Congressman Paul Ryan, writing in the Wall Street Journal, proposes to cut $6.2 trillion over 10 years,
Here are its major components:
• Reducing spending: This budget proposes to bring spending on domestic government agencies to below 2008 levels, and it freezes this category of spending for five years. The savings proposals are numerous, and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates’s plan to target inefficiencies at the Pentagon.
• Welfare reform: This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job—it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work.
As we strengthen and improve welfare programs for those who need them, we eliminate welfare for those who don’t. Our budget targets corporate welfare, starting by ending the conservatorship of Fannie Mae and Freddie Mac that is costing taxpayers hundreds of billions of dollars. It gets rid of the permanent Wall Street bailout authority that Congress created last year. And it rolls back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation and exploration.
• Health and retirement security: This budget’s reforms will protect health and retirement security. This starts with saving Medicare. The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way.
Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.
In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors.
Getty Images/Imagezoo
We must also reform Social Security to prevent severe cuts to future benefits. This budget forces policy makers to work together to enact common-sense reforms. The goal of this proposal is to save Social Security for current retirees and strengthen it for future generations by building upon ideas offered by the president’s bipartisan fiscal commission.• Budget enforcement: This budget recognizes that it is not enough to change how much government spends. We must also change how government spends. It proposes budget-process reforms—including real, enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.
• Tax reform: This budget would focus on growth by reforming the nation’s outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all
Ryan has a video,
UPDATE
Ryan’s Plan: Necessary But Not Sufficient
Click on image to enlarge,
The gray line is where we were at the end of September 2010 ==> that’s our target. The blue line is the Obama administration’s baseline budget. As you can see, it sails off into the stratosphere. This is the budget plan the Democrats are defending.
The teal line and red line are the Deficit Commission and Ryan’s plan, respectively. The teal line makes it back to the gray line by the end of 2022. Ryan’s plan? Well, you’ll have to wait another 10 years.**
So here’s the bottom line. If you believe that the GDP will start growing at a healthy rate and continue at that rate forever, and if you manage to reform Medicare, Medicaid, and Social Security, and if you reform the budget process, and if you reform the tax code, and if you accomplish all these reforms in FY12, then you might be able to pay off this year’s spending within 11 to 12 years. Or maybe the decade after.
This is what the President and his crackerjack economic team have wrought. A one-year deficit that is so large that it can only be paid back if everything goes exactly right. And if everything goes exactly right, we’re still looking at decades before we can get back to the debt level we had only 6 months ago.
But, on the bright side, perhaps as early as 2023 we can start working on paying off the FY10 deficit.
So when the Dems start their caterwauling about how “extreme” the GOP’s suggestions are, just remind them that these “extreme” suggestions may not succeed in paying back even 1 year of Obama’s spending.
CATO has Federal Spending: Ryan vs Obama
