Ryan unveils U.S. budget plan to erase deficit within a decade

Budget Deal

Ryan, whose budget proposal last year wouldn’t have eliminated the deficit until 2040, found his path to balance cleared somewhat by a January budget deal in which lawmakers agreed to raise taxes on the wealthy. That’s projected to pump an additional $600 billion into the Treasury, which Ryan is including in his budget proposal. He has also been helped by revised Congressional Budget Office projections showing that health-care spending is growing less quickly than anticipated.

As in previous years, the centerpiece of Ryan’s plan is his proposal to overhaul Medicare by giving people now under age 55 fixed sums with which to buy either private insurance or use in Medicare. Either way, their benefits would be capped under his plan, which would be a major change in how the currently open-ended program operates. Ryan omitted a proposal floated in recent days among colleagues to phase in the changes a year more quickly, sticking with his original plan to exempt those 55 and older from any changes.

Deep Cuts

The plan reiterates his previous calls for deep cuts in Medicaid, the health-care program for the poor, as well as in food stamps, agriculture subsidies, federal workers’ benefits, Pell college tuition grants and many other programs.

It would impose additional cuts in discretionary spending, beyond this year’s sequestration. His budget plan would set aside $1.14 trillion for such spending for the 2014 fiscal year, which would amount to rolling back that portion of the budget to below 2008 levels -- and even less when inflation is taken into account.

Still, his plan leaves many questions unanswered. It would call for almost $1 trillion in cuts to mandatory programs outside of health care without saying where much of those cuts would be made. The plan also doesn’t propose changes in Social Security, the government’s single biggest program; it has begun running a cash deficit, and the program’s trustees have projected that its disability program will go bust by 2016.

Likewise, Ryan’s plan proposes to overhaul the tax code by dropping the top rate to 25% and collapsing the number of brackets to just two from the current seven, with the other rate set at 10%. It would finance those reductions by squeezing individual tax breaks, without identifying which would have to go.

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