WASHINGTON — Republican Rep. Paul Ryan introduced the second iteration of his “Path to Prosperity” budget plan on Tuesday, a 2013 version of the budget he introduced last year. The two plans share the same name, and they’re likely to garner the same reaction from lawmakers on Capitol Hill.
The budget contains a trove of proposals favored by Republicans but dispelled by Democrats, the biggest of which are the changes to Medicare. The Ryan plan would replace the current Medicare structure with a voucher system in which the government would subsidize the premiums individuals pay for private insurance instead, though the traditional Medicare system is an option for purchase. (This plan is for workers under the age of 55 — current and soon-to-be retirees will be grandfathered into the old system.)
The plan is a modified version of the one Ryan proposed last spring, one Democrats seized on as an “end to Medicare,” a tome the White House and House Democrats have already repeated Tuesday morning.
The proposal also replaces a forthcoming $55 billion cut to defense department spending with cuts to discretionary spending in areas like agriculture, energy, financial services, etc. The cut was mandated by the debt ceiling deal President Obama and Congress agreed to over the summer, but Republicans have vehemently opposed allowing the defense cut to take effect.
One of the plan’s highlights is a simplified, flattened tax code, in which the current code is dispensed with and replaced with two individual income tax brackets of 10 percent and 25 percent. The corporate tax rate would decrease from 35 percent to 25 percent. Such a plan would invariably result in lower government revenues, but Ryan said the plan would make up for that by closing tax loopholes. It’s the lower rate and broader base frequently proposed by lawmakers over the summer, and one that all Republicans on the House Ways and Means Committee — a group that includes Minnesota Rep. Erik Paulsen — approved, Ryan said.
Even with the closed loopholes, Ryan’s plan would reduce federal revenues by more than $2 trillion over the next 10 years, relative to President Obama’s budget proposal. It reduces spending by $5 trillion versus Obama’s budget, most of which comes from repealing the Affordable Care Act health care law ($1.5 trillion in savings) and cutting funds for Medicaid ($770 trillion) and other mandatory government spending ($1.9 trillion).
In all, Ryan’s budget spends $1.028 trillion during the upcoming fiscal year, less than the $1.047 trillion cap approved by Congress last year and built into Obama’s budget. In the long run, it reduces federal spending from 24 percent of the GDP to 20 percent by 2015 and will balance by 2040.
So where does that leave us? House Democrats were united in voting against Ryan’s 2012 budget and certainly won’t support this year’s plan. Only four Republicans defected when the House took up the 2012 plan, but there is a risk that the chamber’s most conservative members will revolt this year — the conservative Club for Growth has already warned that the plan doesn’t cut deeply enough, and should balance within the decade, instead of waiting until 2040.
Democrats see the Medicare argument as a winner, and will likely squeeze as much out of the “Ryan ends Medicare” message as they can. The budget could be a politically risky one for Republican candidates this fall as well.
The House budget committee will consider the bill Wednesday and it could come up for a full House vote as early as next week.
Devin Henry can be reached at firstname.lastname@example.org. Follow him on Twitter: @dhenry