Paul Ryan's ideas for cutting the deficit

Monday, August 2, 2010

The Congressional Budget Office has estimated that Rep. Paul Ryan's plan would cut the budget deficit in half by 2020. Democrats say voters would not back his reductions in Medicare and Social Security. Some highlights:

-- Leaves in place the current Social Security and Medicare system for people 55 and over.

-- For those currently under 55, it would reform Medicare with vouchers that seniors would use to buy private insurance. The vouchers would grow more slowly than the projected increase in medical costs, but Ryan argues that competition would keep plans affordable. The age for Medicare eligibility would increase over time from 65 to 69.

-- Future Social Security benefits would be reduced for many workers now 54 or younger. They would also have the option of putting into investment accounts some money they would pay in Social Security taxes.

-- Gradually raises the retirement age to 70.

-- Eliminates taxes on interest, capital gains and dividends.

-- Replaces taxes on corporations with a consumption tax on what businesses buy.

-- Would freeze increases on most spending by the government but would exempt such programs as Social Security, Medicare and Medicaid, as well as defense spending.

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