Capitol Hill (CNN) – Here it is folks. The American Sauce easy-to-scan bullet points, from my reading of the 78-page ten-year plan from House Budget chief Paul Ryan, R-Wisconsin. Add comments below.
This is important stuff. (Duh.):
- Ryan cuts $5.8 Trillion in government spending over the next ten years, relative to current policy path. It is a cut of $6.2 Trillion relative to the Obama budget.
Balancing The Budget
- Ryan balances the budget by the late 2030s. The government would run deficits until then. Surpluses are forecast to start 2040
- Obama comparison: The Obama budget looks at a ten-year timeline only and because of that, does not indicate the specific future year when his budget would reach balance. Experts debate the usefulness and accuracy of long-range timelines.
- Ryan achieves “primary balance” by 2015. That means revenues equal outlays except for interest on the national debt.
- Obama comparison: Obama comparison: The White House initially said the Obama budget reaches primary balance in the next ten years but the CBO indicates it does not reach primary balance in that timeframe.
- The Ryan plan says it would cut the debt in half, relative to where it is now, by 2050.
- Obama comparison: Again, the Obama budget does not issue forecasts beyond a ten-year window. It is not clear when his proposal would start to decrease the national debt. Additionally, the president has indicated that while there is no entitlement reform in his budget, he wants to address it directly with Republicans.
- Ryan would cut $3.5 Trillion in federal spending. (Obama budget cut $3.7 Trillion)
- Estimates $2.5 Trillion in increased revenue.
- So, cuts deficit to estimate of just under $1 Trillion.
Big Policy Changes
- Ends current Medicare system, replaces with a “premium support” version of Medicare starting 2022. See below.
- Begins significant tax reform, cutting corporate rate and top individual rate from 35% to 25%
- Assumes elimination of the Affordable Care Act or new health care law.
- Ends some subsidies to farmers.
- Makes Medicaid and the SNAP (food stamp) program block grants to states. Caps funding for each (subject to inflation, population).
- Cuts Pell grants to 2008 levels.
- Cuts discretionary spending to “well below” 2008 levels.
- Targets “hundreds of government programs that have outlived their usefulness”.
- Freezes pay for federal workers for five years.
- Would cut 10% of federal workforce over three years, through attrition.
- Would extend ban on earmarks another year, through FY 2012.
- Cut top individual rate from 35% to 25%
- Consolidate all six individual tax brackets. (Waiting for more specifics on that, folks.)
- Cut corp. tax rate from 35% to 25%.
- At same time end or reduce many deductions and loopholes for individuals and corporations. (Also waiting.)
- Note: Ryan would extend the Bush tax cuts and the AMT patch.
- Starting in 2022, a new Medicare system goes in place.
- New beneficiaries would chose from a number of private health care plans offered through Medicare and guaranteed by the Feds.
- The federal government would directly send those programs a “premium support” payment for each individual who signs up.
- Ryan’s summary describes it as similar to the “Medicare prescription drug program”.
- Means tested: It would give lower subsidies (higher “premium support” payments) to wealthier Americans and provide money to lower-income people to help with out-of-pocket costs.
- Unanswered/Unclear: How much in additional premiums Americans would have to pay for various privatized Medicare plans.
- This is a punt with a game plan.
- Ryan says his proposal would “force policymakers to come to the table” and “move the conversation”.
- He would require the president to submit a plan to put Social Security. in balance if it is declared unsustainable. It does not seem to require Congressional action on such a plan.