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Republicans unveil $6.2 trillion in cuts in 'Path to Prosperity' budget plan

Document addresses Social Security, Medicare, tax reform

By Andrew Taylor

Associated Press

Published: Tuesday, April 5 2011 8:35 a.m. MDT

WASHINGTON — Republicans controlling the House have fashioned plans to slash the budget deficit by about $6.2 trillion over the upcoming decade, blending unprecedented spending cuts with a fundamental restructuring of taxpayer-financed health care for the elderly and the poor.

The decade-long plan brought forth by House Budget Committee Rep. Paul Ryan, R-Wis., far exceeds the $1 trillion-plus in budget cuts outlined in President Barack Obama's February budget and is on par with recommendations from Obama's own bipartisan deficit commission in December.

Under the decidedly arcane congressional budget process, the GOP plan is not actual legislation but provides a nonbinding, theoretical framework for future action in Congress. And with Democrats controlling the Senate, the GOP plan serves more to frame the debate heading into next year's election than represent a program with a chance of passing Congress and actually becoming law.

Despite cuts already deemed draconian by Democrats, Ryan's plan can't claim a balanced budget by the end of the decade — getting the deficit to the $400 billion range after six years — because of promises to not increase taxes or change federal retirement benefits for people 55 and over. But he says the measure would stabilize the nation's finances and prevent a European-style debt crisis that could force far harsher steps.

"We're actually saving Medicare and Medicaid, making them solvent for future generations," Ryan said. "And, yes, we're cutting spending. We're cutting a lot of spending, because government is spending way beyond its means."

Tuesday's unveiling of the 2012 budget blueprint comes amid a separate, escalating battle between Republicans and the Obama administration over smaller but more immediate spending cuts for the current budget year. House Speaker John Boehner, R-Ohio, had a meeting scheduled at the White House Tuesday for a session with Obama aimed at staving off a government shutdown this weekend.

Compared with Obama's budget, the Ryan plan actually would cut $6.2 trillion over 10 years. But measured against Congressional Budget Office estimates that assume permanent extension of the Bush-era tax cuts, Ryan's budget would cut $5.8 trillion. However, $1 trillion of savings comes from the unrealistic assumption — also made by Obama — that overseas military operations would soon cost just $50 billion a year — less than half those requested by Obama for 2012.

Ryan's plan, released Tuesday morning, features a controversial proposal to convert the traditional Medicare health plan for the aged into a system in which the government would provide payments for private health insurance plans — a fundamental shift from the traditional Medicare program that directly pays doctors and hospitals.

Current Medicare beneficiaries or workers age 55 and older would stay in the existing system. But for people now under the age of 55, the Medicare program would operate like a voucher system that provides subsidies that are unlikely to keep pace with medical inflation, critics say.

At the same time, Republicans propose to sharply cut projected spending on the Medicaid state-federal health program for the poor and disabled and transforms it into a block grant program that gives governors far less money than under current estimates but considerably more flexibility.

The savings from Medicaid would top $700 billion over the coming decade and that's before another $1.4 trillion would be reaped over the same period by repealing Obama's health care law. In the first decade, the plan barely touches overall Medicare spending.

Legions of critics of the curbs to both Medicare and Medicaid say the moves would inevitably lead to poorer quality coverage. Future Medicare beneficiaries are likely to pay more out of their own pockets while states seeking to preserve Medicaid would have to provide more state taxpayer money to replace federal cuts.

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