House GOP fiscal plan unveiled to slice off $4.4T

By Susan Walsh, AP

House Budget Committee Chairman Rep. Paul Ryan, R-Wis., says the 2012 GOP budget plan does not include tax hikes.

EnlargeCloseBy Susan Walsh, AP

House Budget Committee Chairman Rep. Paul Ryan, R-Wis., says the 2012 GOP budget plan does not include tax hikes.

The plan, criticized by Democrats before it was released, would also cut Social Security, defense and domestic spending in order to reduce federal deficits by $4.4 trillion over 10 years.

The unprecedented attack on government red ink would be achieved without any increase in taxes. The plan calls for reducing the top individual and corporate tax rates to 25% from their current 35% levels — and paying for that by wiping out some special-interest tax breaks.

The plan, produced by House Budget Committee Chairman Paul Ryan, R-Wis., takes an ax to the three entitlement programs that are at the root of the government's fiscal imbalance: Medicare, Medicaid and Social Security.

The proposal is being released as Congress and the White House continue to negotiate over $33 billion in spending cuts needed to seal the 2011 budget. They face a midnight Friday deadline to avoid a partial government shutdown, which last occurred 15 years ago.

"The new House Republican majority will introduce a budget that moves the debate from billions in spending cuts to trillions," Ryan said in a column to be published in today's Wall Street Journal.

The plan, dubbed "The Path to Prosperity," was criticized by Democrats such as House Minority Leader Nancy Pelosi for cutting deeply into New Deal and Great Society programs.

Ryan's plan is much tougher on deficits and debt than the budget President Obama unveiled in February. It's more dramatic, even, than the plan produced by a bipartisan fiscal commission, which recommended in December nearly $4 trillion in spending cuts and tax increases over 10 years.

The plan is likely to win passage in the Republican-controlled House but run into a roadblock in the Democratic Senate, where a bipartisan group of lawmakers is seeking a compromise approach. The White House is hoping those talks yield results.

Highlights of the GOP plan:

•Starting in 2022, new Medicare beneficiaries would choose a private health plan, and the federal government would subsidize the cost. Low-income recipients and those with greater health risks would get extra help.

•Medicaid, the federal-state health program for the poor, would be turned into a block grant to states, just as welfare was in 1996. Similar changes would be made to the food stamps program.

•Defense and domestic programs would be reduced below 2008 levels for the next five years. That's a lower threshold, for a longer period of time, than cuts Obama proposed.

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