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Republicans set the stage for this spring's fiscal battles by readying the debut of their new budget blueprint on Tuesday, which they said would achieve $4.6 trillion in savings and balance the U.S. budget within a decade.
Rep. Paul Ryan, R-Wis., argued that his forthcoming budget — the third he's authored as chairman of the House Budget Committee — would be able to achieve a balanced budget by 2023, and boost the gross national product by as much as 1.7 percent in the meanwhile.
The plan is unlikely to ever become law in its entirety; it assumes a repeal of President Barack Obama's health care reform law, and collects no new revenue from taxes, two elements which are unpalatable to Democrats.
But budgets are often more political statements about a party's priorities than a hard governing blueprint. With that in mind, Ryan, the 2012 GOP vice presidential nominee, sought to inoculate Republicans from criticism of the budget, and play offense against Democrats' forthcoming budget.
"Our opponents will shout austerity, but let's put this in perspective," Ryan wrote in an op-ed to be published in Tuesday's Wall Street Journal. "On the current path, spending will increase by 5 percent each year. Under our proposal, it will increase by 3.4 percent. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy."
Ryan was set to detail his full plan in a press conference on Tuesday morning, but his op-ed contained key elements of the budget. Ryan's plan would:
- Achieve a total of $4.6 trillion in savings over the next decade
- Enact tax reform that closes loopholes and deductions, while reducing the number of income brackets to two — one at 10 percent, the other at 25 percent
- Change Medicare to a model in which future retirees would receive "premium supports" (Democrats call them vouchers) to subsidize the purchase of insurance from a menu of options, including traditional Medicare
- Repeal the president's health care reform law
- Approve the proposed Keystone XL transnational oil pipeline
- Enact welfare reforms to give states more flexibility in enforcing the program
There are other aspects of Ryan's plan that the Wisconsin congressman will outline tomorrow. Many elements of the new Ryan budget are familiar Republican proposals, weaved together in a comprehensive statement of governing principles.
The new budget, however, is only the opening salvo in a budget battle that could stretch throughout much of the spring. Congress acted earlier this year to extend the debt limit through mid-May, but only on the condition that the House and the Senate each pass a budget. The Senate budget, authored by Democrats, and their first in years, is also due this week.
And the political fighting over the dueling proposals has already begun.
"I hate to break the suspense, but their budget won't balance—ever," Ryan wrote. "We House Republicans have done our part … Now we invite the president and Senate Democrats to join in the effort."
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Total Federal Outlays projected by OMB:
………………………….2012…………….2017
Total Outlays………$3.8 trillion……$4.5 trillion
Defense……….………24%.............18%
Medicare/Medicaid….22%.............28%
Social Security……….22%.............23%
Welfare Programs….14%.............12%
Interest on Debt………6%.............12%
Total: 5 Functions……88%............93%
These 5 functions will consume 93% of federal spending by 2017. Social Security is a self-funded program and modest changes will keep it solvent for another 75 years at current benefit levels. Interest on the debt must be paid. That leaves only 3 major areas to cut spending, Defense, Medicare & Medicaid and Welfare Programs like Food Stamps.
Defense, as can be seen in the numbers, is already being cut back. The programs rapidly increasing in size are Medicare & Medicaid. The recent reductions of Medicare cost increases are also in the CBO numbers. Any serious budget by either the House or Senate or the President MUST address Medicare & Medicaid. So far only the House of Representatives has been willing to put a plan on the table for Medicare & Medicaid. It is not sufficient to be opposed the House approach. You must propose one of your own that is credible.
The CBO Director told the Senate Budget Committee that an additional $5 trillion of deficit reduction is needed over the next ten years to get to a sustainable financial situation. That $5 trillion is in addition to the 2011 budget caps, the fiscal cliff deal and the sequester cuts which are already in the CBO projections. Anyone who believes that they can come up with an additional $5 trillion without major tax increases to the middle class and/or deep cuts to Medicare and other social programs needs to take a math course or two.
The CBO Director acknowledged last week that those in the middle class will have to accept higher taxes, less
government benefits/services or (most likely) a combination of the two.
The coupon program that was rejected soundly in the last several years is in Ryan's DOA budget.
A far more sensible approach would be to means test the program and eliminate the payroll tax cap.
Looks like the only answer is GDP growth and that ain't going to happen until these companies stop sucking this country dry and make some investments to make this economy grow.
