House Budget Committee Chairman Paul Ryan is scheduled today to release a plan that would cut more than $6 trillion from President Barack Obama’s budget over 10 years, phase out traditional Medicare and call for a revamp of the tax code.The US budget for 2008 was $2.9 trillion. The 2011 budget had $3.82 trillion in spending
Defense and domestic programs would be reduced below 2008 levels for the next five years. That's a lower threshold, for a longer period of time, than cuts Obama proposed.
Ryan’s proposal to end traditional Medicare calls for new beneficiaries, starting in 2022, to instead be provided subsidies to buy private health insurance.
It would cap spending on Medicaid, the health-insurance plan for the poor, and give states more discretion over how to run the joint federal-state program. Ryan’s plan would also roll back so-called discretionary spending to below 2008 levels and freeze it there for five years.
Even as Democrats denounce the changes, some of Ryan’s Republican colleagues want even bigger savings.
Representative Mick Mulvaney said he wants Ryan’s budget to cut the annual deficit from $1.4 trillion this year to less than $1 trillion in 2012, which would mean finding more than $400 billion in savings in a single year.
Debt-cutting proposals last year by the leaders of Obama’s deficit commission and by a group of independent budget experts would take more than 25 years to balance the federal budget. Obama’s budget request, announced in February, would reduce the deficit to $750 billion in 2015 though it would rise again after that, according to CBO.
The Republican Study Committee, a bloc of fiscal conservatives in the House, will produce an alternative budget plan that achieves balance in the next decade.
Ryan hasn’t said how quickly his plan would bring down the deficit, whether it would balance the budget at some point or where he intends to find his savings.
Ryan’s budget began in a big hole because of his party’s unwillingness to raise taxes. Obama’s budget proposal would reduce the deficit in part by relying on more than $1 trillion in tax increases, including by allowing President George W. Bush’s tax cuts for households earning more than $250,000 to expire at the end of 2012. Republicans will have to replace that with equivalent spending cuts to show the same amount of deficit reduction. Ryan’s budget proposes to set the top individual and corporate income tax rates at 25 percent.
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