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Budget Deal Includes Vote on Ryan Plan

April 11, 2011

The Obama administration and congressional Republicans struck an eleventh-hour deal to prevent a government shutdown on Friday night, with one of the conditions being a vote this week on the tax-cutting fiscal 2012 budget proposal introduced last week by House Budget Committee Chairman Paul Ryan, R-Wis.

Ryan’s budget plan calls for lowering the top tax rate for individuals and corporations to 25 percent from 35 percent (see House Republicans Aim to Lower Top Tax Rate to 25%). It also calls for eliminating unspecified tax loopholes. Ryan’s committee did a markup of legislation last week on his budget, but the legislation did not include any tax increases, so it is still unclear which tax loopholes would be closed with his budget plan. Attempts to add amendments to the budget resolution with various tax changes, such as eliminating tax deductions for domestic oil production and increasing taxes on millionaires, were not approved by the committee.

Other provisions of the Ryan budget call for reducing budget deficits by $4.4 trillion over the next decade, cutting $6.2 trillion in spending. The Ryan budget would also transform Medicare into a “premium support model” under which future Medicare recipients would choose an insurance provider, and a payment would be provided to the plan chosen by the beneficiary, subsidizing its cost. Medicare costs would no longer be paid directly by the government under the plan. Democratic critics charge that seniors would have to pay a gretaer share of medical costs under the plan and say it amounts tp a voucher program. Ryan insists it is not a voucher program.

Medicaid would be transformed under the Ryan plan into a block grant type of program to the states. That would limit the amount of Medicaid funds provided to states, but would also give states more flexibility in how they provide benefits to Medicaid recipients and set the eligibility requirements.

The Ryan plan also calls for repealing the health care reform law. His budget resolution is not expected to pass in the Senate if it does come up for a vote this week. President Obama plans to introduce his own plans for long-term deficit reduction on Wednesday.

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