Republicans unwrap budget proposal

WASHINGTON — Republicans in the House of Representatives unveiled their latest federal budget proposal Tuesday, an election-year manifesto that GOP presidential and congressional candidates embraced and President Barack Obama and congressional Democrats dismissed.

House Budget Committee Chairman Paul Ryan’s proposal has no chance of becoming law — it won’t pass the Democratic-controlled Senate — but it’s likely to rekindle last year’s fierce partisan bickering on Capitol Hill over budget deficits and debt.

The 100-page budget represents a GOP campaign blueprint, drawing sharp fiscal contrasts between Republicans on one side and Obama and his Democratic allies in Congress on the other.

The Wisconsin Republican’s budget plan takes aim at favorite GOP targets, calling for repealing Obama’s health care law, eliminating Fannie Mae and Freddie Mac, and shifting Medicaid and the Supplemental Nutrition Assistance Program — commonly called food stamps — to block-grant programs for states.

On taxes, Ryan proposes collapsing the six tax brackets into just two: 10 percent for low-income earners and 25 percent for higher wage earners and corporations. That would be down from the current top rate of 35 percent. The biggest winners would be those who earn more than $200,000.

“The president’s budget is putting us on a path of a debt crisis, of decline,” Ryan said. “Here is what the path to prosperity proposes. We propose to get our budget on a sustainable path.”

White House officials quickly dismissed Ryan’s budget as a partisan nonstarter.

“The House economic plan draws on the same wrongheaded theory that led to the worst recession of our lifetimes and contributed to the erosion of middle-class security,” White House Communications Director Dan Pfeiffer said.

Ryan’s budget calls for cutting discretionary spending to $1.028 trillion in 2013, less than the $1.047 trillion spending cap that Democrats and Republicans agreed to last August in a hard-fought debt deal. Top Senate Democrats quickly accused Ryan of a “breach of faith” because of that.

Ryan also reprises his controversial pitch to revamp Medicare, a proposal that Democrats pounced on last year by accusing Republicans of reneging on the federal government’s commitment to senior citizens. Ryan renews his call to cap spending on future retirees and offer them a subsidy to buy private health insurance from federal insurance exchanges.

He added a new wrinkle: He’d keep traditional Medicare as an option. But seniors could end up paying more for traditional coverage if that proved to be more expensive than private plans.

“We preserve the Medicare guarantee for today’s seniors so they can count on the benefit that they’ve organized their retirement around and we preserve the guarantee for tomorrow’s seniors by empowering them with choices, including a fee-for-service traditional option within a premium-support system,” Ryan said.

He crafted the traditional option with Sen. Ron Wyden, D-Ore., but other House and Senate Democrats made it clear Tuesday that the idea — along with the rest of Ryan’s budget — will win little or no support from them.

“The Republican proposal would end the Medicare guarantee, shift costs to seniors and let Medicare die on the vine, while providing billions in tax breaks for big oil and special interests, and destroying American jobs,” said House Minority Leader Nancy Pelosi, D-Calif. “The American people have already rejected this plan before, and this year will be no different.”

Independent budget analysts said politics was likely to outweigh policy.

“Chances are nothing is going to get done because it’s an election year,” said Robert Bixby, the executive director of the Concord Coalition, a bipartisan group devoted to fiscal discipline. “It’s a marker for Republicans to take into the political campaign. It’s got two very good ideas: the Medicare provision and the limiting of tax expenditures. However, there’s a lot more work to be done for it to work in a legislative way.”

Bixby questioned how Ryan could win lower tax rates without tackling some of “the sacred cows of the tax code.”

“You’d have to eliminate the exclusion of employee-provided health care, the mortgage interest deduction, charitable deductions,” Bixby said. All of those have strong political support.

Ryan’s plan reopened the bitter rift between Democrats and Republicans over spending and debt, and the debate that raged throughout the day previewed the coming election fight.

Democrats reacted with a predictable wave of outrage.

In a letter to House Republican leaders, Senate Appropriations Committee Chairman Daniel Inouye, D-Hawaii, and Senate Budget Committee Chairman Kent Conrad, D-N.D., warned that “the House’s action would risk a government shutdown. Furthermore, we believe that ignoring the (agreement) represents a breach of faith that will make it more difficult to negotiate future agreements.”

At the White House, Pfeiffer charged that Ryan’s budget plan “once again fails the test of balance, fairness and shared responsibility.”

Obama proposed a dramatically different budget in February. His $3.8 trillion fiscal 2013 budget was designed to help spur the still-weak economy with a $350 billion stimulus package.

The president also would permit the Bush-era tax cuts for people who earn more than $250,000 a year to expire on Dec. 31, but he’d extend the breaks permanently for others. The top tax rate would go to 39.6 percent for the wealthy.

Ryan’s new package is a fresh reminder that a showdown over taxes is coming at the end of the year. While Democrats control 53 of the Senate’s 100 seats, Republicans control the House, setting the stage for a showdown requiring compromise or gridlock.

Obama’s budget plan projects deficits over the next decade totaling $6.7 trillion. That would mean that debt held by the public, including interest, would jump from $11.6 trillion in the current fiscal year to $19.5 trillion in fiscal 2022. When Obama took office three years ago, the figure was $7.5 trillion; all figures are from the president’s Office of Management and Budget.

Obama’s budget is essentially a re-election platform, just as Ryan’s is likely to become the centerpiece of the GOP presidential campaign.

Speaking last Friday in Arlington Heights, Ill., outside Chicago, former Sen. Rick Santorum, R-Pa., said, “What we need to do is what Paul Ryan has suggested and what I suggested and did when I was in the Senate.”

Former Massachusetts Gov. Mitt Romney has frequently praised Ryan’s previous plan and endorsed many of its ideas. Romney has called for a 20 percent cut in marginal tax rates, which would reduce the top rate to 28 percent.

Romney’s detailed economic blueprint is similar to that backed by Ryan, and on Monday he reiterated, “Instead of expanding the government, I will shrink it. Instead of raising taxes, I will cut them. Instead of adding more regulations, I will reduce them with an overriding concern: Do they help or do they hurt jobs?

“I applaud Rep. Ryan for putting a plan on the table that acknowledges that Medicare can’t go on like it is without ultimately hitting a wall.”