April 01, 2014, 10:30 am
Ryan's final $5.1T cut
By Russell Berman and Bernie Becker
Rep. Paul Ryan (R-Wis.) on Tuesday unveiled a budget that proposes to cut $5.1 trillion over a decade in a bid to erase the federal deficit, while calling once again for dramatic changes to Medicare, Medicaid and the tax code. [READ RYAN'S BUDGET PROPOSAL.]
The nearly 100-page blueprint is likely be the last formal budget proposal from Ryan, the Republican chairman of the Budget Committee who wants to move to the more powerful Ways and Means Committee next year.
While Ryan adheres to a bipartisan budget agreement that set a $1.014 trillion spending cap for fiscal 2015, he proposes deeper cuts to discretionary accounts after that in order to keep the GOP’s promise to balance the budget within 10 years. In those out years, defense spending gets a boost by $273 billion over the level President Obama proposed in his budget last month.
“The Bipartisan Budget Act was a good first step. But we can and must do more," Ryan said in a statement, referring to the two-year deal he struck in December with Democratic Sen. Patty Murray (Wash.). “As the House majority, we have a responsibility to lay out a long-term vision for the country, and this budget shows how we will solve our nation’s biggest challenges. By cutting wasteful spending, strengthening key priorities, and laying the foundation for a stronger economy, we have shown the American people there’s a better way forward.”
House Republicans are having a tougher time finding the votes to pass Ryan’s plan this year than in previous years, in part because he sticks to that roughly $1 trillion spending level for 2015 that 62 conservatives opposed in December. And because of a worsening long-term deficit outlook from the Congressional Budget Office, Ryan had to cut deeper to achieve balance and, for the first time, he used a friendlier economic projection method known to some as “dynamic scoring” to help make the numbers work. That move is likely to draw criticism from Democrats, who have campaigned against Ryan’s proposal each of the last three years.
Even so, Ryan's fourth framework as Budget chairman contains broad similarities to last year's effort to revamp tax-and-spending programs, which was opposed by 10 House Republicans. The GOP can lose 16 votes this time around, assuming all Democrats continue to oppose the Ryan budget.
The increases in the defense budget would return Pentagon spending by 2017 to its level from before sequestration cuts kicked in. That amounts to an increase of $483 billion over ten years, which is offset by cuts to non-defense discretionary spending.
Ryan notes in the budget that spending would continue to increase over the next 10 years under his plan, but at a slower pace than it is currently on. While current spending is projected to increase annually by 5.2 percent, the Ryan budget would slow that to 3.5 percent.
The proposal contains Ryan’s now-familiar plans to partially privatize Medicare through an option premium support system while block-granting Medicaid to the states. And although the budget again calls for an overhaul of the tax code that collapses the seven individual income brackets and lowers top rates, Ryan notably does not endorse a major proposal by Rep. Dave Camp (R-Mich.), the Ways and Means chairman who announced his retirement on Monday.
Ryan’s latest budget would allow people who turned 55 before this year to remain on the traditional Medicare. In last year’s budget, people who were already 54 would see no changes in their Medicare.
In effect, that means that the latest Ryan budget affects the same group of people as last year’s framework, just with everyone having become one year older. Ryan had pushed to make Medicare changes to those 55 and younger in last year’s budget, but couldn’t get enough of the GOP caucus on board.
Ryan’s budget also makes few changes to his Medicare framework for people under 55, allowing future seniors to choose between the traditional program or choosing a private plan where costs are offset by a “premium support” payment. For instance, it continues to incorporate the Medicare cuts in ObamaCare that Ryan sharply criticized as GOP nominee Mitt Romney’s running mate in 2012. Ryan has argued the difference is that he uses the cuts for deficit reduction, and continues to press to repeal the healthcare law in the budget.
But the new budget does not outline a specific replacement for the healthcare law, nor does it say what would happen to people now covered under ObamaCare once it is repealed.
The new budget does suggest using the average bid from competing private insurance plans to calculate the premium support payment, a method Ryan says would means savings for both the beneficiary and the government.
Like previous years, Ryan also continues to call for dramatic changes to Medicaid, seeking to provide block grants to states.
In the latest budget, Ryan keeps the outlines of an aggressive plan to overhaul the tax code that he first formulated Camp a couple years ago.
That plan would collapse the current seven individual tax brackets into two, and lower the top individual rate from 39.6 percent to 25 percent. The corporate rate would also be slashed to 25 percent, from its current 35 percent.
Camp released a draft tax reform proposal in February that axed many tax breaks but fell short of those goals, with a small percentage of individual taxpayers hit by a 35 percent bracket.
The Camp plan illustrated the challenges that policymakers face in revamping the tax code, and Ryan – who is the frontrunner to take over Camp’s gavel – again declined to weigh in on which tax preferences should be scrapped.
Ryan applauded Camp for releasing his tax overhaul, but the Budget chairman’s newest framework only notes that “there are a number of good tax-reform proposals” and the “the Path to Prosperity does not embrace any particular proposal.”
Ryan’s budget has historically taken a more hands-off approach to Social Security than it does to Medicare and Medicaid, and the newest framework is no different. Like last year’s budget, the newest plan requires both the president and Congress to submit plans to strengthen Social Security.
In other areas, Ryan’s budget proposes cuts to programs aimed at combating climate change throughout the federal government while expanding domestic oil production on federal lands – a longstanding Republican priority.
Ryan incorporates some of the reforms to agriculture and welfare policy adopted in the farm bill that passed earlier this year, but he proposes additional changes to subsidies while again pushing to block-grant the food stamp program and turn it over to the states.
The proposal envisions the winding down of the housing giants Fannie Mae and Freddie Mac while scrapping significant portions of the Dodd-Frank banking reform bill and significant funding cuts to the Securities and Exchange Commission.
On transportation, Ryan’s plan notes the financial shortfall in the Highway Trust Fund, but it does not endorse a specific long-term funding source and says only that its future spending should match revenues – an approach that could lead to significant cuts to federal transportation projects without a new revenue source.
Ryan again calls for eliminating subsidies to Amtrak, and he proposes reducing funding for the Transportation Security Administration.
In education, the plan calls for major cuts to the Pell grant program, a repeal of funding for the 2010 student loan reform signed by President Obama and a consolidation of job training programs.
One significant omission is familiar from Ryan’s previous budgets: immigration reform. While the president’s budget calls for an overhaul of immigration laws as a way to strengthen the economy and reduce the deficit, Ryan does not touch an area that remains divisive in his party, despite his own personal push for the issue over the last year.