House Republicans' Long-Term Spending Cuts Plan

House Budget Chair Rep. Paul Ryan, R-Wis., on April 5, 2011 unveiled the most expansive and elaborate spending plan, aiming to cut $5.8 trillion over the next decade (through Fiscal 2021). Under the Ryan Plan, Medicaid would be trimmed by $800 billion, or 22%, during 2012-21 by transforming Medicaid into a block grant to states. The Ryan Plan will basically privatize the Medicare (no net savings) for young workers and repeal Obama's signature health care law (savings of $1.4 trillion). Under the Ryan Plan, the people who are currently below 55-year-old will get, as part of Medicare, a specified amount of money from the federal government toward private insurance premium. The Medicare will become more like a voucher program.

The Defense component of the Ryan Plan calls for:

* Increasing Military spending by $200 billion (3%)

* Decreasing costs related to wars in Iraq and Afghanistan by $1 trillion (62%)

* Cutting Domestic Discretionary spending by $1.6 trillion (28%)

The Ryan Plan is, however, silent on Social Security reform, and calls for other mandatory spending cuts by $700 billion (19%). Under his plan, the net interest would go down by $400 billion (8%).

Total Spending Cuts: (0.8 + 1.4 - 0.2 + 1 + 1.6 + 0.7 + 0.4) : Approximately $5.8 trillion.

The Ryan Plan will also lower top personal and corporate tax rate to 25% from 35%. As a result of that, revenue will go down by $4.2 trillion, or 11%, during 2012-21.

Net Savings = $5.8 trillion - $4.2 trillion = $1.6 trillion (2012-21)

Ryan Plan will reduce federal budget defecit by $4.4 trillion over the next decade.

Ryan Plan could be viewed in budget.house.gov/fy2012budget/


Source: The Dallas Morning News (April 6, 2011)

Information Based on May 11, 2011, Edition of The Dallas Morning News

The Ryan Plan that was adopted as part of House-approved Fiscal 2012 Budget would leave 36 to 44 million people uninsured under Medicaid because of the Plan's proposal to convert Medicaid into a block grant to the states and repeal Obamacare. The study was done by Kaiser Family Foundation and the Urban Institute. Under the Ryan Plan, the Medicaid would be transformed from its current open-ended program in which federal government pays 60% of the cost of services into block grants to the state. Currently more than 60 million low-income children and parents, seniors, including most nursing home residents, and disabled people of any age are covered by Medicaid.