Paul Ryan’s budget in summary
It occurs to me that I haven’t yet posted a simple summary of what House Budget Commitee Chairman Paul Ryan’s budget does. So before I comment on it further, let’s do that.
To begin with, you can download his budget here (PDF). But the best way to understand it is probably to break it down by categories. One thing that surprised me when reading through the budget was just how much Ryan was actually proposing to do here. For instance: There’s no obvious reason that repeal of the Dodd-Frank financial-regulation law should be in the budget, yet there it is. Anyway, onto the summary:
1) Discretionary spending
a) Non-defense discretionary: Brings spending back to pre-2008 levels and freezes it there for five years.
b) Defense-related discretionary: Echoes Obama’s budget request in accepting the $78 billion in “savings” that Defense Secretary Robert Gates identified and going no further. I put “savings” in quotation marks because it’s really a reduction in the growth rate that Gates previously requested.
2) Financial system
a) Financial regulation: Repeals Dodd-Frank.
b) Fannie Mae and Freddie Mac: “This budget . . . proposes eventual elimination of Fannie Mae and Freddie Mac, winding down their government guarantee and ending taxpayer subsidies. It supports increasing the guarantee fees Fannie and Freddie charge lenders in order to bring private capital back, shrinking their retained portfolios, and enacting various measures that would bring transparency and accountability to the GSEs.”
3) Safety net
a) Medicaid: Converts federal share of Medicaid spending into a block grant that’s indexed for inflation and population growth. To offer some context, health-care costs often increase at twice the rate of inflation or more.
b) Supplemental Nutrition Assistance Program: Better known as food stamps, SNAP gets the Medicaid treatment: block grants indexed for inflation and population growth.
c) Pell Grants: Cut back to 2008 levels, wiping out recent increases.
d) Health-care reform: Repeals the Affordable Care Act.
4) Retirement security
a) Medicare: Privatizes Medicare. Future beneficiaries will choose from a menu of private options. They won’t have the choice of the standard Medicare plan. Wealthier beneficiaries will get a small voucher and poorer beneficiaries will get a larger voucher. Vouchers grow at GDP+1%, whether or not Medicare does the same.
b) Social Security: Calls for a bipartisan process to develop reforms.
a) Tax reform: “Reform the tax code by consolidating the current six brackets and cutting the top individual rate from 35 percent to 25 percent.”
b) Tax revenue: Prevents the Bush tax cuts from expiring in 2013. So the revenue-neutral tax reform locks in today’s rates, which is to say it makes the Bush cuts permanent.
c) Corporate taxes: Lowers corporate tax rate from 35 percent to 25 percent. “This budget would offset lower rates with a broader base, scaling back or eliminating entirely the deductions.”
Endorses “The American Energy Initiative”: I don’t know much about this bill, but you can find the GOP’s official case for it here.