Ryan to unveil budget plan that cuts $6 trillion in 10 years
April 4th, 2011
11:23 PM ET
11 years ago

Ryan to unveil budget plan that cuts $6 trillion in 10 years

Washington (CNN) - House Budget Chairman Paul Ryan, R-Wisconsin, will unveil a highly anticipated 2012 Republican budget proposal Tuesday that would cut about $6 trillion over 10 years, according to GOP sources familiar with the document.

The plan, the most detailed economic guidepost for the new House GOP majority, would also mean dramatic changes to those political lightning rods - entitlements.

The GOP budget blueprint calls for a controversial overhaul of Medicare, the health care program for seniors. And it imposes deep cuts in Medicaid, which provides health benefits to low-income Americans.

The current Medicare program would be dismantled, starting in 2022. The government would no longer directly pay bills for seniors in the program. Instead, recipients would choose a plan from a list of private providers, which would be subsidized by the federal government.

In an op-ed in The Wall Street Journal, Ryan says that reform "will guarantee that Medicare can fulfill the promise of health security for America's seniors."

Ryan often calls Medicare a major driver of America's debt, and another central goal of his proposed changes to the program is to help reduce the debt and deficit.

GOP sources familiar with the plan stress anyone 55 or older now would not be affected by the changes.

On Medicaid, Ryan's plan calls for deep cuts and another fundamental change: The federal share of the Medicaid system would become block grants to the states.

CNN is told that the House GOP budget plan does not call for significant change to the Social Security program. Republicans argue that while Social Security is a factor in the nation's fiscal crisis, it doesn't contribute as much to the soaring debt as Medicare.

Two House GOP lawmakers briefed on the proposal told CNN that they and others on the House Budget Committee believe it's a mistake not to tackle Social Security.

As for so-called discretionary spending, Ryan says he would bring down spending on domestic government agencies to below 2008 levels.

GOP sources have told CNN his plan is to cut spending back to 2006 levels. It's unclear how much that would slash, but it would be more than the $61 billion in spending cuts House Republicans approved earlier this year.

Ryan says his savings proposals are "numerous and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates' plan to target inefficiencies at the Pentagon."

The budget would also cut the corporate tax rate from 35% to 25%, but at the same time do away with tax loopholes for corporations. Those loopholes helped General Electric find a way to pay no taxes last year, sparking outrage. Ryan says his proposal would help prevent that.

"It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all," said Ryan in his op-ed.

Ryan's plan also provides for a permanent extension of all the Bush-era tax cuts. Under a compromise with President Barack Obama, were extended last year through 2012.

A GOP source said even with the major cuts and changes in Ryan's proposal - essentially a blueprint that guides spending decisions and does not go to the president for his signature - it would not bring the budget into balance for many years.

House Republican leaders have been signaling for some time that they plan dramatic and controversial changes to entitlement programs bring down the budget deficit and debt. Ryan said Sunday he knows his budget is giving Democrats a "political weapon" against Republicans.

Already Democrats have been issuing statements attacking the plan.

"It is now clear that the Republican budget is not bold, but the same old ideological agenda that extends tax breaks to millionaires and big oil companies while cutting our kids education and health security for seniors," said Rep. Chris Van Hollen, the top Democrat on the House Budget Committee.

A spokesman for the House Democrats' campaign arm told CNN that Democrats are already planning to target up to 50 House Republicans, challenging them for supporting Ryan's plan, which they were arguing would "dismantle Medicare for seniors" even before details on the plan were unveiled.

One news release focused on freshman Texas Republican Blake Farenthold, who narrowly won election last fall.

"House Republican leaders are now full-speed ahead on a partisan plan that would dismantle Medicare for seniors," said Jesse Ferguson of the Democratic Congressional Campaign Committee. "Now is the chance for Rep. Blake Farenthold to stand up and say he won't end Medicare as we know it because it's too important to seniors. If Rep. Blake Farenthold can't stand up for Texas seniors now against ending Medicare, then he never will."

Knowing that the proposed changes will be politically risky and elicit an onslaught of criticism, Ryan and Republican Whip Kevin McCarthy of California have been holding sessions two or three times a week with House Republicans to try to arm them with facts and figures about the gravity of the debt problem and why it needs to be fixed.

CNN was allowed into one of these meetings last month and heard Ryan lay out in stark terms what he calls the "tidal wave" of debt the country is facing.

"The Congressional Budget Office has this economic model where they measure the economy going forward, and they are telling us that the entire economy crashes in the year 2037 because their computer simulation can't conceive of any way in which the U.S. economy can continue," Ryan told the GOP group. "By the time my kids are my age, just those three programs - Social Security, Medicaid and Medicare - will consume all federal revenues. There will be no room for anything else in the federal budget."

When Ryan proposed a version of his Medicare overhaul idea last year, known as his "road map," Democrats skewered it and tried to use it as a campaign weapon against Republicans across the country.

Obama has often said it is important for Washington to address entitlement spending. But the president has not offered any specific proposals, and Republicans suggest he is unwilling to back this rhetorical call with specifics because he wants the GOP to take the first risky steps.

