FACTBOX-Comparing Obama, Ryan budget plans

April 14 Thu Apr 14, 2011 1:26pm EDT

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April 14 (Reuters) - President Barack Obama and Republican congressman Paul Ryan have laid out vastly different approaches to reducing huge U.S. budget deficits and mounting national debt.

The battle over taxes, spending priorities and competing visions of the role of government in healthcare will likely continue through next year's congressional and presidential election campaigns.

Here is a comparison of major provisions in the outline presented by Obama and the Republican plan written by Ryan, chairman of the House of Representatives Budget Committee. The House is expected to approve Ryan's plan on Friday.

DEFICIT REDUCTION

* Obama calls for $4 trillion in deficit reduction to be phased in over 12 years or less. Three-fourths would come from spending cuts and interest savings and the rest by streamlining the tax code. A "fail-safe" would trigger across-the-board spending cuts if debt reduction goals are not met.

It calls for reducing deficits as a percentage of gross domestic product from around 10 percent currently to 2.5 percent in 2015 and 2 percent by the end of the decade.

* Ryan's 2012 budget reduces deficits over the next decade by $4.4 trillion, calls for $5.8 trillion in spending cuts and lowers tax rates for businesses and individuals. It would set a binding cap on government spending to keep it below 20 percent of the $14 trillion U.S. economy.

Ryan's plan brings the deficit as a share of the economy to 2.4 percent in 2015 and 1.6 percent in 10 years.

MEDICARE, MEDICAID, SOCIAL SECURITY

* Obama says Social Security is not contributing to the current debt and its financial future should be dealt with separately with bipartisan agreement.

On healthcare, his plan calls for $480 billion in Medicare and Medicaid savings by 2023. He would strengthen Medicare's Independent Payment Advisory Board and save Medicaid money by streamlining the formula for giving federal funds to states.

Obama's plan emphasizes improving care quality to achieve savings for the Medicare healthcare program for the elderly. He would allow Medicare to use its purchasing power to negotiate lower costs on prescription drugs and he would speed up the availability of cheaper generic drugs. He wants upper limits to be set on Medicaid payments for durable medical equipment.

* Ryan would repeal the healthcare overhaul enacted into law last year. He wants to eventually eliminate the current fee-for-service program for Medicare. Instead, future retirees would get a federal subsidy based on income and health status to shop for medical coverage from private insurers. Medicaid would become a block grant program where the federal government gives states a chunk of money to run the health program for the poor without federal interference.

Ryan calls for bipartisan negotiations on Social Security.

TAXES

* Obama calls for ending Bush-era tax cuts for the wealthiest. He wants Congress to overhaul the tax code to make it simpler and fairer and reduce the number of tax breaks that favor one taxpayer over another. He calls for a corporate tax overhaul to help lower the corporate tax rates.

* Ryan also calls for a tax law overhaul. His plan would cut the top corporate and personal tax rates to 25 percent, down from 35 percent.

DEFENSE AND OTHER DISCRETIONARY SPENDING

* Obama wants a fundamental review of U.S. military missions and capabilities around the world. His plan proposes some $400 billion defense spending cuts that would not compromise U.S. defense capabilities.

On non-security discretionary spending, Obama's plan seeks another $200 billion in savings beyond the $400 billion proposed in his February budget blueprint for fiscal 2012, which begins Oct. 1.

* Ryan's budget leaves military spending mostly untouched. But it does reflect $178 billion in savings identified by Defense Secretary Robert Gates. Some $100 billion is reinvested in combat capabilities and the rest is used for deficit reduction. Ryan calls for bringing other spending down to 2008 levels and freezing it there for five years. (Reporting by Donna Smith in Washington; Editing by Deborah Charles)

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