The President started the budget process with his Budget of the U.S. Government FY 2012, published February 14. Now via Constitutional authority, Congress must appropriate funds to pay for the obligations of the Federal Government and thus by law the House has to write its own budget to plan to carry out its Constitutional obligation. So, now we have Rep Ryan (WI-R) the Chairman of the House Budget Committee, has published the House’s initial proposal, “Path To Prosperity – Restoring America’s Promise” at the beginning of April. Ryan and his colleague’s ideas can be summed up by reading their opening salvo in the summary of their plan:
“Where the President has failed, House Republicans will lead. This budget helps spur job creation today, stops spending money the government doesn’t have, and lifts the crushing burden of debt. This plan puts the budget on the path to balance and the economy on the path to prosperity.”
Let the games begin.
The House FY 2012 Budget authorizes $2.858 Trillion with $2.948 Trillion in Budget Outlays and $1.081 Trillion in Deficits. SPENDING: This budget cuts $6.2 Trillion in government spending over the next 10 years and $5.8 Trillion relative to current-policy baseline; Eliminates hundreds of duplicative programs; Reflects the ban on earmarks; Curbs corporate welfare bringing non-discretionary spending to below 2008 levels; it brings Government spending to below 20 percent of the economy (the President’s budget never falls below 23 percent of the GDP over the next decade. DEBT AND DEFICITS: Reduces deficits $4.4 Trillion over the next decade; Surpasses President’s low level of sustainability (which Obama’s fails to meet) reaching primary balance by 2015; it puts the budget on a path to balance and pays off the debt. TAXES: Keeps taxes low to grow the economy; Eliminates roughly $800 Billion in tax increases imposed by the President’s Health Care Law; Prevents the $1.5 Trillion tax increase called for in the President’s budget; Calls for a simpler less burdensome tax code for households and small business; Lowers tax rates for individuals, business and families; Sets top rate for individuals and businesses at 25%, and; improves incentives for growth, savings and investment.
The CBO has conducted a long-term analysis of the House proposal to substantially change federal payments under the Medicare and Medicaid programs, eliminate the subsidies to be provided through new insurance exchanges under last year’s major health care legislation, leave Social Security as it would be under current law, and set paths for all other federal spending (excluding interest) and federal tax revenues at specified growth rates or percentages of gross domestic product (GDP). However, “this analysis does not represent a cost estimate for legislation that might implement the proposal. Rather, it is an assessment of the broad, long-term budgetary impacts of the proposal, with results spanning several decades and measured as a share of gross domestic product (GDP). It is therefore quite different from a cost estimate for legislation, which would require much more detailed analysis, focus on the first 10 years, and be based on more recent baseline projections.”
The House plans changes to Medicare and Medicaid with the repeal of key provisions of the President’s Health Care Plan will, as a result of those changes, lower the government’s mandatory spending for health care to about 6 percent of GDP in 2030 and 2040 and about 5 percent in 2050, as compared with more than 12 percent projected under current law. It will also set “all other spending (excluding that for Social Security and interest) on a path that would cause such spending to decline sharply as a share of GDP—from 12 percent in 2010 to 6 percent in 2022 and 3½ percent by 2050; the proposal does not specify the changes to government programs that might be made in order to produce that path. Set revenues on a path that would cause them to rise from 15 percent of GDP in 2010 to 18½ percent in 2022 and 19 percent in 2030 and beyond.”
The House passed this budget the day after the CR was settled – other budgets were offered, debated and voted down prior to this version being passed, primarily along party lines – 235 to 193 – although all know this version of the 2012 Fiscal Year Budget will not pass in this form – it will be negotiated between the House, Senate and President. We can only hope and pray it contains major deficit reductions and changes to our costly entitlement programs.
