Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

House Passes Republican Plan That Will Help Guide Budget Debate

Don't Miss Out —
Follow us on:
Representative Paul Ryan, a Republican from Wisconsin
The Republican-controlled House will set the stage for an even bigger fight with its expected passage of Representative Paul Ryan’s bid to slash spending by more than $6 trillion over the next 10 years. Photographer: Brendan Hoffman/Bloomberg

April 16 (Bloomberg) -- The U.S. House yesterday passed a Republican budget that would cut spending by more than $6 trillion over a decade and privatize Medicare in a party-line vote that will help define the fight over the deficit into next year’s elections.

By a vote of 235-193, lawmakers approved House Budget Committee Chairman Paul Ryan’s proposal one day after wrapping up their first budget battle of the year with passage of a $38.5 billion spending cut for 2011.

“Yesterday we cut billions, today we cut trillions,” said Representative Kevin McCarthy of California, the House’s third-ranking Republican.

The measure is certain to die in the Senate, where Democratic leaders have endorsed President Barack Obama’s competing call to reduce the deficit through a combination of tax increases and spending cuts.

“The House Republicans have let Tea Party zeal get the better of them, and this vote will reverberate for a long time,” said Senator Charles Schumer, his chamber’s third-ranking Democrat. “In the months to come, we will not miss a single opportunity to remind the public that Republicans voted to end Medicare in order to give extra tax breaks for millionaires.”

No Democrats voted for Ryan’s plan, and four Republicans also opposed it: Representatives Denny Rehberg of Montana, David McKinley of West Virginia, Walter Jones of North Carolina and Ron Paul of Texas.

Unanswered Questions

Rehberg, who is running next year for the Senate, said in a statement: “There are still too many unanswered questions with regard to Medicare reform, and I simply won’t support any plan until I know for a fact that Montana’s seniors will be protected.”

White House spokesman Jay Carney said “the president agrees with House Republicans that we must reduce our deficit and put our country on a fiscally sound path, but we disagree with their approach.”

Carney also said that “any solution will require Republicans and Democrats working together, and we are committed to that process.”

The proposal from Ryan, a Wisconsin Republican, relies exclusively on spending cuts to reduce the government’s deficit, slicing $6.2 trillion over 10 years from Medicare and scores of other programs including Medicaid, food stamps, farm subsidies and Pell college tuition grants.

Private Insurance

It calls for replacing the traditional Medicare health-care system for the elderly with subsidies to buy private insurance starting with people who turn 65 in 2022. It would also cut the top corporate and individual tax rates from 35 percent to 25 percent. The plan wouldn’t balance the government’s books until 2040.

Most Americans would pay more for their health care under the plan, according to the Congressional Budget Office, while states may have to cut participants in Medicaid, the federal-state health-care program that serves the poor.

Representative Allen West, a freshman Republican from Florida, said he is ready to take the plan to his constituents.

“I’m not up here to worry about being re-elected,” West said. “There is a dire situation” and “we have to explain it to the people, not stand up and demagogue it and just try to scare people.”

Representative Lou Barletta, a Pennsylvania Republican, called the vote a “defining moment.”

“We’re doing it even at risk of our own political future,” he said, “but we’re doing it for the next generation, and that’s what I came here to do.”

Tax Policies

After yesterday’s vote, the chamber will need to produce additional legislation to make specific changes to tax and spending policies. That process could produce bills deviating from Ryan’s plan, and some Republicans said it allows them to back his budget even if they don’t support his policy prescriptions.

“I don’t necessarily think that just by voting for the budget, you’re signing on” to his proposals, said Missouri Representative Jo Ann Emerson, co-chairwoman of a group of Republican moderates known as the Tuesday Group.

“He doesn’t have control over what the committees do,” she said. “You know what happens once the committee process starts. It turns out to be a lot different.”

Framing Debate

Each side is seeking to frame the debate over Ryan’s budget around large themes.

“It’s important to define ourselves with our actions and show the country that we’re serious about getting this debt under control,” Ryan said in an interview. “To sit back and not do anything about it because of politics would be a huge moral failing.”

Representative Rosa DeLauro, a Connecticut Democrat, said the Republicans’ budget “throws seniors to the wolves.”

Yesterday’s vote opens another round of fighting over the so-called discretionary part of the budget -- the areas lawmakers control through annual appropriations bills. Ryan’s plan calls for $31 billion in 2012 cuts, on top of the $38.5 billion in savings approved April 14 after negotiations that almost led to a government shutdown.

“We’ll be going through this same battle all over again,” said Representative Scott Garrett, a New Jersey Republican on the Budget Committee.

Ryan said the fact that his plan is coming to a vote shows how “times have changed.” A similar budget plan by Ryan attracted just 14 co-sponsors last year when Democrats controlled the House. Ryan credited his party’s 87-member House Republican freshman class, many elected with the help of Tea Party activists, for the change.

“They brought a whole new perspective. They brought a lot of energy, a lot of gumption, a lot of backbone to Congress,” Ryan said.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.