SummaryAuthorize fiscal 2013 spending of $2.8 trillion and set spending targets for the next decade, including cuts of $770 billion in Medicaid and nearly $2 trillion in other entitlement programs; create a Medicare private insurance voucher program, and lower the top individual and corporate tax rates from 35 percent to 25 percent.
Details & Argument
This resolution is the fiscal 2013 Republican budget proposal spearheaded by Rep. Paul Ryan, R-Wisc., the House Budget Committee chairman. In addition to setting appropriations levels for the fiscal year beginning October 1, 2012, it also sets budgetary targets for the years 2014-2022.
The resolution would authorize $2.8 trillion in total spending in 2013, including $1.03 trillion in discretionary spending, $188 billion less than Congressional Budget Office estimates of President Obama's budget proposal. These spending cuts would be magnified in future years. Medicaid, which under the resolution would be turned into a block grant program, would be cut by $770 billion over 10 years; other entitlement programs would be cut by nearly $2 trillion, including the Supplemental Nutrition Assistance Program (SNAP), formerly known as the food stamp program. Domestic discretionary programs, where spending levels are set based on annual congressional deliberations rather than eligibility formulas, would be cut by $38 billion in fiscal 2013 and more than $350 billion over 10 years.
The budget would hold defense spending at about the same level as 2012, $554 billion, in contrast to the administration's plan for a trim of 2.6 percent
The budget plan contains a plan to convert Medicare into a voucher system, which seniors could use to pay a share of the cost of private insurance. The value of those vouchers would increase at a rate slightly higher than the general rate of inflation but below the historical increase in the cost of medical services. Ryan has said his voucher plan would help limit cost increases and provide seniors an incentive to seek out more cost-efficient care. Critics argue that it would shift health care costs onto seniors and prompt them to put off needed care. This is similar to the controversial Medicare plan Ryan first introduced in 2011; the key difference is that seniors could still opt for traditional Medicare, but it would be treated the same as private plans.
The resolution would also cut tax rates for many Americans. The top tax rate of 35 percent would be cut to 25 percent, and other tax rates would be collapsed to 10 percent. The alternative minimum tax would be eliminated. It promises to remove tax loopholes, but it does not propose to equalize the tax rates on unearned income (such as from investments) and earned income. Income from wealth would continue to be taxed at a lower rate than income from work. It would also change corporate taxation to a "territorial" system that would give corporations incentives to ship jobs abroad or to report profits in overseas subsidiaries to escape U.S. corporate taxes.
In defending the budget resolution, House Budget Committee Chairman Paul Ryan, R-Wis., argued that the change to Medicare would "put 50 million seniors, not 15 bureaucrats, in charge of their own health care decisions." He went on to say that "putting our trust in Americans ... is what this entire budget is all about. We get government bureaucrats out of the business of picking winners and losers in the economy because Americans should make their own decisions about what kind of car they drive or what kind of light bulb they use. We give power over the safety net programs to the States because we believe that governments that are closest to the people are in the best position to design programs for their unique communities, to get people onto lives of self-sufficiency and upward mobility."
In opposition, Rep. Silvestre Reyes, D-Texas, warned that, "By turning Medicare into a voucher program, this budget would effectively end Medicare as we know it, and shift thousands of dollars of health costs onto seniors. But gutting Medicare is not enough for the Republicans. The Ryan budget would also cut more than $1 trillion from Medicaid, and endanger health care coverage for over 60 million Americans, including low-income children, pregnant women, nursing home patients, and persons with disabilities."
Reyes added, "This budget yet again shows how out of touch the Republican Party is with the lives of ordinary Americans. ... In today's economic climate, we don't need more subsidies for big oil and bigger tax loopholes for hedge fund managers on Wall Street. Yet, the Republicans have put forward a budget that provides huge tax cuts and subsidies for the mega-rich and corporations, while utterly failing to support vital investments in education, job training, research and development, and our nation's crumbling infrastructure."
The House approved the budget resolution, 228-191, with 228 Republicans and 10 Democrats voting in favor, and no Republicans and 181 Democrats voting in opposition. Three Republicans and nine Democrats did not vote.
The Senate defeated the budget resolution, rejecting a motion to proceed to full floor consideration, 41-58. Forty-one Republicans voted in favor, and 51 Democrats, 5 Republicans and 2 independents voted in opposition. One Republican did not vote.
The Middle-Class Position
The middle class position is opposed to this bill. Rep. Paul Ryan says it is time for America to choose. And indeed, supporters of this budget choose to be the tribunes of the 1 percent, willing to destroy basic elements of the American dream in service of that cause.
Consider that at a time of extreme inequality, with the top 1 percent capturing a staggering 93 percent of all income gains in 2010, this legislation would dramatically lower taxes on the wealthiest Americans, while cutting programs vital to the security of middle class families.
With boomers headed into retirement and soaring Medicare and Medicaid costs the essential cause of projected deficits, the bill addresses the problem not by limiting health care costs, but by requiring seniors to pay more. It would turn Medicare into a voucher or "premium support" program that would not keep up with health care costs, forcing seniors to pay thousands more out of their own pockets. Worse, it would cut Medicaid support drastically for the most vulnerable: the impoverished, the disabled, and the terminally ill.
With our basic infrastructure from roads to schools to sewage systems in dangerous decline, the construction industry flat on its back and interest rates near record lows, the legislation calls for spending less, not more, on rebuilding America, rendering our economy less competitive and our streets less safe.
With global corporations growing ever more adept at using transfer pricing and overseas tax havens to avoid taxes here at home, the legislation would make the entire world outside the U.S. a corporate tax haven, encouraging companies to move jobs and book profits abroad.
With college tuition soaring and more and more students being priced out of the education they have earned and need, the legislation calls for cutting back on student loan programs.