The New York Times
By: Jonathan Weisman
March 21, 2012
Republicans introduce their plan for budget
House Republicans thrust their vision of a smaller government, a flatter tax code and a free-market Medicare system into the 2012 election season on Tuesday, banking that fears over surging federal deficits will trump longstanding voter allegiances to popular government programs.
The House Budget Committee blueprint for spending and taxation over the next decade would reshape Medicare into a system of private insurance plans, shrink programs for the poor and turn them over to state governments, and try to simplify the tax code for individuals and businesses. The six existing tax rates, topping off at 35 percent, would be reduced to two, 10 percent and 25 percent, while states would be allowed to place time limits, work requirements and other restrictions on programs from food stamps to welfare.
At the same time, the proposal calls for reducing spending below the cap agreed to in last year's debt limit deal, raising the prospect of a tense fiscal clash just a month before the election.
''This is about putting an end to empty promises from a bankrupt government,'' said Representative Paul Ryan, the Wisconsin Republican who is chairman of the Budget Committee and the chief architect of the plan. Mr. Ryan said he had spoken to each of the remaining Republican presidential contenders and expressed confidence that they would back his proposal.
The plan amounts to the most detailed vision yet for Republican governance should the party hold the House and win back the Senate and White House in November. Although the budget plan has no chance of being enacted this year, it could become a touchstone for future general election campaigns. The Republican front-runner, Mitt Romney, hailed it as ''a bold step toward putting our nation back on the track of fiscal sanity'' and called the Medicare changes ''prescriptions that will strengthen Medicare for generations to come.''
The White House communications director, Dan Pfeiffer, countered that the budget plan ''fails the test of balance, fairness and shared responsibility'' and would ''end Medicare as we know it.''
House Republicans understand they are placing a bet that three years of trillion-dollar deficits have prepared the electorate for monumental changes. Representative Tom Cole, Republican of Oklahoma and a former National Republican Congressional Committee chairman, conceded the move is ''high risk politically.'' The budget will be formally drafted on Wednesday with a final House vote next week.
''It's going to be a big deal,'' said Mr. Cole, a member of the Budget and Appropriations Committees. ''This budget was rolled out in the context of a presidential election. The House is shaping the national debate.''
Under the Ryan plan, spending would be cut $5.3 trillion below President Obama's budget through 2022. Medicare would be shaved by $205 billion. Medicaid and other health programs would be cut $770 billion. Other entitlement programs, including welfare, food stamps, agriculture subsidies and transportation, would be cut by nearly $2 trillion. Budget experts said that last figure was so high it could only be reached by scaling back or eliminating payments to the working poor through the earned income credit.
Programs at the discretion of Congress would be cut $352 billion below the levels requested by the president over 10 years. To do that, House spending bills will have to come in well below the caps set last July after hard-fought negotiations over raising the statutory debt limit. In the fiscal year that begins this October, the House plan sets spending on domestic programs $19 billion below the limit in last summer's Budget Control Act. But because of increases to military spending, White House officials said Congress would have to impose an immediate, $27 billion cut below the cap, or about 5 percent.
''By desperately attempting to appease their extreme conservative base, House Republicans are reneging on a deal their own speaker shook on less than eight months ago,'' said Senator Patty Murray, Democrat of Washington, who suggested the divergent roads the House and Senate will take on spending bills could lead to another spending showdown this fall.
House Republicans argue that additional cuts to both discretionary and entitlement spending are needed now to head off automatic, $110 billion in across-the-board cuts to military and domestic programs in 2013. Under the House plan, the current $1.18 trillion deficit would fall to $797 billion in the coming fiscal year, compared with $977 billion under Mr. Obama's plan. But by 2016, the deficit would fall to $241 billion by Republican estimates. The Congressional Budget Office estimated last week that Mr. Obama's budget would still have a $529 billion deficit.
To get the budget balanced, Mr. Ryan is counting on the government shrinking to levels not seen since the beginning of World War II. Medicaid and the Children's Health Insurance Program would shrink from its current 2 percent of the gross domestic product to 1 percent in 2030. Entitlement and domestic programs outside Medicare, Medicaid and Social Security would shrivel from the 12.5 percent of G.D.P. it reached in 2011 to 5.75 percent in 2030 to 3.75 percent in 2050, according to the Congressional Budget Office.
The Ryan plan would accumulate $3.1 trillion in additional debt through 2022. The president's would pile on $6.4 trillion, more than twice that total. The Republican budget mandates the repeal of Mr. Obama's health care law and assumes the elimination of the government-backed mortgage giants Fannie Mae and Freddie Mac.
The tax code would be simplified to just two tax rates, 10 percent and 25 percent, with the closure of tax credits and deductions. The 35 percent corporate income tax would be lowered to 25 percent and the existing worldwide system of taxing corporate profits would be changed to a territorial system where only domestic profits are subject to United States corporate taxation. The budget assumes revenues would stay consistent with revenues under the current individual and corporate tax codes.
Medicare would be turned into a subsidized set of private insurance plans, but with the option of buying into the existing fee-for-service program.