It's budget week in America, and for the first time in four years, both houses of Congress will respect the law and produce a blueprint for the coming fiscal year. The release of the president's budget, which was due by statute on February 4, has been delayed for a second time until April 8. Senate Democrats will finally unveil their plan on Wednesday, with a single day mark-up planned for Thursday. Sen. Jeff Sessions, the ranking Republican on his chamber's budget committee, says he fears Harry Reid and Patty Murray's caucus will introduce a budget that raises taxes by trillions of additional dollars but never achieves balance. On a conference call with reporters late last week, he warned that Democrats may resort to a series of gimmicks to manufacture phony "deficit reduction" mechanisms. These maneuvers could include so-called savings war and Sandy relief outlays (basically, taking credit for not spending money that was never going to be spent in the first place), and a misplaced emphasis on "primary balance" -- which does not account for interest payments on the national debt. Such payments are on track to reach nearly $900 billion by the end of the decade. But for now, that's all speculation. What's not speculation, however, is what the new House GOP budget will accomplish. House Budget Committee Chairman Paul Ryan appeared on Fox News Sunday to preview his party's forthcoming FY 2014 governing document. Here's a portion of the exchange:
We'll have much more on the new Ryan budget in the coming days, but here are five major take-aways from the interview:
(1) The GOP budget will balance in 10 years. By comparison, President Obama's most recent budget came into balance...never. Ryan's plan accomplishes this feat by implementing a number of cost-reducing reforms to entitlement programs, incorporating the budget caps and revenue increases that recently became law (laying down a new, more advantageous baseline), and by asking all federal workers to begin making some contributions to their pensions by the end of the coming decade.
(2) The Republican proposal increases spending overall. Democrats will inevitably inveigh against Ryan's budget as a heartless and "draconian" imposition of unthinkable austerity. Nonsense. It will, on average, increase federal spending by 3.4 percent per year for the next ten years. Yes, this is a less rapid rise compared to the unsustainable current path (annual increases of nearly five percent), but it's an increase nonetheless. Ryan contextualizes these big numbers: "Instead of spending $46 trillion over the next 10 years, we'll spend $41 trillion. That's means we'll grow spending on average 3.4 percent a year instead of growing it an average 4.9 percent a year, which is the path we're on, which keeps us from ever balancing the budget which produces a debt crisis." Compared to the current trajectory, the GOP plan will reduce spending by $5 trillion.
(3) Ryan's bipartisan Medicare reform plan remains intact. The structural reforms to Medicare from last year's GOP budget will be replicated in this year's iteration. This proposal is drawn from the bipartisan Wyden/Ryan compromise, which entails premium support, increased means testing, and maintaining a traditional Medicare option for future seniors. As was the case last time around, anyone aged 55 or older is totally unaffected by these reforms. There were rumors circulating that encroaching fiscal realities might have forced Ryan to bump this age threshold up to 56 or higher this year, prompting gales of protest from Republicans who campaigned on the 55-plus promise last cycle. I spoke to several senior Republican sources who said a final decision on this question was still under consideration, but Ryan's interview with Chris Wallace indicates that the '55' level will stay in place. On its current, unreformed path, Medicare will be insolvent in 11 years.
(4) Tax reform, not tax hikes. President Obama is trying to redefine "tax reform" to be synonymous with tax increases. On top of his $600 billion hike imposed in resolving the fiscal cliff standoff, Obama will likely seek to raise at least as much extra revenue in his new budget. Not to reduce the deficit, of course, but to finance more spending. Ryan rejects this perversion of "reform," opting instead for pro-growth, genuine, revenue-neutral reforms -- which were endorsed by the president's own fiscal commission. The basic premise involves closing and eliminating tax loopholes and deductions in exchange for lowering rates across the board.
(5) Wishlists vs. reality. Ryan confirms that the new budget calls for the total repeal of Obamacare, which Chris Wallace notes is a political impossibility. Without eliminating that program's enormous price tag and massive long-term debt implications, many of the Republicans' budget math becomes infeasible. Ryan concedes that the president is unlikely to experience a change of heart regarding conservatives' entitlement reform ideas -- even as it remains to be seen if the White House will advance a solution of its own. Nevertheless, the chairman expresses hope that certain piecemeal reform options may still be on the table; the Wall Street Journal outlined some of these potential measures in an editorial last year. Perhaps they'll receive due consideration during a conference committee, which reconciles differences between House- and Senate-passed legislation under (recently elusive) normal order.
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