Proposals for how to fix the U.S. government's spiraling federal budget deficit have led to little more than political gridlock and public frustration.
But House Republicans aimed to make progress this week. They released an ambitious 2012 budget plan yesterday (Tuesday), setting the stage for heated debate with Democrats over the best way to pull America out of its debt hole.
House Budget Committee Chairman Rep. Paul D. Ryan, R-WI, said the GOP's main goal is to avoid the national debt crisis America is headed toward.
"This is not the future of a proud and prosperous nation. It is the future of a nation in decline – its best days come and gone," the proposal states.
The GOP budget proposal, called "The Path to Prosperity," cuts $6 trillion in spending over the next decade and aims to balance the budget – excluding interest payments – by 2015.
"We've got to show the country that we can get this situation under control and grow the economy, and that's what we're doing," Ryan said Tuesday. "I can't look my kids and my constituents in the eyes with my conscience being clear and not know that I didn't do everything I could to try and fix this problem before it got out of control."
Here are some key reforms the GOP has proposed to meet its spending cuts goal:
- Convert Medicare in 2022 into a "premium support system" for Americans, where they can choose from an array of private insurance plans. The U.S. government would pay about the first $15,000 in premiums, with payment amounts varying based on participants' economic and health status.
- Make Medicaid a block grant program, giving state governors more flexibility with funding.
- Cut non-security discretionary spending by $79 billion next year by reducing farm subsidies, shrinking the federal work force and streamlining government agencies.
- Cap government spending as a percentage of gross domestic product to around 20%, down from about 24% now.
- Repeal U.S. President Barack Obama's healthcare law.
- Adopt $178 billion in Pentagon cuts, with $100 billion to be reinvested in other defense programs.
- And cut corporate and personal taxes to a top rate of 25%, down from 35%.
Overall, the GOP budget proposal spends $3.53 trillion next year, $179 billion less than President Obama's 2012 plan.
Democrats were quick to attack the Republicans' proposal, starting a long battle in Washington over how to rein in U.S. government spending. Many claim the GOP plan hurts those who need government aid.
"The American people won't be fooled by your rhetoric, Mr. Chairman," said a statement Tuesday from the office of House Democratic Leader Rep. Nancy Pelosi, D-CA. "The GOP budget eliminates guaranteed benefits for seniors under Medicare and slashes support for seniors, children, and Americans with disabilities on Medicaid."
This brings us to next week's Money Morning "Question of the Week": What do you think about the GOP's proposed spending cuts? Do you think the budget proposal is good for the country, goes too far, or doesn't do enough? What do you think about the proposed changes for Medicare and Medicaid?
We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- The New York Times:
The House Republicans' 2012 Budget Proposal
- Fox News:
Rep. Paul Ryan Previews GOP Budget
- Money Morning News Archive:
Question of the Week Feature