Factbox: Republican Ryan's earlier budget plan has clues

Sun Apr 3, 2011 2:55pm EDT

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(Reuters) - An influential House of Representatives Republican will unveil his budget plan for 2012 next week and it could have similarities to an earlier "roadmap" that called for big changes to social programs and make it harder for Congress to raise taxes.

House Budget Committee Chairman Paul Ryan is expected to release the proposal on Tuesday. It is seen as a blueprint for the ruling House Republicans' position for the coming fiscal year budget, which starts on October 1.

A bold proposal by Ryan last year, dubbed a "roadmap for reform," advocated keeping federal taxes at no more than 19 percent of gross domestic product and giving seniors an option to put Social Security savings into private retirement accounts.

Republican leaders never embraced that plan and aides expect the new proposal to be a bit less aggressive.

On Sunday, Ryan said his proposal will go further than the presidential deficit commission recommendations, which proposed cutting $4 trillion over a decade from the deficit, which is expected to hit $1.4 trillion this year, according to the Congressional Budget Office.

Ryan also said his proposal would cap spending and lower corporate tax rates.

Critics say his earlier plan would disproportionately hurt the poor, while it cuts taxes for the wealthy and big companies.

Elements of Ryan's earlier proposal include:

GENERAL SPENDING, TAXES

Creates a mechanism to slow growth in mandatory spending programs like Medicare and Social Security, with automatic across-the-board cuts if Congress fails to act.

Requires a supermajority, or three-fifths vote, in the House and Senate to debate legislation increasing taxes.

HEALTHCARE

Ryan's plan would de-link healthcare from employment, where most U.S. citizens now get their health insurance, by repealing the tax exclusion for group health insurance. It would give individuals and families a refundable tax credit to buy insurance.

MEDICARE

For those qualifying after January 2021, it requires recipients of Medicare, a government healthcare benefit for the elderly and disabled, to sign up for private health insurance. It would give recipients vouchers to pay for health coverage.

MEDICAID

Converts the current Medicaid program, which provides healthcare for the poor, into a debit card system and apply it to families who have no health insurance with gross income not exceeding 200 percent of the federal poverty level.

SOCIAL SECURITY

Creates personal savings accounts starting in 2012 where workers under 55 can deduct some of their Social Security taxes toward investment accounts. This idea was proposed by former President George W. Bush and was met with fierce resistance by Democrats and proved unpopular, never making headway in Congress.

It also gradually raises the eligibility age for the popular social program.

INDIVIDUAL TAXES

Gives an option of staying with the current individual tax system, with its slew of deductions, or moving to a program with two lower tax rates, 10 percent and 25 percent. Those choosing the latter option would not be able to enjoy most current deductions and credits.

The current top income tax rate for the highest earners is 35 percent.

CORPORATE TAX

Replaces the current corporate tax, now at 35 percent for large companies, with a "business consumption tax" of 8.5 percent on goods and services.

This proposal is similar to so-called value-added taxes adopted by nearly every major industrialized country outside the United States, where the idea has proved politically unpopular.

(Reporting by Kim Dixon; Editing by Eric Walsh and Deborah Charles)

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Comments (2)
Thank you Mr. Ryan. You single-handedly just turned me into voting for Democrats. I cannot support an American democide. As an ex-Republican my advice is let Asia and Europe pay for their own defense, make medical providers accept revised Medicare/Medicaid rates, and revise these unfair trade agreements that only benefit the largest corporations and the top 1% wealthiest Americans and leave all the small business people out in the cold. But then that makes too much sense for a Republican.

Reagan signed the great amnesty, passed horrible trade legislation, engaged in massive deficit spending, and every other Republican has done likewise right up to Obama who implemented Bush’s bailout and spend plan. You remember Bush, the guy who charged iraq for a couple trillion while mismanaging the economy into a meltdown and then declared we had to suspend free enterprise to save the free enterprise system.

Now the Republicans are lying about all of that and saying they didn’t do it when they did. It’s enough to make you never vote for a republican again.

Apr 03, 2011 5:12pm EDT  --  Report as abuse
How dare those old people that won WWII and built the country from the Great Depression get free medical care in their old age. How dare poor suffering Americans who worked for decades having their labor exploited by godless corporations and then kicked to the curb and lost everything in the Great Recession before retirement and got sick get free medical care.

Instead of spending trillions to protect Europe, South Korea, Iraq, etc… and passing a law to make medical providers accept a revised Medicare/Medicaid rate schedule, they just want to toss all the poor sick and elderly Americans under a bus.

Sounds like Republican sponsored democide on Americans to me. The people won’t go for it. They will just see these crazy loons for what they are.

If they really wanted to help the country they would stop spending trillions trying to take over the world and let Asia and Europe pay for their own defense. It shouldn’t cost much in Europe’s case. They have nothing to defend against anymore.

Apr 03, 2011 5:12pm EDT  --  Report as abuse
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