With the unveiling of Paul Ryan’s budget blueprint on Tuesday and the Democrats’ version coming this week, it appears the wheels of Congress have begun turning. But the machine could stop soon.
Releasing budget blueprints is something both parties do each year. It could get both sides talking, but there is skepticism whether there will be any actually problem solving. Much like their everyday politics, the vast differences between Democrats and Republicans are still very evident in their approach to reducing the nation’s deficit and charting a clear path forward for the government's finances.
On the one side, Democrats are proposing a $1.85 trillion package split between spending and new taxes, including cuts to healthcare and defense. On the other are the Republicans, who plan to balance the budget in 10 years through no new taxes but much more spending cuts. The GOP’s plan would keep the entire next decade of savings from cuts specified under the Budget Control Act of 2011. Republicans would also keep the $1.2 trillion from the sequester, the $600 billion in tax revenue from the recent fiscal cliff deal, and the $716 billion in savings from Medicare under the Affordable Care Act, also known as Obamacare.
But Ryan doesn’t stop there. Going a step further, he would repeal Obamacare, saving $1.8 trillion by his reckoning, and make cuts to Medicare and Medicaid, with the latter turning into a block grant program giving states more flexibility.
But he has no chance of seeing his budget pass the Democratic Senate.
“I don’t think it is a sign of a thaw. I would hope there is a thaw,” said Scott Lilly, a senior fellow at the Center for American Progress. “The extreme nature of Ryan’s budget is a discouraging sign of the two parties getting together.”
Ryan’s budget contains several issues that were hot points in the electoral debate last year. The safety net for the poor may be weakened under his plan, and senior citizens haven't reacted favorably to the transformation of Medicare into a voucher system.
“Instead of coming to the center the Republicans are moving further and further to the right,” Lilly said.
And if Ryan doesn’t want to include revenue as a solution to the deficit, but remains focused on gutting programs like Medicare and Medicaid, then, President Barack Obama said, “we’re probably not going to be able to get a deal.”
The near-term economic outlook however is good from the point of view of the non-partisan Congressional Budget Office, or CBO. The CBO’s baseline projection is that the deficit will continue to shrink over the next few years, to 2.4 percent of GDP in 2015.
It is later in the decade that the deficit will pose a problem, when it increases because of an aging population. An increasing number of elderly is expected to send health-care costs up. There will be an expansion of the federal subsidies for health insurance and increased interest payments on the federal debt, the CBO stated. That will add to the existing national debt.
“As a result, federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade,” according to the CBO.
Some experts are saying it is hard to take the Republicans’ budget seriously.
In his analysis of Ryan’s budget, Robert Greenstein, president of the Center on Budget and Policy Priorities, said te plan doesn’t specify “hundreds of billions of dollars in budget cuts as well as the several trillion dollars of needed tax expenditure savings to pay for its proposed deep cuts in income tax rates.”
He added that the claims in Ryan’s proposal “rest on massive magic asterisks.”
“What stands out, above all else, is Chairman Ryan’s unwillingness to propose anything that would upset his party’s base of supporters or, in particular, its ideological opposition to any revenue increases,” Greenstein wrote in his statement. “Paul Ryan is a smart and engaging individual. But, make no mistake: his budget is extreme. And, in its reverse Robin Hood policies, its ideological rigidity, and its calculated vagueness, it sadly reflects some of the worst features of American politics at this crucial time.”
“The elimination of Medicare is not a viable solution in this. I’m not saying we can’t touch Medicare, just don’t eliminate it,” he said. “The irony of all of this the people [the Republicans] are attacking is the majority who voted for them.”
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