House passes huge GOP budget cuts, opposing Obama

[April 16, 2011]  WASHINGTON (AP) -- In a prelude to a summer showdown with President Barack Obama, Republicans controlling the House pushed to passage on Friday a bold but politically dangerous budget blueprint to slash social safety net programs like food stamps and Medicaid and fundamentally restructure Medicare health care for the elderly.

The nonbinding plan lays out a fiscal vision cutting $6.2 trillion from yearly federal deficits over the coming decade and calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans

The GOP budget passed 235-193 with every Democrat voting "no." Obama said in an Associated Press interview that it would "make Medicare into a voucher program. That's something that we strongly object to."

The vote sets up the Republicans' next round of confrontation with Obama and Democrats over must-pass legislation to allow the government to borrow more money to finance its operations and obligations to holders of U.S. bonds. For the first time, Obama acknowledged that raising the debt limit is "not going to happen without some spending cuts" insisted upon by Republicans and some Democrats.

The vote came on the same day Obama signed a hard-fought six-month spending bill that averted a government shutdown while cutting $38 billion from the government. Struck last week, the compromise was the first between the White House and the emboldened Republican majority in the House.

Under the House Republican plan approved Friday, deficits requiring the federal government to borrow more than 40 cents for every dollar it spends would be cut by the end of the decade to 8 cents of borrowing for every dollar spent.

"If the president won't lead, we will," Boehner said as he closed debate. "No more kicking the can down the road, no more whistling past the graveyard. Now is the time to address the serious challenges that face the American people and we will."

Obama saw the situation differently. In the AP interview, he said the Republicans' "pessimistic vision ... says that America can no longer do some of the big things that made us great, that made us the envy of the world."

The plan by Budget Committee Chairman Paul Ryan, R-Wis., exposes Republicans to political risk. Its Medicare proposal would give people presently 54 or younger health insurance subsidies that would steadily lose value over time -- even as current beneficiaries and people 55 and older would stay in the current system.

The budget measure is nonbinding but lays out a vision to fundamentally reshape government benefit programs for the poor and elderly, programs whose spiraling costs threaten to crowd out other spending and produce a crippling debt burden that could put a major drag on the economy in the future.

"Which future do you want your children to have? One where the debt gets so large it crushes the economy and gives them a diminished future?" Ryan asked. "Or this budget ... that literally not only gets us on the way to balancing the budget but pays off our debt?"

The GOP's solution to unsustainable deficits is to relentlessly attack the spending side of the ledger while leaving Bush-era tax cuts intact. It calls for tax changes that would lower the top income tax rates for corporations and individuals by cleaning out a tax code cluttered with tax breaks and preferences, but it parts company with Obama and the findings of a bipartisan deficit commission, which proposed devoting about $100 billion a year in new revenue to easing the deficit.

Democrats and many budget experts say this spending-cuts-only approach is fundamentally unbalanced, targeting social safety net programs like Medicaid and food stamps while leaving in place a tax system they say bestows too many benefits on the wealthy. The GOP blueprint would cut almost $800 million from the federal-state Medicaid program -- which provides health care to the poor and disabled and pays for nursing home care for millions of indigent senior citizens -- into a block grant program run by the states.

Republicans counter that low taxes and spending cuts would unleash capital into the economy and put it on firm footing -- and avoid a European-style debt crisis that could force far harsher steps.

"The Republican plan is not bold. It's just the same old tired formula we've seen before of providing big tax breaks to the very wealthy and powerful special interests at the expense of the rest of America," said top Budget panel Democrat Chris Van Hollen of Maryland. "Except this time it's dressed up with a lot of sweet-smelling talk of reform."

In their budget, Republicans shied away from tackling Social Security shortfalls, steering clear of what pundits sometimes call the "third rail of American politics."

Virtually every budget expert in Washington agrees that projected Medicare cost increases are unsustainable, but the GOP initiative has brought heated disagreement.

"We hear a lot about Medicare as we know it," said Rep. Tim Griffin, R-Ark. "Well, unfortunately Medicare as we know it is going bankrupt. If you are for the status quo with regard to Medicare, you are on the side of the elimination of Medicare as we know it."

Democrats countered with official estimates showing the GOP plan would provide vouchers whose value would steadily erode.

"The Republican proposal breaks the promise that our country has made to our seniors -- that after a lifetime of work they will be able to depend on Medicare to protect them in retirement," said Democratic leader Nancy Pelosi of California. "The Republicans' plan forces seniors to buy their insurance from health insurance companies where the average senior will be forced to pay twice as much for half the benefit."

Also Friday, the House easily defeated two liberal budget alternatives. A plan offered by the conservative Republican Policy Committee failed as well, while a Democratic alternative that called for higher taxes on the wealthy and special interests fell on a 259-166 vote.

The GOP plan isn't actual legislation. Instead, under the arcane congressional budget process, the measure sketches out a nonbinding blueprint each year for running the government. The resolution doesn't require the president's signature, but it does set the framework for changes to spending or tax policy in follow-up legislation.

The most immediate impact of the GOP plan would be to cut the $1 trillion-plus budget for appropriated programs next year by $30 billion, following on the $38 billion in cuts just adopted. That would return domestic agency accounts below levels when George W. Bush left office.

Food stamps would also be cut sharply and turned into a block grant program.

For the long term, Ryan's 10-year plan still can't claim a balanced budget by the end of the decade because of promises to not increase taxes or change Medicare and Social Security benefits for people 55 and over.

But eventually annual deficits are projected to fall to the $400 billion range, enough to stabilize the nation's finances.

The Democratic-controlled Senate has yet to produce its alternative plan. Senate Budget Committee Chairman Kent Conrad, D-N.D., and other members of Obama's independent fiscal commission are pursuing a bipartisan "grand bargain" blending big spending curbs with new revenues flowing from a simplified tax code.

The budget deficit is projected at an enormous $1.6 trillion this year, and, more ominously, current projections show an even worse mismatch in coming decades as the baby boom generation retires and Medicare costs consume an ever-growing share of the budget.

[Associated Press; By ANDREW TAYLOR]

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