Here's Paul Ryan's Plan To Save America From Bankruptcy

The House G

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OP has attacked the federal government’s red ink, unveiling a budget plan that, according to the plan, would reduce the deficit by $6.2 trillion over the next decade.

The proposal, drafted by U.S. Rep. Paul Ryan (R-WI), takes aim at popular government programs and entitlements.

Like many Republican plans to fix the deficit, this one is light on details. When we add up the specific savings in some of the proposals, we don’t get anywhere near $6.2 trillion. 

The bulk of the savings–$4.4 trillion–come from a “cap” on annual government spending at 20% of GDP. This sounds reasonable and bold until you realise that it just kicks the “what spending should we cut?” can even farther down the road.

Even without specifics, the plan is unlikely to make it past the Democratic-controlled Senate. But it is already stirring up a bitter budget debate, just days before a possible government shutdown.

Here’s a quick summary of some of the big proposals.

Reform the budget process.

Savings: Brings the deficit below $1 trillion in FY2012. Reduces the deficit by $4.4 trillion over the next decade.

Details: Ryan's plan caps government spending at 20% of GDP by 2018. To slow growth in entitlement spending, the plan requires OMB to make across-the-board spending reductions to programs that are growing too fast. Any federal tax increase would require three-fifths majority approval in Congress.

Source: A Roadmap For America's Future

Freeze all discretionary government spending.

Savings: $79 billion in FY2012 and $1.6 trillion over 10 years.

Details: Ryan's budget would cut non-defence, non-security discretionary spending to pre-2008 levels. These cuts include domestic spending Congress approves annually, like environmental protection and scientific research.

Source: A Roadmap For America's Future, WSJ

Reform and reduce federal Medicaid spending.

Savings: $750 billion over the next 10 years.

Details: Converts federal share of the Medicaid program into a 'block grant.'

Source: A Roadmap For America's Future, CBS News

Repeal Obamacare.

Savings: $725 billion over the next decade.

Details: Repeals tax exemptions for employer-sponsored health coverage. Provides a flat income tax credit for individuals and families that purchase health insurance.

Source: A Roadmap For America's Future

Privatize and reform Medicare over time.

Savings: $389 billion over 10 years.

Details: Government would provide 'premium support payments' (re: vouchers) for private insurance for Medicare beneficiaries eligible after Jan. 1, 2021. Those eligible before that date won't see any 'disruptions.'

Source: A Roadmap For America's Future; House Committee On The Budget

Reduce inefficient defence spending.

Savings: $78 billion.

Details: Ryan's budget reflects the $178 billion in savings proposed by defence Secretary Robert Gates but only $78 billion would go towards deficit reduction. The remaining $100 billion would be reinvested in 'higher military priorities.'

Source: House Committee On The Budget

Advance Social Security reforms.

Savings: None

Details: Social Security spending is kept steady under Ryan's budget. The proposal would allow workers under 55 to shift a portion of their payroll tax payment into a personal retirement account. When the retirement age reaches 67 in 2026, Ryan's proposal would continue increasing the retirement age incrementally until it reaches 70.

Source: A Roadmap For America's Future

Simplify and reduce income taxes.

Savings: None.

Details: Ryan's plan creates a two-rate income tax schedule. A 10% rate would apply to anyone earning up to $50,000 ($100,000 for joint filers). A 25% rate would apply to any income over $50,000. The tax change would be revenue-neutral because the proposal also eliminates a series of tax breaks.

Source: A Roadmap For America's Future, WSJ

Eliminate the corporate income tax.

Savings: None.

Details: Eliminates the corporate income tax and replaces it with a Business Consumption Tax of 8.5% on goods and services. The new tax would be calculated by subtracting total purchases from total sales. The change would not affect the deficit.

Source: A Roadmap For America's Future

Reform and consolidate federal job training programs.

Savings: Unspecified

Details: Consolidates federal job training programs into block grants, or 'career scholarships,' for states. Would require competitive bidding for all job training grants and give preference to applications that would integrate private investment.

Source: A Roadmap For America's Future

Privatize Fannie Mae And Freddie Mac.

Savings: Unspecified.

Details: The GOP spending bill would end federal conservatorship of the home-mortgage giants Fannie Mae and Freddie Mac.

Source: House Committee On The Budget

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