UPDATE 4-Republican budget draws election contrast with Obama
* Deficits of $3.13 trillion over next 10 years
* Savings from dismantling healthcare law, other programs
* Plan has little chance of becoming law
By David Lawder
WASHINGTON, March 20 (Reuters) - U.S. House Republicans placed a major election-year bet on Tuesday on a deficit-slashing budget proposal the party hopes will win over voters and quell any concerns about the plan's most controversial element - a sweeping revamp of Medicare.
The plan, authored by Congressman Paul Ryan, seeks to draw a sharp contrast between Republicans' vision of a smaller, less-intrusive federal government with that of President Barack Obama, who stresses the importance of social safety nets and emphasizes the positive role government plays in the economy.
The Ryan plan would shrink U.S. deficits to $3.13 trillion over 10 years - less than half the size of the deficit projected under Obama's own plan. It would dismantle Obama's 2010 healthcare reform law and make deep cuts to federal employee pensions and to social programs such as food stamps and the Medicaid health care program for the poor.
In offering a well-defined conservative alternative to the Democratic president's approach to solving the nation's long-term problems, Republicans are hoping to win over voters profoundly worried about huge U.S. deficits and Obama's stewardship of the economy.
"We are sharpening the contrast between the path we are proposing and the path of debt and decline that the president has placed us upon," Ryan said in a speech to the conservative American Enterprise Institute.
Where Obama and many Democrats want to raise taxes on the wealthy and boost near-term spending on infrastructure and education, Republicans want to cut taxes and spending, except for defense. They reckon that the Ryan budget will help portray them as better-equipped to govern responsibly and make tough fiscal choices.
While the Republican plan has little chance of becoming law due to opposition in the Democratic-controlled Senate, it could still have some real-world consequences.
The overhaul of the popular but increasingly expensive Medicare plan sets up Republicans for another round of damaging election-year attacks from Democrats, who have vowed to preserve the fee-for-service program.
The Republican budget also seeks to cap discretionary federal spending on education, transportation and other government programs at $1.029 trillion, roughly $18 billion less than Democrats want. That sets up a battle over spending that could potentially shut down the government just weeks before the Nov. 6 election.
ALTERED MEDICARE REFORMS
After proposing last year to convert Medicare into a voucher-like program to allow seniors to purchase private health insurance, Ryan has modified his reforms in a bid to blunt criticism that it would shift too many costs onto the elderly.
The new plan offers so-called premium support to allow beneficiaries to purchase either traditional Medicare or competing plans through a government-run exchange.
But political strategists say the party will still struggle to sell it to older voters who worry about their benefits.
The plan also drew a quick rebuke from the Federation of American Hospitals, which said it would "make it difficult for hospitals to meet the healthcare needs of seniors and the most vulnerable in our communities."
A statement from House Democrats branded it a "vicious plot to destroy our nation's promise to our seniors" while the White House said it was harmful to the vast majority of Americans.
"What we see in this proposal is, again, much like its predecessor, essentially a shift of money from the middle class, seniors and lower-income Americans, disabled Americans, to the wealthiest Americans," said White House spokesman Jay Carney.
Democrats see the Medicare reform push as politically toxic for Republicans in congressional races and are targeting Medicare-focused campaigns against some 41 House Republicans that they see as vulnerable in November.
THE MAN BEHIND THE PLAN
But the political risk on Medicare has not daunted Ryan, who at 42 has fashioned an image as a brash young reformer bent on shrinking government. The budget gives him a huge platform to influence his party's direction and the campaign debate.
Known for his slick YouTube videos showing dire forecasts of U.S. debt growth and for slipping in iPod earbuds sometimes when reporters are around, Ryan has kept the debt debate on the boil since Republicans took control of the House in 2010.
But some lawmakers say House passage of the Ryan plan is not assured and House Speaker John Boehner may need to twist arms within his unruly Republican caucus for support.
"There are a variety of worries from a lot of different people and different angles," said Congressman Mike Simpson, a Republican on the Budget and Appropriations committees. "Some people - Medicare is the worry. Some people - discretionary spending is the worry. Some people - defense is the worry."
On discretionary spending, the Ryan budget seeks to reduce fiscal 2013 spending caps agreed with Democrats last year by $18.4 billion. Democrats warn that the cut breaks last year's debt-limit agreement meant to keep fiscal peace and risks a government shutdown by causing conflict over spending bills.
Some Tea Party Republicans who wanted deeper cuts may balk at the plan, but it does offer them some comfort by shielding defense and security spending from automatic spending cuts that are scheduled to kick in next January.
"It's just not good enough," said Republican Tim Huelskamp, a Budget Committee freshman, telling Reuters that he would vote against it because the cuts do not go far enough.
The Ryan plan contains another element popular with Republicans across the board: tax reform. It proposes to cut top rates for individuals, paring back the number of tax brackets to two - 25 percent and 10 percent - from six now.