House Budget Committee Chairman Paul Ryan outlined his “Path to Prosperity” budget plan Tuesday at the American Enterprise Institute.
Ryan’s budget blueprint aims to take a bite out of the nation’s looming debt crisis by restraining total federal spending at between 18 and 19 percent of nation’s GDP – far below the Obama average of 20-24 percent – and tackle the nation’s over-$15 trillion debt.
It would also cut projected spending by $6.2 trillion over the next decade compared with the president’s budget proposal, and reduce deficits during the same period by roughly $4.4 trillion.
“This debt crisis is the most predictable crisis we have ever had in this country,” Ryan said. “I think we have changed the debate in Washington by showing that we have a plan to preempt and prevent this debt crisis from taking down our economy.”
The Obama budget, by contrast, would keep federal spending above 20 percent as far as the eye can see, which conservative economists argue would hinder long-term economic growth.
“The president’s budget says we should have a net spending increase,” Ryan said. “It’s a budget that says the only area where we actually end up cutting spending is in defense – to hollow out our defense – and not dedicating that for defense reduction but for more spending.
“And it’s a budget that includes a new $2 trillion tax increase; it’s a budget that says, come January, the top individual rate goes up to 44.8 percent.”
The Ryan proposal would simplify the tax code by consolidating tax brackets and by bringing the top individual tax rate from 39 percent down to 25 percent and reducing the current 15 percent bracket to 10 percent.
“By lowering the rates to 10 and 25 percent, younger workers won’t be any worse off under tax reform, and actually will likely be slightly better off,” Ryan Ellis, tax policy director with Americans for Tax Reform, told Red Alert Politics.
“Path to Prosperity” would also cut the corporate tax rate down to 25 percent the same as last year’s proposal.
“Let’s lower rates and broaden the base,” Ryan said. “What we have here on tax reform is a new emerging consensus that says, ‘Let’s stop picking losers and winners in the tax code …’ and let’s have a tax system that is wired for growth and for opportunity that lets businesses succeed based on their hard work and on the merits of their ideas and not upon cronies and their connections in Washington.
“Increasingly, I think the president is on the outside of this consensus looking in.”
Ryan’s proposal also aims to save Medicare for younger Americans – something the Obama budget fails to do – and keep entitlements from crippling the nation’s economic prosperity, as they have done in Europe.
“Less than a year ago, the House of Representatives passed a budget that took on our generation’s greatest domestic challenge: reforming and modernizing government to prevent an explosion of debt from crippling our nation and robbing our children of their future,” Ryan said. “Absent reform, government programs designed in the middle of the 20th century cannot fulfill their promises in the 21st century. It is a mathematical and demographic impossibility. And we said so.”
Medicare would be preserved by scrapping Obamacare’s planned $500 million raid of Medicare funding and introduce a variety of options into the system. It would leave Medicare untouched for current beneficiaries.
“For people 54 and below, you’ll have a program that works like the one that I have as a Member of Congress and the federal employees have,” Ryan said. “You have a list of guaranteed coverage options for Medicare. You can choose from a list of private plans or from a traditional Medicare fee-for-service option.”
“You can pick your plan and Medicare subsidizes your premiums based on who you are – more for the poor, more for the sick and less for the wealthy,” Ryan continued. “Having providers and insurers compete for the beneficiaries’ business is how we propose to save this system.”
