March 7 (Bloomberg) -- House Republicans plan a new front in Washington’s budget wars with a proposal they say would erase the government’s deficit within a decade.
House Budget Committee Chairman Paul Ryan of Wisconsin said he will unveil next week a fiscal blueprint delineating how Republicans would eliminate a deficit projected to reach $978 billion in 2023.
The plan’s timetable is more ambitious than previous versions of Ryan’s tax-and-spending proposals, the last of which wouldn’t have balanced the government’s books until 2040. It’s also a gamble that the promise of erasing red ink without tax increases will outweigh concerns over the wrenching changes in spending policies that would be needed to make the numbers work.
“We can show the country that this is an achievable goal, a goal that we all ought to share, a goal that helps us prevent a debt crisis, a goal that helps our economy,” Ryan told reporters yesterday.
The proposal will come amid a separate fight over what to do about the $85 billion in automatic spending cuts that began last week, the penalty for lawmakers’ failure to break their long-running impasse over fiscal issues that include cutting entitlement programs and raising taxes. President Barack Obama has begun contacting individual Republican lawmakers, including Ryan, in search of a long-range deal.
As in previous years, Ryan’s plan will include partial privatization of the Medicare program, with those 55 years of age and older exempt from any changes. After floating the idea of exempting a smaller pool of future retirees -- which would generate budget savings faster -- an aide said Ryan has dropped that idea. The lawmaker himself declined to comment when asked about it by reporters.
His proposal will be unveiled before Obama presents his own fiscal blueprint, which is supposed to kick off the government’s annual budgeting process. The president’s plan was due by the first Monday in February. The administration has said it was delayed by the early January agreement to avoid the so-called fiscal cliff, which increased taxes on top earners and delayed until March 1 the start of the automatic spending cuts required by a 2011 law raising the debt ceiling.
Ryan, the Republicans’ 2012 vice presidential candidate, blasted the delay, saying Obama is “waiting for others to lead” on deficit reduction.
“The person in the White House ought to lead -- that’s what presidents are supposed to do,” he said. The delays, he added, show “there is not a seriousness of purpose to fixing our budget.”
Even so, Ryan said Obama has called him to discuss the budget.
“I have talked to him,” Ryan said. “I’ll keep our conversations confidential, as they ought to be.”
Referring to Social Security and Medicare, he also said, “We need to prepare for the retirement of the baby boom generation for this country to save these programs not just for current retirees, but for the next wave of retirees.”
Aides declined to say how much spending Ryan would need to cut to reach the balanced budget goal. His task has been made easier by revised budget forecasts showing health-care spending growing less quickly than anticipated. Medicare and Medicaid are now projected to cost $200 billion less in 2020 than the nonpartisan Congressional Budget Office predicted three years ago.
What’s more, the fiscal-cliff deal is projected to generate an additional $600 billion in revenue, which Ryan, 43, said he will include in his budget. “We’re not going to refight that,” he said.
Also next week, the Senate is to begin debating a Democratic budget proposal. Senate Budget Committee Chairwoman Patty Murray of Washington state has said any plan enacted must draw from both sides of the budget ledger, so that version can be expected to seek additional tax increases on top earners.
With House Republican leaders stressing their opposition to increasing taxes, little prospect exists of agreement between the two chambers, which means Congress probably will go a fourth consecutive year without approving an annual budget.
Many economists argue it makes little difference whether the budget is technically balanced, saying what matters is bringing debt down to manageable levels.
“There is absolutely no reason why, from an economic standpoint, our goal should be a balanced budget,” said former Congressional Budget Office Director Bob Reischauer.
Still, it’s a powerful idea for many voters though who consider it shorthand for fiscal responsibility, said James Savage, a University of Virginia professor who’s written about the politics of balanced budgets.
“How do they know if government is being managed effectively?” said Savage. “One of the easiest measurements is: Is the budget balanced?”
That’s “how people think about it, and how they’ve been encouraged to think about it,” he said. “This has gone on since the founding of the Republic.”
Ryan’s previous budget would have reduced the deficit to $287 billion at the end of the first 10 years.
“Our budgets always got close but never quite there,” he said. “We’re going to do some additional things to make sure that we get there, and we’re going to show that is clearly an achievable goal.”
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