Rep. Ryan unveils House GOP plan to balance budget, cut $5T in spending

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Inside the Ryan budget plan

Congresman Paul Ryan details his plan to balance the budget, cut $5 trillion in spending

WASHINGTON – House Budget Committee Chairman Paul Ryan renewed a fight with Democrats over spending cuts and deficit reduction, unveiling an updated Republican budget plan Tuesday that aims to cut spending by more than $5 trillion over a decade and balance the budget in that time.

Similar to past proposals, Ryan's plan would include cuts to food stamps and major changes to government-sponsored health care for the poor and working class. Ryan's plan would also cut Pell Grants for low-income students and pensions for federal workers, while steering away from cuts to benefits for senior citizens, at least in the short term.

"This is a plan to balance the budget and create jobs, and it builds off a simple fact: We can't keep spending money we don't have," Ryan, R-Wis., said in a statement.

Unlike many spending proposals floating around the Hill, Ryan's aims to balance the budget within 10 years, in part by cutting more than $5.1 trillion. Whether that plan would actually work remains to be seen -- and, as in past budget cycles, Democrats made clear they would not be supporting his approach.

"Because of a stubborn unwillingness to cut the deficit in a balanced way by closing tax loopholes for the wealthy and well connected, the House Republican Budget would slow the economy, stack the deck against the middle class, and threaten the guaranteed benefits seniors have paid for and earned," White House Press Secretary Jay Carney said in a statement.

The House GOP proposal would reprise a voucher-like Medicare program for future retirees that would be the basis for GOP claims that the measure would drive down government debt over the long term.

The plan should skate through the Budget Committee on Wednesday but faces challenges on the floor next week since it endorses a bipartisan pact -- negotiated by Ryan and Senate Budget Committee Chairman Patty Murray, D-Wash., in December -- to increase agency operating budgets this year and next.

Many conservatives who opposed the pact last year would have to reverse course and embrace them as part of the GOP budget. Democrats who helped pass the Ryan-Murray pact in December will oppose the GOP plan.

The legislation promises to serve more as a political and policy statement by House Republicans than a realistic attempt to engage President Obama and Democrats, who control the Senate, in any serious effort to further cut the deficit. Election-year politics are in play, for starters, as are entrenched differences over spending and taxes.

At issue is the arcane congressional budget process, which employs a non-binding measure known as a budget resolution to set forth goals for future taxes, spending, and deficits. But follow-up legislation is usually limited to one-year appropriations bills rather than more difficult measure to deal with the government's long-term fiscal challenges, which are fueled by spiraling health care costs and the retirement of the baby boom generation.

Ryan's budget brings back a now-familiar list of spending cuts to promise balance, including $2.1 trillion over 10 years in health care subsidies and coverage under the Affordable Care Act, $732 billion in cuts to Medicaid and other health care programs, and almost $1 trillion in cuts to other benefit programs like food stamps, Pell Grants, and farm subsidies. While repealing the benefits of "Obamacare," Ryan would preserve its tax increases and cuts to providers, including cuts to private insurers under the Medicare Advantage program. Republicans have attacked Democrats for the Medicare cuts used to finance the new health care law.

As in the past, Ryan has steered clear of cuts to Social Security and promises steady increases for veterans. But he faced a more challenging task to promise to balance the budget by decade's end than he did last year because the CBO projects lagging revenue estimates.

But steep cuts to Medicaid, which Ryan proposes to turn into a block grant program managed by the states, could drive millions of people from the program, including seniors in nursing homes and tens of millions of children from low-income households. Ryan proposes to cut projected costs of Medicaid and other non-Obama-sponsored health care programs by 17 percent over the decade.

Ryan's budget claims balance by 2024, but relies on $74 billion in savings in that year from the macroeconomic effects of cutting deficits, which CBO says would have a long-term positive effect because it would free up savings and investment capital. Democrats are sure to seize on the maneuver as phony math; without these projections, however, Ryan's budget plan would fall almost $70 billion short of balance.

Earlier versions of Ryan's plan have passed the House three times since the GOP seized control of the chamber following the 2010 mid-term elections. This year's version may prove more controversial because it begins to implement cuts to future Medicare beneficiaries. Under the plan, people who enroll in Medicare in 2024 would be given a subsidy -- dubbed "premium support" by Republicans, derided as a voucher system by Democrats -- with which they would purchase health insurance on the open market.

The Associated Press contributed to this report.