Paul Ryan's new budget whittles spending faster, still guts 'Obamacare'

Rep. Paul Ryan’s budget is back – and the new budget looks a lot like its predecessors.

The House Republican budget, which Democrats deride as an antigovernment slasher novel and Republicans hail as their courageous blueprint to save the nation from fiscal ruin, is back for its third iteration, with the GOP's Mr. Ryan, of Wisconsin, unveiling his proposal on Tuesday. Senate Budget Committee Chairman Patty Murray (D) of Washington, meanwhile, will offer her own proposal on Wednesday, ending a four-year streak in the Democratic-led Senate without a budget plan.

Thus, Senator Murray and Representative Ryan set the stage for the political fireworks that accompany documents that have more import for political campaign material than for actual governance.

The newly minted Ryan budget equalizes government spending and revenues within the next decade (versus nearly three decades under his plan from last year). Besides that, its planks are similar to those that Ryan, the House Budget Committee chairman, has proposed in the past.

His plan, for instance, still takes aim at President Obama's signature health-care reform law. Repealing it would account for $1.8 trillion of the total $4.6 trillion in deficit reduction (all achieved via spending cuts) forecast over the next decade. (Spending $4.6 trillion less is about a 10 percent reduction over 10 years.) 

And Republicans still want either to send social insurance programs such as Medicaid, which offers health insurance to the poor, to state governments or to tighten eligibility standards for programs such as subsidized college loans and food assistance. Total savings from such social services: $1.6 trillion in the next decade.

In one area, House Republicans favor spending more: The Ryan budget uses some of these cuts to pay for $500 billion in additional defense spending over the next 10 years. 

Overall, Ryan's new proposal will cut roughly the same amount of money over the next 10 years as his 2012 budget did. But this year he is driving to attain a balanced budget sooner after last year decrying the "fiscal cliff" deal that raised taxes on the rich, adding more than $600 billion to federal revenues over the next decade.

What’s somewhat unusual is how the Ryan budget treats the coming fiscal year, beginning Oct. 1.

That's the year that matters most to lawmakers, because congressional budgets are only as good as the next government funding cycle. That’s the time frame in which budget instructions are supposed to serve as guidelines for House and Senate appropriations committees to set government-spending levels. Though budget plans look out 10 years, no Congress can bind a future Congress regarding taxing and spending. That's why conservatives such as Rep. Justin Amash (R) of Michigan are keen to ask how much spending is being cut right now, not 10 years in the future.

In fiscal 2014, Ryan’s budget would reduce federal spending by some $80 billion. That is, in size, roughly commensurate to the "sequester" cuts from March through September. But Ryan would apportion the cuts totally differently from how spending is being reduced under sequestration.

Nearly half – $36 billion – would come from the Republican holy grail: repealing "Obamacare." Another $41 billion would be stripped from “other mandatory” spending, which includes things such as food support, temporary assistance for needy families (commonly known as welfare), and unemployment insurance.

As for the discretionary budget, which bore most of the sequester cuts? Ryan would shave off another $2 billion, a small fraction of the just over $1 trillion the federal government will spend on most general government functions next fiscal year.

Ryan's proposed cuts of $80 billion next year are the smallest he makes in any of the budget years, by far. In fiscal 2015, cuts would more than triple to $250 billion-plus. 

Still, compared with his 2012 budget proposal, Ryan has doubled the overall level of cuts he asked for in the next year, owing in part to his collapsed time frame for bringing the budget into balance.

Why winnow the US budget deficit to zero over 10 years instead of 20? Or, as Democrats are likely to propose, why not simply stabilize the deficit’s growth to match the rate of economic expansion?

“It’s a common-sense goal that the American people can relate to,” says a House Budget Committee aide, characterizing Ryan’s thinking.

In the budget, Ryan shades this goal as bringing government back to its proper size.

“We balance the budget for an important reason,” Ryan writes. “An unbalanced budget is a sign of overreach. When government does too much, it doesn’t do anything well.”

Democrats are eager to make their counterargument: The government should be investing in the economy at a time of high unemployment, and those who want to cut government spending at such a moment are doing so for ideological, not economic, reasons.

The aim of balancing the budget in 10 years is the result of intraparty negotiations between House GOP leaders and the often-rebellious group of economic conservatives who prefer even faster reductions in government spending, says Rep. Chris Van Hollen (D) of Maryland.

“They now have established this political target of balance in 10 years … it was simply a result of the Republican speaker of the House negotiating with the tea party wing of their caucus,” says Representative Van Hollen, the top Democrat on the Budget Committee. “It doesn’t have any economic basis.”

So what does the future hold for Ryan’s economic plan? Will having two wildly different budget resolutions from the House and Senate ignite the long-dormant “regular order” of budgeting, whereby the two chambers come to a compromise and then have the appropriations committees get to work?

Don’t hold your breath, lawmakers and analysts say.

Compromise on the budget would be “very helpful” in getting Congress to clear spending bills on time this year, Van Hollen added. “It doesn’t mean it would be required.”

However, even if compromise doesn't happen, going through the exercise of putting two sets of spending preferences on the table could still be useful. For one thing, those budget priorities could be the basis of negotiations to make fiscal reforms heading into Congress's next debate, this summer, over raising the federal borrowing limit once again. 

“What you’ll have now is two budgets that establish the priorities of Republicans and Democrats and set out very different visions for how we should strengthen the economy and move forward, and I think that’s the starting point for a negotiation,” says Van Hollen.