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With last year’s budget running a trillion-dollar deficit, and the national debt topping $16 trillion, congressional Republicans have set an ambitions goal — a balanced budget in 10 years.
It won’t be revealed until April 15 — tax day — but Republican sources say the blueprint will resemble the budgets the House passed in 2011 and 2012.
Each plan’s signature proposal? Not shying away from the big drivers of our long-term spending, which already brought our public debt to 70% of our GDP and is forecast to climb even higher.
And not putting more of a burden on taxpayers to do it.
Seventy percent of the federal budget is eaten up by defense, debt interest and entitlements, including Social Security, Medicare and Medicaid. While defense spending should decline, barring another major engagement, our aging society and rising health-care costs aren’t expected to improve.
Republicans say something must be done about those costs and argue that Democrats are unwilling to face reality. The GOP relishes the upcoming debate, believing it offers them an opportunity to press their case for the kind of limited government policies, including an overhaul of the tax code, that they believe are crucial to robust economic growth.
Based on previous budgets and sources, here are some of things they will target:
* Transforming the $400 billion Medicaid health-care program for the poor. The program is jointly run by the states and the federal government. Recent Republican budgets proposed transferring most authority to the states, with Washington contributing funding in the form of a block grant that is indexed to inflation and population. That would shift the cost to local areas that can make decisions based on need.
* Overhauling the $500 billion Medicare health-care program for retirees. Recent House GOP budgets proposed changes for all workers under the age of 55 at the time of enactment. Those changes would include providing seniors subsidies to purchase private insurance. Higher-income seniors would see some benefit reductions to help finance increased benefits for poorer retirees.
* Reforming the tax code for individual taxpayers and corporations. Previous House GOP budgets called for junking the six current income tax rates and replacing them with just two: 10% and 25%, depending on your income level. The plans also proposed reducing the corporate rate to 25% from 35%. Various tax loopholes and itemized deductions also would be phased out, depending on income level. Republican sources argue this will increase government revenue, as corporations, for instance, shift more of their earnings to the US.
* Other proposals that have been floated but may not make it into a final bill include: end farm agriculture and farm subsidies; reduce funding for public education, allowing for more local decision-making and funding; scale back funding for transportation projects, which increased during the stimulus; shut down funding for public broadcasting, the National Endowment for the Arts, the National Endowment for the Humanities and AmeriCorps. These and other cuts to discretionary spending, combined with tying such spending to the rate of inflation, would save more than $2 trillion over 10 years, the Heritage Institute claims.
Congress and the White House have spent the last three years kicking the can down the road. The last formal budget resolution was passed in 2009. Since then, the budget has just puttered along with automatic increases every year.
Last week, the Congressional Budget Office agreed that the tax deal agreed upon for the “fiscal cliff” was a short-term solution. Though the budget deficit will fall to $845 billion this year, and lower next year, it will climb back to $1 trillion a year in 2023, it predicts.
“We have large projected deficits, a debt that will remain at a historically high share of GDP and will be rising at the end of the coming decade,” CBO Director Douglas Elmendorf said. “I think what that implies is that small changes in budget policy will not be sufficient to put the budget on a sustainable path.”
President Obama has not proposed a budget, and last week instead asked for a mix of “spending cuts and tax reforms” that would stop the sequester — automatic deep cuts to various programs — and push off the deadline for a more comprehensive deal for “few more months.”
Senate Democrats are preparing to write their own budget. That will be debated and negotiated in a House-Senate conference committee along with the Republican deal.
Both sides say they are ready for the debate; that the time for tough choices is now. But will it happen?
David M. Drucker is an associate politics editor for Roll Call.