To take a closer look at the cuts, go to:http://appropriations.house.gov/_files/41211ProgramCutsListFinalFY2011CR.pdf
For a summary of the CR from the House Appropriations Committee, go to:http://appropriations.house.gov/_files/41211SummaryFinalFY2011CR.pdf
Drawing new battle lines
Whereas the recent spat over FY 2011 will affect government spending for just the next five months, the next budget battle could echo for a generation.
On April 15, the House approved a bold proposal developed by Budget Committee Chairman Paul Ryan (R-WI) that starts to tackle the issue at the heart of the budget crisis: entitlements.
The report paints the budget debate as a fight for the nation's sovereignty and character:
"A government that loses sovereignty to its bondholders cannot long guarantee its people's prosperity – or secure their freedom. A government that buries the next generation under an avalanche of debt cannot claim the moral high ground in the world. A government that allows economic destinies to be determined by political considerations rather than merit cannot lead the world in productivity and growth. A government that promotes dependency and undermines the institutions of faith and family will inevitably weaken the Nation's greatest strength: the exceptional character of its entrepreneurial, self-reliant, and hard-working citizens."
The theme of the Ryan plan is that discretionary spending (the part Congress controls on an annual basis) is just 40% of the federal budget. More than half of that goes to defense. "Auto pilot" spending (Social Security, Medicare, Medicaid, and interest on the debt) consumes 60%. To eliminate budget deficits and bring down the debt, Congress must confront entitlements. The report accompanying the legislation describes in vivid terms how these programs threaten to overwhelm the budget:
"Medicare, Medicaid, and Social Security will soon grow to consume every dollar of revenue the government raises in taxes [see chart]. At that point, policymakers would be left with no good options. Making do without any Federal Government departments, including the military is not really an option, and neither is raising taxes to a level that no free and prospering economy could sustain.
"Of course, if Congress continues to delay, it will lose even the ability to make its own choices on its own terms. The foreign governments and institutional lenders that finance America's debt would cut up the Nation's credit cards before things got that far. That would mean sudden, steep cuts in entitlement benefits to current seniors, less help for the poor, and a crushing tax burden on young families."
To address these challenges, the Ryan plan proposes to:
- Bring federal spending to below 20% of gross domestic product (GDP), which is consistent with the post-war average, and reduce deficits by $4.4 trillion;
- Bring spending on domestic government agencies to below 2008 levels and freeze this category for five years;
- Replace Medicare starting in 2022 with a premium supported model that gives beneficiaries a choice of health insurance plans like those available to members of Congress and providing subsidies to pay insurance premiums;
- Convert the federal share of Medicaid into a block grant that would let states design health care options for low-income Americans; and
- Focus on growing the economy by reforming the tax code, consolidating brackets, and fixing the top individual and corporate tax rates at 25%.