House Republicans have unveiled an alternative budget proposal to the federal spending priorities put forward by President Barack Obama and Congressional Democrats.
Rep. Paul Ryan, R-Wisc., the ranking GOP member of the House Budget Committee, said Wednesday that the proposal was designed to present a clear alternative to the Democratic plans, as Obama and his administration had challenged in recent weeks.
Democrats, however, said that from initial readings the GOP proposal would enact draconian cuts to federal programs, with some noting that the proposals lacked credibility without any hope of achieving enough support to pass the House and Senate.
America is in the midst of a fiscal and economic crisis, and yes the President did inherit this fiscal crisis, Ryan said. But the question is, is he fixing it or is he making it worse.
He added, We believe the President's budget . makes our fiscal crisis much, much worse.
The GOP budget alternative gives Americans a real choice for a better pathway forward, Ryan said, by freezing non-defense discretionary spending, making a start at reforming federal entitlement programs like Medicare, Medicaid and Social Security, and reforming the tax code to lower rates for businesses and individuals.
The proposal, which would spend $36.9 trillion over 10 years, aims to keep federal spending limited to near 20 percent of the gross domestic product while keeping federal borrowing to 65 percent of GDP - borrowing $3.6 trillion less than Obama's proposals, according to Ryan.
It results in lower spending, lower deficits, lower taxes, lower debt and more jobs, Ryan said. It puts America on a pathway to controlling our debt, versus the President's plan bringing our debt out of control.
He added, We are going into an ocean of red ink in this country. We cannot go down this path of borrowing and borrowing and borrowing.
The Republican budget would also repeal all of the spending in the recently enacted $787 economic stimulus and recovery package, with the exception of unemployment benefits, and rescind the excessive spending in the omnibus budget bill to fund the federal government for fiscal 2009, Ryan said.
We also propose statutory spending caps, real statutory spending caps with real budget enforcement to lock in these budgetary savings, he said.
For individual taxes, Ryan's budget would extend the tax cuts enacted in 2001 and 2003 under President Bush, which Democrats have criticized as being targeted toward the wealthy, while offering a simpler alternative tax code.
Under that alternative individual tax code, individuals making less than $50,000 per year and families earning less than $100,000 would have their income taxed at 10 percent, while money earned over those levels would be taxed at 25 percent.
That method would include what Ryan called generous standard deductions, but would close many of the loopholes in the current tax code.
For individuals, we offer taxpayers a choice, he said. You can have the current code, with all of its bells and loopholes and deductions if you want to, or you can switch over to a choice based system, a simple system, a system with two rates.
He added, You can file your taxes on a postcard if you want to. It's tax reform elected by each individual taxpayer.
The budget also envisions cutting the corporate tax rate to 25 percent from the present levels of 35 percent.
Cut the corporate tax rate. Currently it's the second highest in the industrialized world, Ryan said. When we tax our employers and our jobs more than our competitors tax theirs, we lose jobs.
He added, We have to help our businesses, big and small, compete and thrive in the global economy.
On federal entitlements, Ryan's budget would set up a system of block grants to states to allow governors the flexibility to attempt reforms of Medicaid. It also envisions means testing Medicare Part D prescription drug benefits, but making no other changes for those age 55 and over, a measure Ryan said was endorsed by the Obama administration.
It would also seek more far-reaching reforms, as well as changes to Social Security benefits for workers 54 years old and younger. For Medicare, younger workers would be enrolled in a program similar to that available for members of Congress and federal employees while receiving a payment equal to what their Medicare benefit would be.
On Social Security, the proposal would set up a trigger to change benefit policies if the Social Security Trust Fund dips below certain levels - a proposal advanced by Obama's Director of the Office of Management and Budget, Peter Orszag, when he was working at a Washington think tank.
Medicare is the largest and one of the most important programs in the federal government, Ryan said. Starting with those who turn 65 in year 2021, the Medicare program is reformed.
He added, On Social Security, we propose no changes in benefits for those in or near retirement.
Ryan noted that his Social Security reform proposal was a modest first step that he said would set the stage for a broader discussion about reform.
Following the announcement of the alternative, leading House Democrats expressed severe reservations about the proposals, while cautioning that they had not had time to fully examine the document.
Rep. John Spratt, D-S.C., the chairman of the House Budget Committee, said he doubted that that many of the plans of Ryan's budget alternative could actually garner support to be enacted.
We have a got a good resolution compared to the resolution that we just heard Mr. Ryan propose, which we are now trying to digest, Spratt said. We are now trying to digest [it] and finding it all too difficult to get down.
He added, It calls for some substantial cuts that are so, so enormous that they strain credulity. . It gets to the point where even Republicans, for the most part, will find it hard to vote for something like this.
Senate Majority Leader Harry Reid, D-Nev., went further in his criticism of the GOP proposals, although Senate Republicans have yet to endorse it.
If you like this recession, you'll love the Republican budget, Reid said in a written statement. If their plan sounds familiar, it's because it merely repeats the same mistakes of the past eight years - mistakes that have cost millions of Americans their jobs and plunged our nation into the worst economic crisis since the Great Depression.
He added, While the Democratic budget invests in health care, education and energy, the Republican budget will take cops off the streets and eliminate needed transportation projects that create jobs. While the Democratic budget cuts taxes for middle-class families, the Republican budget continues to give tax breaks disproportionately to multimillionaires and Big Oil companies. And while the Democratic budget is designed to help families keep their homes and get us out of this recession, the Republican budget will only make a bad situation worse.
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