GOP 2012: overhauls on entitlements and taxes, $6.2 trillion in cuts over decade

House Republicans plan to propose Tuesday historic changes to Medicare, Medicaid and other popular programs that pour federal money into Americans’ lives, arguing that a sacrifice now will keep those programs solvent for the future.

The proposal also includes broad changes to the tax system and $6.2 trillion in federal spending cuts from President Obama’s budget over the next 10 years.

In all, the House Republicans’ budget for fiscal 2012 — to be presented by Rep. Paul Ryan (R-Wis.), the Budget Committee chairman — represents the most ambitious alteration of federal benefits since President George W. Bush’s ill-fated attempt to overhaul Social Security in 2005.

But the proposal, which Ryan calls “The Path for Prosperity,” will arrive at a time when Congress is already choking on a much less ambitious effort to cut thisyear’s budget, leading to the threat of a government shutdown.

So their proposal also amounts to an enormous bet, both on Ryan’s political charisma and on the depth of the fiscal concerns that gave Republicans control of the House.

Last fall, House Republicans promised an “adult conversation” with the American public about the nation’s finances. That conversation, they have concluded, includes a talk about cutting benefits.

“This is America’s moment to advance a plan for prosperity,” Ryan wrote in an op-ed published in Tuesday’s Wall Street Journal. “ . . . We can reform government so that people don’t have to reorient their lives for less. We can grow our economy, promote opportunity, and encourage upward mobility. This budget is the new House majority’s answer to history’s call. It is now up to all of us to keep America exceptional.”

The 2012 budget is entirely separate from the one that Republicans and Democrats are still fighting over for 2011, and it has a long way to go to take effect. Even if Ryan’s plan passed the House, it would need approval from the Democrat-controlled Senate, which is not likely.

On Tuesday, Sen. Charles E. Schumer (D-N.Y.) said Democrats believe that programs such as Medicare and Medicaid could be preserved by making them run more efficiently. Republicans, he said, would cut them across the board.

“You cannot say, ‘Don’t touch these programs.’ That will lose,” Schumer said. He said Democrats instead would “come up with a better proposal that reduces the deficit, but basically preserves the [programs] by eliminating waste and inefficiency.”

But the budget is still significant, as a mark of House Republicans’ willingness to break one of Washington’s great political taboos: tinkering with the programs that pump federal money into daily life.

Last fall, while Republicans were trying to retake the House, their leadership seemed to distance themselves from Ryan’s budget plans. Now — even before they have resolved the year’s first big budget fight — GOP leaders are embracing his call for another one.

“The public is in a very different place than they have been in the past on these issues,” said Michael Steel, a spokesman for House Speaker John A. Boehner (R-Ohio). Without reform, Steel said, these programs would eventually run short of money. “You have to protect these programs, and the status quo doesn’t do that.”

Ryan’s proposal would turn Medicaid, the health program for the poor, into what’s called a “block grant.” Currently, the U.S. government and states share oversight and funding responsibilities. Under Ryan’s plan, the federal government would ship the money out through grants, and let states decide how to spend it.

The idea is that states could spend the money more efficiently, which would allow less to be spent overall. In his op-ed, Ryan offers the Medicaid overhaul as welfare reform that builds upon the Clinton administration’s changes to federal welfare.

“We’ve had so much testimony from so many different governors saying, ‘Give us the freedom to customize our Medicaid programs, to tailor for our unique populations in our states,’ ” Ryan said this week on “Fox News Sunday.” “We want to get governors freedom to do that.”

The Democratic governors of 16 states, as well as the Virgin Islands, outlined their opposition to the Medicaid proposal in a letter Monday to House and Senate leaders. They wrote that they support flexibility and improvements to Medicaid but believe that Ryan’s proposal would “significantly shift costs and risks to states.”

“Such a cost shift would severely undercut our ability to provide health care to our residents and adequately pay providers,” the governors wrote.

On Medicare, Ryan will propose altering the plan so that the federal government no longer acts as a health insurer for seniors. Instead, he would create what’s called a “premium support plan.” Seniors would pick from a list of private insurance plans, and Medicare would subsidize their coverage.

The idea, again, is to use market competition to create a system with lower costs. Ryan’s plan would not apply to Americans age 55 and older, for whom Medicare would remain under the current system.

Ryan said his budget would also reform Social Security, but he has not yet offered details on that plan.

Ryan’s budget calls for strict caps on federal spending. In his op-ed article, Ryan said that some savings could come from reforming agricultural subsidies, shrinking the federal workforce through attrition and accepting military spending cuts suggested by Defense Secretary Robert M. Gates. Ryan’s calculation of $6.2 trillion in spending cuts over a decade would be achieved in part by repealing the coverage provisions of Obama’s health-care law.

On taxes, Ryan’s budget would consolidate brackets and lower tax rates; the top individual and corporate rates would drop to 25 percent. The plan also would remove deductions and loopholes that Ryan writes “distort economic activity and leave some corporations paying no income taxes at all.”

With this budget, Ryan and the Republicans are hoping that a long recession and the specter of the national debt have altered something basic in American politics. They are hoping voters understand the long-term benefits of these changes — so much so that they will ignore charges from Democrats that Republicans are hollowing out programs for the elderly and the poor.

Those charges began before Ryan’s budget was even announced.

“When the American people get a close-up look at this, they’re not going to like what they see because this budget is way outside the American mainstream,” Rep. Chris Van Hollen (Md.), the top Democrat on the Budget Committee, said in an interview Monday. “It’s the same old ideological agenda on steroids. They’re providing tax breaks to the wealthiest Americans, subsidies to oil companies and giveaways to special interests while they’re cutting kids’ education, eliminating guaranteed benefits for seniors under Medicare, and slashing support for seniors in nursing homes and other vulnerable populations on Medicaid.”

Ryan, the leader of this vast effort, has an understated political style. In interviews, he appears to trust that the changes sell themselves. He lays out the math of growing spending and deficits, and argues that only quick action can stave off a crisis of too much debt.

It is not always arresting. Ryan, in fact, was upstaged on his biggest moment in politics so far, when his response to this year’s State of the Union address was overshadowed by the off-center gaze and slide-show illustrations of the rogue response from Rep. Michele Bachmann (R-Minn.).

So, if even a president couldn’t sell the country on changing its own benefits, what chance is there for a young, wonky congressman?

“These are some of the most popular government programs in existence, and they’re especially popular among a very politically engaged group of citizens,” the elderly, said John Sides, a professor at George Washington University. He said Ryan’s approach is not likely to change the nation’s mind. “I don’t think that the public responds just to the facts.”

Ryan himself admitted recently that there was a political risk to what he was doing.

“We will walk into a political buzzsaw,” he said on the CNBC program “Squawk Box.” “I believe Americans . . . want political leaders to be candid with them, to be honest with them, and to solve these problems.”

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David A. Fahrenthold covers Congress for the Washington Post. He has been at the Post since 2000, and previously covered (in order) the D.C. police, New England, and the environment.
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