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Budget Watch: This Week...

March 29, 2012

Paul Ryan's Budget Passes the House

Today, the budget introduced last week by House Budget Chairman Paul Ryan (R-WI) was narrowly approved by the House of Representatives. This budget would cut discretionary spending even more than agreed to in last year’s bipartisan Budget Control Act, and would increase funding for defense instead of cutting it, as agreed to last year. Additionally, it would further cut taxes, thus requiring even more spending cuts in future years if deficit reduction is to be achieved.

The Ryan budget breaks a bipartisan agreement last year (The Budget Control Act) that would reach an agreed upon spending threshold by taking half the $1.2 trillion in cuts from programs that serve vulnerable Americans and half from defense. Essentially, his budget takes all the cuts from programs that provide Americans with important services and serve children, families, the elderly, and people with disabilities. By cutting discretionary spending below the level agreed upon with Democrats last year, Ryan’s budget sets up another partisan battle on spending and tax issues that will make a budget deal virtually impossible before the November elections (all spending bills must be passed by beginning of FY 2013, October 1, or the government shuts down unless there is some temporary extension of spending). Senate Budget Chairman Conrad has announced that he will not pass a budget this year, but has filed a deeming resolution setting the FY 2013 spending limits agreed to last year.

Specifically, Ryan’s budget calls for $5.3 billion in reduced spending, and nearly $4.4 trillion in lower taxes over 10 years compared to current policies, on top of the $5.4 trillion cost of making the Bush tax cuts permanent. It would cancel the scheduled cuts to defense (“the sequester”) agreed to as part of the budget deal last year ($600 billion over 10 years) and would instead increase spending on defense (by $228 billion through 2022) and shift all those scheduled cuts to domestic programs. He does not specify how those savings would be reached, but the budget includes instructions to the authorizing committees to find enough savings for this purpose. About half of the cuts in the Ryan budget ($2.5 trillion) are from health care programs – block granting Medicaid, repealing the Affordable Care Act, and voucherizing Medicare. By block granting Medicaid, Ryan’s budget would cut spending by $810 billion over 10 years, and additionally give states the power to cut eligibility, benefits, and payments to doctors and hospitals, and raise costs to the poor. The Ryan budget would also repeal the Affordable Care Act (ACA), eliminating the Medicaid expansion to lower income Americans, canceling all the subsidies to low and middle income Americans to help purchase health insurance starting in 2014, and cutting funding for the Children’s Health Insurance Program (CHIP) by nearly $29 billion in two years alone. Without the ACA, the 30 to 32 million Americans who would be expected to gain health coverage under the ACA would not get coverage, and in addition, millions of people who are already covered would lose their health coverage.

The Ryan budget would also cut funding for food stamps (SNAP) by about $133 billion over 10 years, and block grant the program, making assistance contingent on work or training, and subject to time limits and work requirements. Additionally, Ryan’s budget calls on six committees to find $261 billion in cuts to mandatory programs, so the other cuts that would necessarily result have not yet been identified.

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