The CBO has already added in higher GDP growth than we have seen over the last 5 years. But they do not see that continuing long term because of demographic issues. It has nothing to do with companies investing in this country. Companies are investing heavily in technologies that improve their productivity. That way they can improve profit margins even with slow growing demand for their goods and services. There is no reason for some massive build out of capacity to produce things that are not needed. It is time to realize that there have been significant structural changes to the global economy because of the information technology revolution. Workers are being replaced by devices/software.
Not to mention new lucrative emerging economy markets, with new potential middle classes.
Although Ryan suggested a potential 1.7% rise in GDP growth, his projection uses the CBO growth numbers.
The CBO numbers, of course, reflect existing law...NOT the Obama proposals. Most of the differences between Ryan's budget and the anticipated (and late) Obama FY 2014 budget may be found at the White House website, regarding the proposal made to Boehner.
The basic difference will probably be the trade off's between Ryan's anticipated savings on Medicare/Medicaid and Obama's proposal for additional revenue.
Yes I know they shouldn't be making things that no one is going to buy, but they have moved all of their manufacturing off shore, that doesn't help GDP. Instead of competing, they just gave up and abandoned "Made in America". I know it cost less over there, but with all of these productivity gains they say they have made, it seems they could counteract that mass of cheap bodies and level the playing field. I don't think they are investing in pure research the way IBM use to do some years ago. they are putting their money in existing proven tech that will bear fruit in the near term. Bold research in new technologies that will boost growth like Space and computers did years ago is not being done.
Depends on the type of product. We basically "gave away" relatively simple, labor intensive manufacturing, as sort of a Marshall Plan for the post-communist emerging economies. They have to build something for export in order to afford purchasing the West's (and a few others such as Japan) higher tech products and services.
Keep in mind Ben Bernanke's reply, in a Congressional hearing, to what was the single largest cause of the housing bubble: "Asian savings."
Before we pull the plug on grandma there are plenty of tax dodges that can be eliminated first;
Means test Social Security and Medicare savings $31 billion
Tax Capital gains as ordinary income $100 billion new revenue.
Eliminate payroll tax cap $375 billion in new revenue.
End tax subsidies to oil companies $5 billion savings
End carried interest loophole $10 billion new revenue
Enact the Buffet rule $37 billion new revenue
Total $558 billion
$5.58 Trillion 10 year debt reduction.
After you get all of that, what about the next ten years? The boomer retirement years are just starting.
Not trying to blow your hypothesis, just want your thoughts on a longer term solution.
Nuke the boomers. Just kidding. Everyone will have to rethink Medicare as demographics alone are going to make it much harder to fund. Turning it into private insurance with a coupon is absolutely the worst idea. Medicare has an overhead that is about 1/4th of private insurers. We don't need to spend $109 million per year of our health care premiums on CEO pay. That said, higher premiums and deductibles for beneficiaries and lower payouts to providers and hospitals are in order. No choice about that. After Obamacare fully takes effect we need to review it for the good and the bad and modify it to try and get a handle on health care costs that have been rising exponentially compared to pay (and anything else) for decades now. The free market when it comes to health care has been an unmitigated disaster.
Yes, like higher premiums and deductibles for beneficiaries will work out well for those on strict fixed incomes. Not everyone has a large IRA or HSA account to use - many are lucky to have food or medicine - not necessarily both. The answer is not going to be easy, but putting the burden on the elderly, newly retired or those who have invested 10-20 or more years into the existing system is no answer either.
I'd say the worst part of all of this is insurance companies with their high premiums, high cost office visits, tiered prescription plans and high deductibles. When someone who retired twenty years ago pays $2 to $5 a prescription, a union worker pays about the same - then compare them to a salaried worker or newly retired person (also salaried) from the same company, they have no "grandfathered in policies" - just pay whatever for the rest of their lives. Their costs go up and up each year - no one cares. Doesn't seem fair but that is how many of Americans are treated. It's difficult to afford insurance and health care even if you've worked 35 years or more of your life - and had benefits.
Hey, the beneficiaries of SS and Medicare didnt cause this debt crisis!!! They should NOT have to foot the bill for a deliberately created debt crisis! The GOP created this problem with tax cuts and overspending under rayun/bush/bush. They left Obama with a $1.3T deficit. Let the REPUBLICANS figure out a way, using responsible budget cuts and increased revenues to solve the problem THEY created! Let THEM and their supporters foot the bill for the largest transfer of wealth upward in the history of this country.
