Ryan budget aims to cut $5.1 trillion, reach balance in 10 years
POSTED: Tuesday, April 1, 2014 - 4:04pm
UPDATED: Wednesday, April 2, 2014 - 2:39pm
WASHINGTON (CNN) -- — Republican House Budget Chairman Paul Ryan unveiled a budget plan Wednesday that would achieve some key conservative goals - balancing the federal budget in a decade while starting to contain the national debt - while also rekindling some old controversies by changing Medicare, repealing Obamacare and significantly cutting social programs like food stamps.
A balanced budget
"Washington owes the American people a responsible, balanced budget," reads the first line of Ryan's 2015 budget outline, which is titled "The Path to Prosperity."
The title is the same as past Ryan budget proposals, and the content largely mirrors his past approaches with a few notable exceptions.
Without action, the federal budget will take Washington to new heights of debt. Within a few years, the non-partisan Congressional Budget Office predicts deficits will again start to rise, reaching above $1 trillion a year. Ryan's budget would reverse that course by balancing the budget in a decade, slashing the national debt from 73% of the nation's Gross Domestic Product now to 54% in 2024.
Ryan achieves his balance by cutting $5.1 trillion in overall spending growth. The largest chunk of those savings, over $2 trillion, comes from repealing Obamacare's insurance coverage extension while keeping certain tax revenues and Medicare cuts included in the law.
Ryan's proposal calls for Obamacare to be replaced, but does not provide specific alternatives. It also assumes that any replacement would have no net cost.
Program cuts and Medicare
As with his past budget proposals, Ryan would turn major social welfare programs, like Medicaid and food stamps, into smaller block grant programs for states. It continues the GOP's push to bolster the military while cutting other agencies, increasing defense spending nearly $500 billion over the next decade while cutting non-defense by nearly $900 billion.
And notably, the Ryan plan would rewrite Medicare starting in 2024, allowing those eligible to choose either a fee-for-service Medicare program from the government or use a single government payment to help pay for a private insurance plan.
Democrats quickly fired back.
"The problem is the Ryan budget wouldn't do a thing to help the middle class," charged Sen. Chuck Schumer, D-New York. "Simply attacking Obamacare won't get them the political victory they seek."
The economy and a "fiscal dividend"
Ryan argues that a balanced budget would help improve the economy and job growth.
"By balancing the budget, the 'Path to Prosperity' will promote economic growth," his plan states. "By paying down the debt, the federal government will help keep interest rates low, which will spur greater investment and productivity"
The former GOP vice presidential nominee's budget counts on that economic gain in order to balance. The proposal forecasts that a "fiscal dividend" of $175 billion will come to the federal books as a result of better budgeting over 10 years.
While the potential White House hopeful tackles some controversial areas in his proposal, he sidesteps others.
Ryan sets a goal of collapsing the tax code down to two income tax brackets, with a top rate of 25%. But he does not give details for exactly how that would be done.
In addition, as he has done in the past, Ryan does not tackle the issue of Social Security. His proposal states that the president should first submit his plan.