March 20, 2012 / 2:31 PM / 8 years ago

Factbox: Highlights of Congressional Republican budget plan

(Reuters) - Republicans in the House of Representatives on Tuesday unveiled their 2013 budget proposal as an alternative to the plan offered a month ago by Democratic President Barack Obama.

The competing plans likely will be debated throughout this year’s presidential and congressional election campaigns, as Democrats and Republicans try to win voter support for their different visions of what government should do in an era of high budget deficits.

Here are key elements of the fiscal 2013 budget offered by House Budget Committee Chairman Paul Ryan:

* The budget deficit would fall from the nearly $1.2 trillion expected this year to $797 billion in 2013. Obama’s budget is seen resulting in a $977 billion deficit next year.

* House Republicans would cap federal spending on “discretionary” programs at $1.029 trillion in the fiscal year starting on October 1. That’s lower than Democrats want. They urge sticking with the $1.047 trillion cap established by a deficit-reduction/debt limit increase deal enacted last August.

Discretionary programs are those up for review and renewal by Congress every year. They range from education, transportation and law enforcement to foreign aid, defense and space exploration. They do not include the huge “mandatory” programs that account for about two-thirds of the federal budget, such as Social Security retirement and Medicare healthcare for the elderly.

* The plan would circumvent automatic spending cuts in the military and security budgets that are due to start in January, and shift those reductions to a range of domestic programs and agencies.

* Medicare savings, because of reforms, would total $205 billion over 10 years, compared with Obama’s budget request. Future retirees would get an allowance to help them buy healthcare insurance. They would be able to choose private insurance plans or traditional Medicare, both of which would be offered on a special exchange. This is a slight change from Ryan’s proposal last year, which was met with loud criticism from Democrats and retiree groups. Outside experts estimated out-of-pocket expenses for the elderly would have risen by about $6,000 a year under Ryan’s Medicare reforms unveiled a year ago.

Obama’s budget calls for Medicare savings, but mostly by cutting payments to medical providers, not beneficiaries.

* The Ryan budget again calls for major changes to U.S. tax laws but it does not go into great detail. It calls for cutting top corporate and individual tax rates to 25 percent from the current 35 percent. Instead of six tax brackets for individuals, there would be two rates of 10 percent and 25 percent.

The budget proposal notes the many loopholes in the tax code, saying they cost the Treasury about $1 trillion a year. But a wholesale rewrite of tax law would be up to the House Ways and Means Committee, which might try to do so next year.

Obama’s budget contains a small amount of tax cuts, but would raise taxes on the wealthiest Americans, increasing revenues by some $1.5 trillion over the next decade. The White House has long argued that the wealthy need to shoulder more of the burden of deficit-reduction.

* The “budget resolution,” even if it were to pass the full House of Representatives and Senate, never is enacted into law. Instead, it is a non-binding document that gives a 10-year look at broad spending and tax priorities and resulting deficit estimates. It also provides top-line spending limits that appropriations panels must follow in writing bills to fund government activities.

Reporting by Richard Cowan; Editing by Bill Trott

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