House Republicans unveil $3.5T budget blueprint for 2012

House Republicans on Tuesday unveiled an ambitious and politically perilous plan to resize the federal government and stem the $14 trillion national debt by slashing spending on domestic programs and fundamentally overhauling government health programs for the elderly and the poor.

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. But with the cost of benefits expected to exceed revenues this year, Republicans say they would enact legislation to force President Obama to propose changes to “restore balance to the fund.” Suggested reforms include adjusting the retirement age to reflect longer life spans and slowing the growth in benefits for higher-income workers.

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Republicans controlling the House have fashioned plans to slash the budget deficit by about $5 trillion over the upcoming decade, blending unprecedented spending cuts with a fundamental restructuring of taxpayer-financed health care. (April 5)

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Compare President Obama’s budget proposal with the House GOP plan.

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All told, the document, titled the “Path to Prosperity,” proposes to spend about $40 trillion over the next decade — $6.2 trillion less than the budget that Obama put out in February.

Despite its vast ambitions, however, the blueprint drafted by House Budget Committee Chairman Paul Ryan (R-Wis.) underscores the tremendous difficulty of mopping up the nation’s enormous tide of red ink.

For fiscal 2012, for example, Ryan’s plan would authorize $3.5 trillion in total spending, leaving a budget deficit next year of just under $1 trillion. That’s slightly lower than the deficit projected under current law, but it’s still a significant budget gap.

Annual deficits would dwindle to under $400 billion by the end of the decade, a dramatic improvement over Obama’s budget proposal. But even Ryan’s plan would take nearly 30 years to wipe out deficits completely. More deficits mean more borrowing, and the national debt would keep rising under Ryan’s plan — requiring lawmakers to raise the $14.3 trillion legal limit on borrowing this year. Even Ryan’s austere proposal would allow the debt to rise, to more than $16 trillion next year and more than $23 trillion by 2021.

A significant number of Republicans, however, oppose raising the debt limit. On Monday, Treasury Secretary Timothy Geithner pushed congressional leaders to raise the cap, which he says the country will hit in mid May, forcing it to default.

Because the economy would keep growing, the debt would diminish as a percentage of gross domestic product, an important measure of financial stability that could help the nation avert a debt crisis. But that considerable achievement might be too nuanced for the most conservative members of the House Republican caucus, several of whom berated Obama’s budget director in February for failing to offer a plan that would end additional borrowing.

Republican congressional leaders, however, praised Ryan’s proposal Tuesday.

“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.”