The much-anticipated House GOP budget was released in what is widely believed to outline the battle-lines of the 2012 Congressional and Presidential elections. House Budget Committee Chairman Paul Ryan, R-Wis., announced the new budget in a press conference stating the plan would move America away from a “dependent culture.”
The House Democrats were quick to denounce the plan as unbalanced, favoring corporations over Medicare recipients.
Ryan’s GOP budget shares much of the structure of the plan proposed in 2011, centering on the single greatest budget-buster, Medicare, setting a course to reform the plan for citizens currently under age 55. The plan allows seniors to choose from a list of plans, including the traditional fee-for-service Medicare plan and private insurance with government subsidies.
The GOP budget leader added, “We believe competition and choices should be the way forward versus price controls that leads to rationing.”
GOP Plan Revises Ryan’s Original Budget
Several new twists on the 2011 GOP budget were added that dramatically simplify the tax code. Ryan’s budget condenses the current six-bracket system into two: one at 10 percent and the other at 25. The specific details on the trigger-points for the new two-rate system remain to be seen, but Ryan accomplishes this simplification by eliminating many of the current tax breaks.
The GOP plan released by the House Budget Committee slashes the spending identified in President Obama’s budget. The GOP alternative reduces the deficit by $3.3 trillion including more than $5.3 trillion in spending reductions and $2 trillion in lower taxes, as compared to the president’s budget over the next decade.
According to the GOP budget, the deficit in 2015 would drop to about $300 billion from $1.2 trillion deficit projected for the current budget year.
Democrats are outraged by the cuts included in the GOP plan including spending reductions to Medicaid, food stamps, Pell Grants and other Obama favorites.
Rep. John Larson, D-Conn., chairman of the House Democratic Caucus said, “It’s deja vu all over again.” Larson said the plan would make Medicare unrecognizable compared with its original form.
Given the aging “baby boomer” generation Medicare’s current form cannot survive. Failing to address the upside-down nature of Medicare over the next 20 years would mean drastic cuts in services. While the political darts are flying the problem grows.
House Minority Leader Nancy Pelosi, D-Calif., said, “The American people have already rejected this plan before — and this year will be no different. The Republican proposal would end the Medicare guarantee, shift costs to seniors, and let Medicare wither on the vine while providing billions in tax breaks for Big Oil and special interests and destroying American jobs.”
Pelosi’s assertion is not only disingenuous but pure political nonsense. The American people never had the opportunity to accept or reject the GOP budget proposed by Ryan in 2011. The only thing that “withered on the vine” was the budget that was never taken up in the Senate, where all progress to address the nation’s soaring debt runs into a political brick wall.
The GOP’s response to the demagoguery was that a new approach on Medicare is necessary to force competition on the most wasteful parts of the health care system, lowering cost increases to seniors and offering them more options.
Ultra-liberal Senator Ron Wyden, D-Was., said the GOP budget cuts costs too steeply and would provide the elderly with a steadily shrinking menu of options and higher out-of-pocket costs. Wyden’s assertion may not be totally off-target but where once lawmakers negotiated to find a solution palatable to both sides the tactic-de jour is to launch a few political projectiles.
GOP Deputy House Whip Peter Roskam, R-Ill., said the plan addresses a critical and looming crisis.
The GOP plan is fundamentally distinct from the president’s budget which relies heavily on tax increases on the wealthy but fails to address the looming entitlement calamity in any manner.
GOP Budget Will Play In 2012 Presidential Race
The current GOP presidential hopefuls will strongly support the Ryan plan, though as of yet they’ve been mysteriously quiet. Gingrich is certain to take a much more supportive tone on the new GOP plan after his faux pas last year proclaiming “right-wing social engineering is no better than left-wing social engineering.”
Ryan released a video Monday evening previewing the upcoming battle, saying that “Americans have a choice to make. It’s up to the people to demand from their government a better budget, a better plan, and a choice between two futures. The question is: which future will we choose?”
In a re-run of the 2011 process, the House will likely pass the GOP budget over the course of the next week to 10 days, only to see the process die in the U.S. Senate which has no plans to debate a budget and will table the matter relying on last summer’s budget deal for the current year’s spending bills, once against kicking the can down the road.
Monday, Senate Budget Committee Chairman Kent Conrad, D-N.D., and Appropriations Committee Chairman Daniel Inouye, D-Hawaii sent top House GOP leaders a letter protesting the GOP plan to cut agency operating budgets below levels negotiated last summer, threatening that breaking with the agreement only guarantees delays later this year and “represents a breach of faith that will make it more difficult to negotiate future agreements.”
The mandated across-the-board spending cuts set to take effect next January, caused by the failure of the vaunted “super committee”, will require $1.2 trillion in newly identified deficit cuts over the next decade that will surely add to the partisan bickering. Without action, $55 billion will automatically be cut from the defense department and $43 billion from non-defense each year.
The GOP budget plan requires various House committees to come up with at least $261 billion in savings over the coming decade, including reductions in food stamps, federal employee pensions, and federal health care programs
The GOP budget along with the required budget reductions will yield a $797 billion deficit in 2013 as opposed to $977 billion under Obama’s budget. The deficit would fall to $241 billion by 2016 under the GOP plan as compared to a $529 billion deficit in 2016 under Obama’s plan.
This is the first skirmish of the 2012 election as political troops amass along the front lines. The GOP will insist on getting our financial house in order while the Democrats will insist on maintaining spending levels while increasing the tax burden on the American people. It sounds a lot like 2010 and is likely to awaken Tea Party forces. The Tea Party was decisive in the last round of national elections and they’ve had two years to hone their swords.