House Republicans Roll Out New Budget Plan Today

House Budget Committee Chairman Paul Ryan (R-WI) will reveal the House Republicans’ FY2013 budget today on Capitol Hill at 10:30 am ET.  He will answer questions at 11:30 am ET at the American Enterprise Institute, which will webcast that event.

Ryan wrote an op-ed for today’s Wall Street Journal that outlines the plan.  Its main themes are to cut taxes and reduce federal spending, including changes to Medicare, while at the same time negating the “sequestration” for defense programs required under the Budget Control Act (BCA) passed last summer.  Sequestration also applies to non-defense spending, but protecting non-defense spending (such as NASA or NOAA) is rarely mentioned.

After a contentious battle that almost led to the government defaulting on its debts, Republicans and Democrats passed the BCA in August 2011.    It is the law that set up the “congressional supercommittee” that failed to reach agreement last fall, meaning that the back-up plan, across-the-board cuts to all federal spending beginning on January 1, 2013 — otherwise known as sequestration — is the law of the land at the moment.   Sequestration was included in the law as a poison pill because of its dire consequences, especially for the defense budget, and politicians on both sides of the aisle are looking for a way out.

The BCA also set the total federal government spending level for FY2013 — referred to as a “cap.”   Ordinarily, the House and the Senate each pass budgets and then reach a compromise on what the spending cap is for each fiscal year.  From that, they allocate specific amounts to each of the 12 appropriations subcommittees, which then decide how much each department or agency gets.  Since the cap for FY2013 already was set in the BCA, strictly speaking there is no need for a budget resolution this year.   However, House Republicans apparently to want to change the deal and lower the cap.

For their part, two top Senate Democrats, Budget Committee Chairman Kent Conrad (D-ND) and Appropriations Committee Chairman Daniel Inouye (D-HI), wrote a letter to the House leadership yesterday warning them not to renege on the amount agreed to for FY2013 in the BCA — $1.047 trillion.   Nonetheless, the Ryan plan reportedly lowers that cap to $1.028 trillion while protecting spending for defense.

Fundamentally, both parties are sticking to their positions on how to reduce the deficit.   Republicans want spending cuts only, no tax increases; Democrats want spending cuts and tax hikes for the wealthiest individuals.

Politico says that Democrats consider the Ryan plan “Christmas in March” because they believe voters will reject it, especially because of its impact on Medicare, and plan to release their own budget proposal next week.   Republicans apparently are counting on a chart they prepared to win voters to their side.  The chart, published in Ryan’s Wall Street Journal op-ed, shows President Obama’s very long-term budget — through the year 2080 —  dramatically increasing federal debt while the Ryan plan reduces it to zero by 2050.