Ryan introduces GOP budget plan, slashing social programs and tax rates

House Republicans renewed their commitment Tuesday to the politically risky strategy of targeting Medicare and other popular social programs to tame the national debt, unveiling a $3.5 trillion spending plan that would also slash the top tax rate paid by corporations and the wealthy.

The GOP blueprint, authored by House Budget Committee Chairman Paul Ryan (R-Wis.), is designed to draw a sharp contrast with President Obama heading into the November election in the ideological battle over taxes and spending. But the plan also renews a narrower fight over agency budgets that has tied the Capitol in knots since Republicans took control of the House last year.

Bowing to demands from conservatives influenced by the tea party movement, House leaders are pressing to protect the Pentagon in 2013 while cutting budgets for domestic agencies below levels set during last summer’s showdown over the federal debt ceiling. The decision has alarmed both Democrats and some GOP moderates, who said the move could spark a fresh clash over the annual bills needed to keep the government running into the new fiscal year, which begins Oct. 1.

If that dispute is not resolved, Democrats warned that the government — or significant parts of it — could shut down five weeks before the election.

On Tuesday, House Speaker John A. Boehner (R-Ohio) defended the decision to set agency budgets $19 billion lower than the cap established last year.

“People have limits on credit cards. That doesn’t mean that you’re required to spend up to the limit,” Boehner told reporters. “It just says you can’t spend any more than that.”

Democrats immediately accused the GOP of reneging on the hard-fought deal, which both parties had hoped would get them through the Nov. 6 election without additional drama. In the Senate, Budget Committee Chairman Kent Conrad (D-N.D.) filed a motion to permit spending bills to be drafted at the higher level — which, he noted, “everyone agreed to just last year.”

“House Republicans, I hope, would do the same,” Conrad said. “If they fail to do so, they will once again threaten to shut down the government and needlessly imperil the economic recovery.”

It was not clear, however, that Boehner could deliver on last summer’s agreement even if he wanted to. Centrist Republicans responsible for writing the annual spending bills openly fretted about being squeezed between the demands of the Senate and the demands of their own right wing, where the $19 billion cut is widely viewed as too timid.

“I don’t know how we get our work done,” said Rep. Steven C. LaTourette (R-Ohio), who allowed that Democrats have a point about Republicans breaking their word. “It’s law. . . . So I have difficulty backing off,” he said.

Ryan said he has the votes to push the broader, $3.5 trillion budget blueprint out of committee Wednesday and present it to the full House next week. But the committee vote could be close.

The blueprint largely reprises the spending plan Ryan unveiled one year ago, with a few new details penciled in. The plan would put the nation on course to balance the budget by 2040 and shrink the national debt to historic norms as a percentage of the economy. But because Ryan rejects higher taxes, that path would require significant reductions in a host of popular programs.

The plan would cut spending on the major programs for the poor, including Medicaid and food stamps, while giving the states greater responsibility for their administration. Recipients would also be given a deadline to find work and get off the dole.

Education and job training programs would be consolidated and “modernized,” the plan says. And spending on Pell grants would be reduced and retargeted toward low-income college students most in need of assistance.

On Medicare — a flash point last year — the Ryan budget once again proposes to raise the eligibility age to 67 and cap spending on those who turn 65 after 2023, offering them a set amount with which to purchase private health insurance on newly created federal exchanges. In reaction to Democratic criticism that his plan “ends Medicare,” Ryan now aims to preserve traditional Medicare as an option, though it could cost seniors more than the cheaper private plans.

All told, Ryan proposes to slash federal spending by $5.3 trillion over the next decade, compared with Obama’s latest budget blueprint. But deficits under the Ryan budget would be only about $3.3 trillion smaller because his plan would generate less tax revenue.

On taxes, Ryan proposes to collapse today’s six brackets into two. The bottom 10 percent rate would be preserved, while the top rate would fall from 35 percent to 25 percent. Corporations would get the same reduction, as well as dramatically lower rates on profits earned overseas.

To pay for those changes, Ryan proposes to wipe out deductions, credits and other tax breaks that benefit people at every income level. Neither he nor House Ways and Means Committee Chairman Dave Camp (R-Mich.) would spell out specifics on Tuesday.

“We owe the country an alternative path if we don’t like the path the president is taking us on. Whoever our nominee is going to be owes the country that choice of two futures,” Ryan said. “We’re helping them put this together.”

Former Massachusetts governor Mitt Romney immediately endorsed the Ryan budget, calling it “a bold and exciting effort.” Former senator Rick Santorum (R-Pa.) was silent. Meanwhile, reaction from the White House was sharp.

“The House budget once again fails the test of balance, fairness and shared responsibility,” White House Communications Director Dan Pfeiffer said in a statement. “It would shower the wealthiest few Americans with an average tax cut of at least $150,000” — paid for, he said, “by undermining Medicare.”

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
Rosalind Helderman is a political enterprise and investigations reporter for the Washington Post.
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