Taxes & Spending

GOP budget plan would cut spending $5 trillion over 10 years

Republicans on Tuesday embraced an ambitious budget plan that would repeal ObamaCare, make changes in the tax code, reform Medicare, and eventually end the climbing deficit with significant spending cuts.

“We know a debt crisis is coming and we believe we have a moral obligation to stop it,” said Rep. Paul Ryan (R-Wis.) chairman of the House Budget Committee.

The House Republican plan would cut spending by $5 trillion over the next 10 years while cutting taxes paid by an estimated $2 trillion. It would establish two tax brackets for individuals –10 percent and 25 percent, and in addition to eliminating ObamaCare, would repeal some 20 new tax hikes expected to accompany the law. It also repeals the Alternative Minimum Tax, Dodd-Frank Act and privatizes Fannie Mae and Freddie Mac.

Ryan announced the proposal during a Capitol Hill news conference and at a separate address at the American Enterprise Institute, and expects to have the votes necessary to pass the plan in the House next week.

However, the plan has little chance of becoming law – the Senate has not passed a budget in three years, and Majority Leader Harry Reid (D-Nev.) has already said members do not plan to pass one this year.

Instead, Democrats say Congress should continue spending plans set under a budget deal last August for $1.047 trillion in discretionary spending for the 2013 fiscal year.

Sen. Jeff Sessions (R-Ala.), ranking member of the Senate Budget Committee, called the House proposal an “intelligent and responsible” plan. “We have never needed a budget more than we need it today,” Sessions said. “Senate Democrats have abandoned their obligations and refused to offer a budget for three straight years – we will miss the April 1 deadline again this year.”

The Republican budget would cut discretionary spending next year to $1.028 trillion, and balances the budget – eliminating the $15 trillion deficit – by the year 2040. House Speaker John Boehner (R-Ohio) said the Republican budget would put Americans back to work while eliminating a massive budget deficit he blamed on President Barack Obama.

“The greatest threat to our economy and our future is doing nothing,” Boehner said.
The plan proposes to replace the defense sequestration that takes place in January and that essentially protects the Pentagon against spending cuts. However, the budget directs a half-dozen House Committees to cut $18 billion, including the Agriculture, Ways and Means, Energy and Commerce, Financial Services, Judiciary and Government Oversight and Reform Committees.

Democrats criticized the plan, saying it will cut programs such as food stamps that help the poor, without raising more taxes on the rich. “The House budget once again fails the test of balance, fairness and shared responsibility,” White House Spokesman Dan Pfeiffer said in a written statement.

“What’s worse is that all of these tax breaks would be paid for by undermining Medicare and the very things we need to grow our economy and the middle class – things like education, basic research, and new sources of energy,” Pfeiffer said.
Gene Sperling, director of the National Economic Council, told MSNBC before the plan was released that it would put Medicare in a “death spiral.”

Ryan told reporters that the Republican plan would save Medicare “by taking power away from government bureaucrats.”

“Competition and choice should be the way forward instead of price controls that lead to rationing,” Ryan said.

The budget proposal will likely become a topic among Republican presidential hopefuls in the coming days, as they strive to paint a difference between a new GOP administration, and a continuation of Obama’s spending policies.

“Our nominee owes it to the country to give them a choice of two futures,” Ryan said. “We’re helping him do that.”

“We’re not simply running against someone, we’re proposing solutions. We feel we have a moral obligation to show the country how we would do things differently,” Ryan said.

“Americans are ready to be talked to like adults about this issue, not pandered to like children,” Ryan said.

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