Multiple GOP sources admit the timing of Ryan's 2012 budget proposal is tricky. It is being released in the middle of down-to-the-wire, contentious negotiations with Democrats about a spending measure to keep the government running for the rest of this 2011 fiscal year.

CNN is told GOP leaders considered delaying the release of Ryan's budget until this year's spending differences are resolved.

However, they decided to go ahead with it because they hope showing major cuts and reforms planned for next year will help calm rank-and-file conservatives who are unhappy their leadership is compromising too much on spending cuts now.

Filed under: Budget • Congress • House • Paul Ryan
soundoff (36 Responses)
  1. Marie MD

    Of course, frownline man would go for this, this is all so that the rich can continue to get richer and the poor and retirees are screwed.
    The rethugs are a bunch of pathetic liars. Let's continue to extend the shrub's tax cuts for the rich while women, children, education, the poor and the old get less and less. This is why the Democrats should have all grown a pair not to allow the extension to 2012! You can't make nice with people who run on JOBS and just want to destroy everything that has happened in the last 20 years. Never mind, when it comes to women and children, they still live in the 50s!!!!!

    April 5, 2011 06:19 am at 6:19 am |
  2. T'sah from Virginia

    This all sounds good to the RIGHT – cut from the low/no income folks and keep the tax cuts for the rich!!! On top of that, cut corporate taxes another 10% while my 22 year old son, who works @ Staples, pays taxes. There will ALWAYS be "loopholes" because Republicans are about BIG CORPS/small Big Corp businesses. So this LIE about cutting LOOPHOLES is just that – a LIE!!

    RICH people want to be RICH. In order to keep that status, they need POOR – very POOR!! Their is NO SUCH thing as "middle class"to the RICH because as you see – it's dwindling and almost gone!!! The RICH felt "threatened" by the Middle Class so they had to REDUCE them!!

    April 5, 2011 07:09 am at 7:09 am |
  3. Don

    Cuts in Medicare and Social Security and also a little tax cut from 35% to 25% for those in for the top tax bracket. Fair and Balanced. Reverse Robin Hood at it's finest. Good l;uck with that in 2012.

    April 5, 2011 07:09 am at 7:09 am |
  4. USNdiver

    Some one has to do it ! Dems won't because it buys votes with someone elses money . Repubs haven't because they have no b-lls and just want to be loved , awwww. This guy is right ,and gutzi.

    April 5, 2011 07:18 am at 7:18 am |
  5. Larry L

    I will try to look at the plan with an open mind. We need to cut spending and everybody should sacrifice. Having said that, I fully expect this Republican to offer cuts that disproportionately hurt the poor and middle class, do not make the ultra-wealthy pay a reasonable tax, pander to insurance companies, oil companies, and pharmaceuticals, and fails to close corporate loopholes. I'd not be surprised to see a school voucher plan thrown in to directly feed monies to church schools. We'll see...

    April 5, 2011 07:23 am at 7:23 am |
  6. lgny

    The Medicare savings here are built on a fantasy. It proposes to save money by turning it into a subsidy to purchase private insurance. Considering that the private companies all have higher internal operating costs than Medicare, this assures less money to pay for actual medical expenses. This all guarantees that there will be very substantial premium costs to pay for the difference between Medicare and the insurance company's actual fees.

    Second, considering the Conservative's devotion to the free market, they will resist all efforts to regulate the insurance companies, thereby perpetuating the many consumer-damaging rules such as pre-existing conditions, payment caps, dropping sick customers, .... After all, we don't need rules because the marketplace will assure that all companies are fair and treat their customers well.

    April 5, 2011 07:32 am at 7:32 am |
  7. Greg in Arkansas

    "cut the corporate tax rate from 35% to 25%, but at the same time do away with tax loopholes for corporations. Those loopholes helped General Electric find a way to pay no taxes last year"???



    Didn't think so................

    April 5, 2011 07:46 am at 7:46 am |
  8. Jake

    Finally someone that is taking the role as leader. Hey Obama why don't you take note!

    April 5, 2011 08:03 am at 8:03 am |
  9. Wire Palladin, S. F.

    The one thing for right wingnuts to remember about Crazy Ryan's budget, is that the wealthiest 2% will only pay 25% for their tax rate, compared to the Bush tax cut rate of 35%. Before the Bush cuts, wealthy had a rate of 39%. In order to pay for Ryan's windfall for the wealthy, medicare and medicaid will be virtually eliminated. There is no way any profit oriented insurance company will insure the elderly, and they usually have greater health risks.

    April 5, 2011 08:04 am at 8:04 am |
  10. LA, LA, LA

    Paul Ryan can kiss my entitlements.

    April 5, 2011 08:05 am at 8:05 am |
  11. U.S. Common Sense

    Real men (or women) will tackle the entitlement programs that are driving us over the cliff. The question is ... are there any real men in Congress?

    April 5, 2011 08:06 am at 8:06 am |
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