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House Kicks Off Budget Debate

The House took up a stringent GOP budget plan Wednesday that blends big cuts to safety-net programs for the poor with a plan to dramatically overhaul Medicare, kicking off a politically-charged, election-year debate over trillion-dollar deficits and what to do about them.

Congress
Mark Wilson, Getty Images

The debate quickly split along partisan lines, with Republicans shunning tax increases on the wealthy called for by President Barack Obama, while Democrats resisted curbs on federal health care spending and further cuts to domestic programs. An alternative based on Obama’s 2010 deficit commission promised to bring at least a glimmer of bipartisanship to the floor but was expected to fall victim Wednesday night to GOP opposition to tax hikes and Democratic resistance to further cuts to domestic programs.

The main focus, though, is on the budget-slashing GOP plan by Budget Committee Chairman Paul Ryan, R-Wis., which would quickly bring the deficit to heel but only through unprecedented cuts to programs for the poor like food stamps, Medicaid, college aid and housing subsidies. The Republican budget also reprises a controversial Medicare plan that would switch the program — for those under 55 today — from the traditional framework in which the government pays doctor and hospital bills to a voucher-like approach in which the government subsidizes purchases of health insurance.

The GOP plan is set to pass on Thursday, but swiftly die in the Democratic Senate. Under the arcane budget rules of Congress, the annual budget resolution is a sweeping but nonbinding measure that sets the parameters for follow-up legislation.

The measure reopens last summer’s hard-fought budget and debt deal with Obama, imposing new cuts on domestic agencies while easing cost curbs on the Pentagon that won bipartisan support just months ago. It would set in motion follow-up legislation that would substitute $261 billion in spending cuts spaced over a decade for $78 billion in automatic spending cuts that would cut the Pentagon budget by about 10 percent next year and cut numerous domestic programs as well.

The election-year GOP manifesto paints clear campaign differences with Obama, whose February budget submission offered tax increases on the wealthy but mostly left alone key benefit programs like Medicare, Medicaid and food stamps. Obama and his Democratic allies instead promise to protect programs aimed at the elderly and the poor.

Ryan said the GOP plan steps in aggressively to prevent a European-style debt crisis that would swamp the economy and force draconian spending cuts and tax increases.

“Let’s not wait until we have a crisis. Let’s not wait until interest rates go up and we’re in sort of a European meltdown mode,” Ryan said. “Let’s do it right and do it now, because then we can keep the promises that government has made to people who need it the most.”

But Democrats said the Ryan plan makes spending cuts that are simply too draconian, knocking millions of people off of food stamps and forcing states to drop Medicaid nursing home coverage for many elderly people. At the same time, Democrats said the GOP budget promises a radical overhaul of the tax code that would deliver big tax cuts to upper-income people while taking away tax deductions and credits important to the middle class and the poor, like the child tax credit, and deductions of health insurance, mortgage interest and contributions to charity.

Democrats say the GOP Medicare proposal, similar to a plan that started a political firestorm last year, would cut costs steeply and provide the elderly with a steadily shrinking menu of options and higher out-of-pocket costs.

“It is not bold, not bold to provide tax breaks to millionaires while ending the Medicare guarantee for seniors and sticking them with the bill for rising health care costs,” said top Budget Committee Democrat Chris Van Hollen of Maryland. “It is certainly not brave to cut support for seniors in nursing homes, individuals with disabilities, and poor kids. And it is not fair to raise taxes on middle-income Americans, financed by another round of tax breaks for the very wealthy.”

Compared to President Obama’s budget, the GOP measure includes deficit cuts totaling $3.3 trillion — spending cuts of $5.3 trillion tempered by $2 trillion in lower taxes — over the coming decade. The deficit in 2015, for example, would drop to about $300 billion from $1.2 trillion for the current budget year. But the GOP measure — despite assumptions of unrealistic cuts to transportation, education and food aid — doesn’t achieve balance for almost three decades, leading conservatives to offer an even tougher plan that would come to balance in five years.

The GOP measure is likely to pass almost exclusively with GOP votes, though some tea party lawmakers will oppose it for not going far enough.

Wednesday night will feature a closely-watched vote on a bipartisan alternative that would cut the deficit by $4 trillion over 10 years with a mix of new tax revenues and spending cuts across the federal budget.

The proposal by Reps. Steve LaTourette, R-Ohio, and Jim Cooper, D-Tenn., is modeled after a much-praised plan by the co-chairmen of Obama’s 2010 deficit-reduction commission.

The bipartisan measure calls for $1.2 trillion in tax increases over the coming decade, less than the $2 trillion-plus in revenue increases called for by former White House chief of staff Erskine Bowles, a Democrat, and former GOP Sen. Alan Simpson of Wyoming, the co-chairmen of Obama’s deficit commission.

The bipartisan Simpson-Bowles plan won a majority vote in Obama’s 18-member deficit panel, though it fell short of the supermajority 14-vote tally required to win the commission’s official endorsement. But the plan won the votes of conservatives like Sen. Tom Coburn, R-Okla., and liberals like Sen. Dick Durbin, D-Ill., which was seen as a moral victory.

But the Simpson-Bowles plan, hatched in the wake of the Democrats’ drubbing in the 2010 midterm elections, received a chilly reception from the White House and leaders of both parties, and that’s unlikely to change Wednesday.

“Unfortunately, the proposal fails to confront the key driver of the debt: the explosive growth of government spending on health care,” said House Budget Committee Chairman Paul Ryan, R-Wis. For starters, the LaTourette-Cooper plan would leave in place Obama’s health care overhaul law.

Wednesday’s bipartisan plan was unlikely to win much Democratic support either, in part because it cuts domestic programs below Simpson-Bowles levels and imposes stiffer curbs on health care programs.

From a technical perspective, the measure leaves Social Security alone. But it contains a policy statement endorsing the Simpson-Bowles plan, which called for raising the retirement age and reducing annual cost-of-living increases.

“It has real entitlement reform and real revenues,” Cooper said in an interview. “And those are two essential elements of any viable budget. It’s shared sacrifice. Everyone is asked to help make our country stronger, and that’s why it’s bipartisan.”

But it’s those curbs on so-called entitlement programs — which include Medicare, Medicaid and Social Security — that seem likely to limit Democratic support, just as most Republicans will recoil from the measure’s proposed tax increases.

The measure, like the Simpson-Bowles plan, calls for a tax overhaul that would bring the top tax rate down from 35 percent to 29 percent or lower, financed by repealing various tax breaks, deductions and credits. Overall revenue would rise, since the revenue raised by eliminating dozens of tax breaks would exceed the revenue lost by lowering rates. Some supporters of revamping taxes say revenues would be even higher because it would spur economic growth.

(Copyright 2012 by The Associated Press. All Rights Reserved.)

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