to increase taxes on oil and natural gas companies, which were included in the President's proposed 2012 budget.

He also embraces fundamental tax reform to set a top tax rate of 25 percent for both individuals and corporations, down from the current top rate of 35 percent for both.

Republican congressional leaders praised Mr. Ryan's proposal.

"The American people understand we can't continue spending money we don't have, especially when doing so is making it harder to create jobs and get our economy back on track," House Speaker John Boehner (R., Ohio) said. "Our budget will help spur job creation today, stop spending money we don't have, and lift the crushing burden of debt that threatens our children's future."

Democrats said the GOP plan focused its cuts on seniors and the poor to pay for continued tax cuts enjoyed by the wealthiest.

"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," said Rep. Steve Israel (D., N.Y.). "Forcing seniors to pay higher health costs is not the right way to balance our books and it's not the only way to do it."



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