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U.S. Republican budget cuts social spending, boosts military
March 17, 2015 / 1:44 PM / 2 years ago

U.S. Republican budget cuts social spending, boosts military

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Chairman of the House Budget Committee Tom Price (R-GA) announces the House Budget during a press conference on Capitol Hill in Washington on March 17, 2015.Joshua Roberts

WASHINGTON (Reuters) - U.S. House Republicans on Tuesday proposed higher defense spending and deep cuts to social services including healthcare for the poor in an aggressive new budget plan that seeks to eliminate deficits by 2024.

The blueprint from House Budget Committee Chairman Tom Price, which has almost no chance of becoming law, prescribes $5.468 trillion in spending cuts and interest savings over 10 years compared to current policies.

Like the budgets of Price's predecessor, Representative Paul Ryan, the document assumes $2 trillion in 10-year savings from full repeal of the Affordable Care Act, the signature healthcare reform law that President Barack Obama has vowed to defend.

Price's plan also recycles Ryan's prescription for controversial changes to the Medicare health program for seniors, turning it into a system of subsidies for private insurance, affecting those born in 1959 or later.

The non-binding resolution reasserts the Republican Party's long-standing vision of a smaller federal government, less national debt, lower taxes and a stronger economy, all likely themes in the 2016 presidential campaign.

Senate Budget Chairman Mike Enzi plans to unveil his version of the Republican budget on Wednesday but it is expected to be more cautious, excluding the Ryan-style Medicare reforms in favor of savings similar to those proposed by Obama.

Price's plan could struggle to gain the support of deeply divided House Republicans. It seeks to skirt "sequester" spending caps, nominally keeping them in place to please deficit hawks while boosting military spending by adding nearly $40 billion to an off-budget war funding account.

Pro-military Republicans greeted the plan with skepticism. "I'm not convinced this budget does it," said Representative Ryan Zinke, a former Navy Seal commander.

Chairman of the House Budget Committee Tom Price (R-GA) speaks to reporters after announcing the House Budget on Capitol Hill in Washington on March 17, 2015.Joshua Roberts

The plan contrasts with Obama's 2016 budget request, which would raise taxes on the wealthy by about $1 trillion through 2025 to help pay for infrastructure and education spending while running annual deficits from $400 billion to $800 billion.

Democrats said the House Republican budget was full of "gimmicks" and would shred programs that aid the poor, the elderly and working families.

"It's not a budget that reflects the future. It's not a budget that reflects growth," Obama said at the White House, where he called for more investment in research and education.

Obama will travel to Cleveland on Wednesday where he is expected to give a speech drawing a sharp contrast between the Republican plan and his spending proposals.

Price's plan would cut $913 billion in Medicaid spending by shifting it to a grant program to allow states to tailor the healthcare program for the poor. It would devolve other programs to states through grants, including food stamps and transportation funding. Pell grants for college tuition would also shrink.

"The $5.5 trillion in decreased spending and the end to annual deficits will mean we can begin to pay down the national debt and stave off a severe and completely avoidable fiscal crisis in the future," Price's proposal says.

Like previous Republican budgets, Price's plan contains no tax increases. It assumes Congress will enact revenue-neutral reforms to the tax code to reduce rates while ending many tax breaks. But it leaves the details for later.

Price said tax reform and other proposals, including a roll-back of financial regulations enacted in 2010 [ID:nL2N0WJ0ZC], would unleash stronger economic growth that will help slash deficits by more than $1 trillion through 2025.

While these growth assumptions are baked into Price's budget numbers, they have not been confirmed by the Congressional Budget Office.

Reporting by David Lawder, Roberta Rampton; Editing by Kevin Drawbaugh, Susan Heavey and Tom Brown

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