WASHINGTON—Republican House Budget Chairman Paul Ryan’s federal budget plan, introduced Tuesday, proposes to eliminate the annual deficit by 2023 and invites President Obama and his fellow Democrats to offer their own alternatives for balancing the budget.
“Are we going to continue to be complicit with never ever balancing our budget,” Ryan asked in an effort to put Republicans on the budget offensive after several years of being on the budget defensive.
Ryan’s deficit elimination goal represents a victory for fiscal conservatives. The plan, titled “The Path to Prosperity: A Responsible, Balanced Budget, does not cut federal spending, but it does reduce the government’s rate of growth. It cuts about $5 trillion from spending growth projections for the federal government over the next decade, a slice in the explosion of government spending that Democrats are sure to attack.
The Wisconsin congressman said his new budget ensures the country will live within its means. He proposes spending a total of $41.5 trillion during the next 10 years. That’s a 3.4 percent annual increase over current federal spending levels compared to current projections of a 5 percent yearly hike in federal spending over the coming decade. Ryan’s plan projects $5 trillion in federal spending for fiscal year 2023 (fiscal year 2012 is set to carry a $3.5 trillion federal budget). At Ryan’s spending levels, he projects that the government would have a surplus of $7 billion in 2023.
“We believe that we owe the American people a balanced budget,” he said Tuesday during a Capitol Hill press conference. “It’s a reasonable goal … we can’t just keep spending money we don’t have.”
Some conservative groups, such as The Heritage Foundation, are dissatisfied with Ryan including in his budget plan the $618 billion in tax increases that President Obama secured with the Jan. 1 fiscal cliff deal. Proving how hard it is to kill a government program once it is given life, Ryan’s plan also achieves its balanced budgets by including some elements of Obamacare’s projected $1 trillion in tax hikes.
Still, Ryan called his proposal a pro-growth plan that injects common sense budgeting practices that are often missing in Washington.
“We match revenue with the expenditures … just like every family and business must do throughout America,” he said.
The plan’s overhaul of the tax code includes a reduction of the number of income tax rates from seven to two: 10 percent and 25 percent. It also lowers the highest corporate tax rate to 25 percent, closes tax loopholes, and repeals the Alternative Minimum Tax. Currently the tax code is nearly 4 million words long. About 60 percent of filers hire a professional to help prepare their returns at a combined cost of $160 billion annually.
“The purpose of tax reform is not to take more money from our families to spend more money here in Washington,” said Rep. Diane Black, a Republican from Tennessee who sits on the House Budget Committee.
For the big drivers of the federal spending crisis, entitlements, Ryan proposes a Medicare premium support system. Seniors would have the option of Medicare’s current fee-for-service program or the premium support system that would give them money to buy private health insurance. Ryan would dole out Medicaid through block grants to states so that governors would have flexibility in tailoring the system to their state’s specific needs.
“We know without a shred of doubt that we are consigning the next generation to an inferior standard of living,” Ryan said of the country’s mammoth entitlement obligations. “We are addressing the most predictable economic crisis in this country’s history.”
But the Medicare system would not start until 2024, meaning those 55 and older would be spared—a move meant to shield Republicans from Democratic attacks that the GOP budget will remove benefits for the elderly. And, to the dismay of conservatives, the plan does not include reforms to Social Security.
Ryan does call for repealing most elements of Obamacare, a move he projects would save the government $1.8 trillion. Ryan includes $962 billion in cuts to other mandatory spending programs.
His core philosophy, repeated several times on Tuesday, is that balancing the budget would grow the economy and make it easier for businesses to plan, invest, and create jobs. But Ryan’s plan, which would see the government spend roughly $985 billion less in 2023 than what the Congressional Budget Office currently predicts for that year, will go nowhere in the Senate. Ryan knows that. He stressed that his proposal shows voters the Republican vision for a “pro-growth society.”
Ryan urged Americans to compare his outline to what the Democrats are proposing. That has been hard to do of late. Obama, who faced a legal deadline of Feb. 4 for submitting a budget, still has not released his plan despite being more than a month late. And the Democratic-led Senate has not adopted a budget in nearly four years. That has left Republicans on the defensive in previous years, having to explain their spending plans to voters while having contrasting plan from the other side. But now Senate Democrats have pledged to adopt a budget this year, and that is why Ryan spent so much of his Tuesday press conference urging Americans to take a look at the two competing visions.
Despite Ryan’s challenge, neither Obama’s budget nor the Senate plan will balance the budget. Reports suggest that the Senate plan, to be introduced later this week, will seek nearly $1 trillion in new revenue. On Monday, White House Press Secretary Jay Carney, said balancing the budget was not one of Obama’s goals.
“It should not be deficit reduction for deficit reduction’s sake,” Carney said of federal budgeting.
Republicans are hoping the Senate’s adoption of a budget plan this year will revive the regular budgeting process and provide voters with a clear contrast between the spending philosophies of the two parties.
Democrats will argue that the austerity in Ryan’s plan would be too painful for a nation that has grown dependent on federal government dollars. Senate Majority Leader Harry Reid wasted no time going after Ryan’s budget on Tuesday, labeling the plan “extreme” and full of “draconian cuts” to government services.
“It guts investments in education, healthcare, public safety, scientific research, and job-creating clean energy technology,” Reid said. “The Republican budget also devastates the economy, costing jobs and slowing growth.”
Democrats will use caricatures of Ryan’s budget in their efforts to regain control of the House in the 2014 elections. But Republicans, for the first time in four years, will have a Democratic-authored alternative budget in the Senate to poke and prod. Republicans will point out how the Democrats will push for more taxes. Such revenue increases may be a hard sale for incumbent Democratic lawmakers from red states, particularly for those facing reelection.
“Will enough Senate Democrats be willing to endorse a plan that taxes more so that Washington can spend more,” asked Rep. Tom Price, R-Ga. It is a question a lot of Republican lawmakers will be asking voters during the next two years.
In laying out the Republican’s vision and priorities for Washington spending, Ryan is urging lawmakers to stop measuring success by how much money the government spends and instead put more emphasis on what works.
“We have put so much money in welfare program, but we have 46 million people living in poverty,” Ryan said. “That is among the highest rates of poverty we have had in a generation.”