Republicans are constantly complaining that Obama never got a budget passed. Reid wouldnt allow a vote!! If that's true, whose budget is being spent, running up the debt as much as it is? It CERTAINLY isnt Obama's budget so how can HE be running up any debt, especially when his spending increases are the lowest in 60 years. The country is being run on continuing resolutions which continues spending levels from the previous year. And THIS is true all the way back to BUSH'S last budget, FY 2009! That is why the deficits have been around the $1.3T level-- almost exactly the amount that Obama inherited from Bush.And the Republicans in Congress approved all these resoltuions!
It seems to me that the GOP learned nothing from the election and are ignoring the advice of conservative thinkers about how to respond. In one way, that's fine with me. It's going to result in a TOTAL REPUDIATION of what this version of the GOP stands for! The country can only be better for it!
NEVER believe what a GOP politician says....WATCH what they DO! LOOK at who benefits from their proposals. THAT will tell you who their buddies are. They continue to give Joe America the finger!! Well, it's their funeral I suppose.
One of the reasons this country is in trouble is that so many influential elements in our society simply refuse to acknowledge or come to terms with the truth.
You can take all, and I mean all, of everything that's happened to stop or at least slow down any progress that Obama or Democrats have made so far, and assign to it one, and only one, reason.
And it is simply this.
All Republicans, and some Democrats, will, if at all possible, absolutely refuse to allow Obama to accomplish anything.
His election was unforseen by these people, and for many of them, it was a shock.
Their only answer is to make sure it never, ever, happens again.
If the whole country goes through hell while they accomplish this goal then so be it.
A black person simply cannot be allowed to have any success of any kind.
And if something is accomplished it must be reversed or undone, at any cost.
Which is why Ryan and so many others' top priority is to get rid of Obamacare.
It simply cannot be allowed to stay in effect if at all possible.
Blacks certainly must never again be allowed to attain the presidency of this country.
And a a message must be put out to any black person who may aspire to the presidency that this obstructionism and total disrespect is what they will also be in for if they attempt it.
This is the truth.
And it's the truth for one simple reason. There is simply no other logical reason to explain the extreme animosity Obama has been shown by Republicans since he took office.
None whatsoever.
And if you hear of any other reason, trust me. It's a lie.
This idiot couldn't even do his own taxes right..................so how is he going to balance the budget? His figures just don't add up. Just like his taxes.
If they want to cut healthcare let them start by cutting the government funded/debt driven healthcare they receive. Their healthcare IS a part of the budget. Social security isn't.
Ryan should read the latest AARP magazine - Americans pay double what other industrialized nations pay for health care and get less in return. We have fewer doctors, more specialists and a population who (for the last thirty years) has increasingly become more unhealthy, die younger and continue to fall below other nations in living longer lives - men average live expectancy 75.6 years ranked last in the survey and women ranked 16th with a live expectancy of 80.7 years. The article claims our worst problem is access to good primary care physicians and not tending to unhealthy lifestyles - drinking, smoking, obesity, etc.
Like Obama's health care or not, we do need a better health care system - from insurance premium costs, to more doctors, having to pay less for office visits, prescriptions, tests, etc. For all the money we spend on so called medical insurance, care, and such - we are spending more than any of the 13 western European countries, Australia, Japan and Canada in the study.
Maybe Paul Ryan doesn't understand or care - Americans need an affordable health care system. He doesn't realize his message was made and ignored in the last presidential primary and election. Taking away any form of health care is not the answer just as it is not going to help changing Social Security, Medicare and other benefits people have worked a lifetime to secure and deserve - now, and in the future. Most Americans are not wealthy like those serving in Washington and Paul Ryan and his followers do not care.
We will remain in this mess as long as the republican party and some democrats are willing to channel the power of the plutocrats into our political system.
@salsaforever! Way to go! About the controversial pipeline-In 1980 big oil lobbied thru a bill that states oil companies don't have to pay for the clean up of "bitumen"spills, via paying into a clean-up fund. Tar sands oil - which is a coal/oil crap slurrey-is classified as "bitumen"!( I heard this on two podcasts, one titled "Spills and Spoils" by Best of the Left and it can also be found at the Progressive.org website.) It is just what Big Oil doesn't want us to know. I told an IL congressman and he did not know this either. It is the Scam of Scams. Dirty rotten scoundrels- so Arkansas can pay for their own pipeline spill- although I think the oil company will want to look good, pre-approval of the pipeline consideration, and probably kicked in. But the truth is, you can't really clean that chemical slurry up. I feel sorry for the property owners of AK affected. The outrage is the duplicitous psycho-CEO's of the oil companies and the congressmen they own. But I have to hand it to them on their capacity of vision. They saw this coming back in 1980.......