House set to defeat bipartisan budget plan
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.