House set to defeat bipartisan budget plan

ANDREW TAYLOR

Asso­ci­ated Press

WASHINGTON — The House was poised Wednes­day to reject a bipar­ti­san bud­get plan mix­ing tax increases with spend­ing cuts across the bud­get to wring $4 tril­lion from the bud­get deficit over the com­ing decade, paving the way for Repub­li­cans to mus­cle through today a strin­gent GOP bud­get that blends big cuts to safety-net pro­grams for the poor with a plan to dra­mat­i­cally over­haul Medicare.

The bipar­ti­san mea­sure, pat­terned on a plan by Pres­i­dent Barack Obama’s 2010 deficit com­mis­sion, was sure to fall vic­tim to GOP oppo­si­tion to its $1.2 tril­lion tax increase over a decade — and Demo­c­ra­tic resis­tance to fur­ther cuts to domes­tic pro­grams. The plan, by Reps. Steve LaTourette, R-Ohio, and Jim Cooper, D-Tenn., won praise from out­side experts and some law­mak­ers in both par­ties, but got a chilly recep­tion from GOP lead­ers unwill­ing to stray from the party prin­ci­ples on taxes and top Democ­rats unable to stom­ach cuts to social pro­grams they and Obama have promised to defend.

At the cen­ter of Wednesday’s debate, how­ever, was a budget-slashing GOP plan by Rep. Paul Ryan, R-Wis., chair­man of the House Bud­get Com­mit­tee, that would quickly bring the deficit to heel but only through unprece­dented cuts to pro­grams for the poor such as 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 pri­vate health insurance.

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

The mea­sure reopens last summer’s hard-won bud­get and debt deal with Obama, impos­ing new cuts on domes­tic agen­cies while eas­ing cost curbs on the Pen­ta­gon that gained 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 exten­sive, 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 for 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 Mary­land Rep. Chris Van Hollen, the top Bud­get Com­mit­tee Demo­c­rat. “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 with 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 major 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.

The bipar­ti­san alter­na­tive to be debated Wednes­day night would cut the deficit by $4 tril­lion over 10 years with a mix of new tax rev­enues and spend­ing cuts across the fed­eral budget.

It 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.

“Unfor­tu­nately, the pro­posal fails to con­front the key dri­ver of the debt: the explo­sive growth of gov­ern­ment spend­ing on health care,” Ryan said. 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 lim­ited Demo­c­ra­tic sup­port, just as most Repub­li­cans recoiled from the measure’s pro­posed tax increases.

The mea­sure, like the Simpson-Bowles plan, called 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.

Posted by AP News on Mar 28 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.