Bloomberg News

Ryan Says His Budget Would Slow Annual Spending Growth to 3.4%

March 11, 2013

House Budget Committee Chairman Paul Ryan

House Budget Committee Chairman Paul Ryan, a Republican from Wisconsin, said the extra $600 billion in new tax revenue that Congress agreed to in January will help achieve a balanced budget in 10 years. Photographer: Andrew Harrer/Bloomberg

House Budget Committee Chairman Paul Ryan is planning to unveil a 2014 budget plan this week that would balance the government’s books in 10 years by limiting the annual growth of spending to 3.4 percent.

The budget proposal assumes that Congress would repeal President Barack Obama’s health-care law set to be implemented next year, Ryan said yesterday on “Fox News Sunday.” That assumption depends on the unlikely possibility that the Democrat in the White House and those who control the Senate agree to repeal the president’s signature domestic policy achievement.

Ryan, a Wisconsin Republican, said his budget would save $5 trillion over 10 years, the same amount his two previous budget plans had proposed saving by 2040. His party’s vice presidential nominee in 2012, Ryan said new tax revenue of more than $600 billion that Congress and the president agreed to in January will help achieve a balanced budget in 10 years.

“Instead of growing spending at 4.9 percent” annually, “we grow spending 3.4 percent” so “the result is a $5 trillion” cut in the increase of spending over 10 years, he said.

Ryan said his plan would save $770 billion over 10 years by taking money designated for expanding Medicaid, to provide more insurance to low-income people, and give it to states as block grants to “customize” coverage.

“By repealing Obamacare and Medicaid expansions that have not yet occurred, we are preventing the explosion of a program that is already failing,” Ryan said.

Expansion’s Cost

The health-care law would expand Medicaid to cover people with incomes of as much as 133 percent of poverty. The federal government would pay the expansion’s entire cost until 2017 and 90 percent after that.

Some states with Republican governors or legislatures have balked at agreeing to the expansion of the Medicaid program, which is financed by state and federal funds. Eight Republican governors seeking re-election next year, including New Jersey’s Chris Christie and Ohio’s John Kasich, have proposed the Medicaid expansion in their states.

Still, the House wants to “give the states the tools they are asking for” to “make these benefits work for their populations,” Ryan said.

‘Raid on Medicare’

His proposed budget would end the health-care law’s “raid on Medicare” and use the money -- $716 billion over 10 years -- to shore up the Medicare trust fund, Ryan said. The program is projected to be insolvent by 2024.

“Obamacare does damage to Medicare,” he said. “It is doing damage to the current program for seniors.”

The non-partisan Congressional Budget Office said in a 2012 letter that Medicare spending would increase by $716 billion by 2022 if Congress repealed the health-care law.

Ryan said his budget, like his plan last year, would propose giving new Medicare beneficiaries, now younger than age 55, the option of purchasing private insurance with a government subsidy instead of the traditional Medicare plan.

The budget blueprint Ryan and his panel are set to propose this week puts him at loggerheads with Obama, with whom he had lunch March 7, along with Maryland Representative Chris Van Hollen, the top Democrat on the budget committee.

“We come from very different perspectives,” Ryan said. “We exchanged very frank, candid views, which are very different.”

Dinner Companions

Obama has reached out to Republicans in an effort to forge a deal on spending and entitlement overhaul. The president also dined March 6 with about a dozen Republican senators.

One of the senators at the dinner, Tom Coburn of Oklahoma, said he was optimistic that Obama is “tremendously sincere” about tackling the long-term spending issues posed by Medicare and other entitlements. “I don’t think this is just a political change in tactic,” the Republican said on NBC’s “Meet the Press.”

Republican Senator Ron Johnson of Wisconsin called the dinner “a first good step” by Obama toward developing a working relationship with members of the opposite party. “I’ll certainly give the president the benefit of the doubt,” Johnson said on ABC’s “This Week.”

Obama, in his radio address over the weekend, blamed “political gridlock” for the forced spending reductions. The president has sought higher taxes on the wealthy in return for cuts to entitlement programs such as Social Security and the Medicare and Medicaid health insurance programs. Republican leaders have opposed higher levies and demand spending cuts.

Whether Obama can forge consensus with a Congress that is operating under split political control depends on “how he conducts himself in the coming weeks and months,” Ryan said. “Will he resume the campaign mode, will he resume attacking Republicans?”

Ryan said that Obama’s depiction of Republican spending proposals as “draconian cuts” to “impugn people’s motives” hasn’t helped his relations with Republicans in Congress. “If that kind of rhetoric resumes, then we will know” that the outreach “was for show,” he said.

To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net


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