WASHINGTON (Reuters) - Annual deficits under a new plan from Senate Democrats would be in the $400-600 billion range for much of the next decade, a level they say would allow stronger near-term job growth than Republicans’ balanced-budget vision.
Full details of the plan released by Senate Budget Committee Chairwoman Patty Murray on Wednesday showed that deficits would average 2.4 percent of U.S. economic output through 2023, a rate many economists view as sustainable.
Deficits have exceeded $1 trillion during each of the past four years due largely to economic damage from the recent financial crisis. Under the assumptions used in Murray’s budget, the fiscal 2013 deficit is forecast at $891 billion, or 5.6 percent of gross domestic product.
The Democratic plan would add $5.2 trillion to public debt over the decade, pushing it above $18 trillion in 2023. As a share of a growing economy, however, the debt would decline gradually to 70.4 percent from 76.6 percent now.
The plan, given to Budget Committee members only after the panel opened debate on it, aims to shrink deficits by $1.85 billion over 10 years - including the replacement of about $960 billion in automatic spending cuts known as the sequester.
It adds $100 billion in new spending to rebuild roads, bridges, schools and workers’ job skills and prescribes $975 billion in spending cuts and $975 billion in new revenues from the elimination of tax deductions and loopholes that benefit the wealthy.
“The highest priority of our budget is to create the conditions for job creation, economic growth, and prosperity built from the middle out, not the top down,” Murray told the committee.
The plan is a sharp contrast to the budget offered on Tuesday by House Budget Committee Chairman Paul Ryan. It aims to slash deficits by $4.6 trillion and reach equilibrium by 2023 through deep cuts to domestic social programs such as Medicaid healthcare for the poor.
Ryan’s plan benefits from a $620 billion tax increase on the wealthy enacted in January, but will not levy any more new taxes. It calls for repeal of President Barack Obama’s health care reforms for savings of $1.8 trillion.
For the third year in a row, Ryan has proposed major changes to the Medicare health care system for the elderly, converting it after 2024 to a voucher-like system that gives seniors a subsidy to purchase private health insurance or coverage through the existing fee-for-service Medicare program.
Murray’s plan would make no changes to Medicare’s structure but claims it will achieve $265 billion in savings from the program through unspecified efficiency changes that build on Obama’s health reforms. Senate Budget Committee aides said these would be determined by choices made in future legislation. Another $10 billion in savings would come from new efficiencies in the Medicaid program
The Democrats’ plan would also reduce discretionary spending caps starting in 2015 for savings of $240 billion from the military, $142 billion discretionary domestic spending and $76 billion from certain benefit programs. The programs and projects that would bear these cuts are not specified, leaving that task to appropriations committees.
On the tax side, the budget offers little specificity on which credits, deductions and loopholes should be closed to raise the $975 billion in new revenues.
(This story corrects Murray title to Senate Budget Committee chairwoman)
Reporting By David Lawder; Editing by Sandra Maler and Andrew Hay