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Rep. Paul Ryan, R-Wis., presents the GOP budget proposal at a press conference on Tuesday.
Associated Press/Photo by Carolyn Kaster
Rep. Paul Ryan, R-Wis., presents the GOP budget proposal at a press conference on Tuesday.

Budget battle

Congress | House Republicans, led by Rep. Paul Ryan, lay out a balanced budget plan in anticipation of a Democratic alternative that emphasizes more taxes and spending

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.

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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.”

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