With budgets on the floor of both chambers this week, here's a quick breakdown of the key points for the two main proposals:
House: Paul Ryan Budget (The Good) - H.Con.Res. 25
- Balances in 10 years, and supposedly stays in balance in the out-years
- Does not rely on budget gimmicks such as the projected reductions in war spending
- Calls for fundamental tax reform
- Two-tier flat (or flatter) tax (at 10% and 25%)
- Gets rid of Alternative Minimum Tax
- Repeals ObamaCare entirely
- Block-grants Medicaid and Food Stamps to the states
- Reforms Medicare for those under 55 by offering optional premium support
House: Paul Ryan Budget (The Bad)
- Relies on current levels of taxation in order to balance, which means:
- Keeps revenue raised by ObamaCare Taxes
- Keeps revenue from both the payroll tax hike and the tax increases on the rich from January’s Fiscal Cliff debacle
- Does not offer seniors the choice to opt out of Medicare
- Does not touch Social Security reform
- Cuts some spending, but does not eliminate any major departments or agencies
Senate: Patty Murray Budget (The Ugly) - S.Con.Res. 8
- Raises taxes by $975 billion, supposedly by closing personal and corporate loopholes
- Sets aside $100 billion for infrastructure spending – essentially stimulus funds
- Claims to cut $1.8 trillion spending, but:
- Actually eliminates sequester “savings”, which reduces cuts by a trillion
- Also counts “savings” from reduced war spending (which aren’t really savings)
- Counts $275 billion in savings from cutting “waste” in health care spending, without defining how those savings will materialize.
- Actually increases overall spending in its first year.
- Never balances (still accounts for hundreds of billions in deficits ten years from now)
The Conclusions: Ryan's budget successfully balances in 10 years, and otherwise maintains the best features of his previous budgets. However, he balances the budget on the backs of the massive tax increases enacted by President Obama in 2013, which places a bit of an asterisk on his 10-year number.
The Senate Democrats' budget completely misses the mark, massively increasing taxes and continuing to run 12-figure deficits in perpetuity. By that reckoning, it may be that the Senate budget is actually worse than no budget at all.
These two budgets are the main players, but stay tuned for updates on other proposals, including from the Republican Study Committee in the House and from Senator Rand Paul in the Senate.