CQ TODAY ONLINE NEWS
March 19, 2012 – 10:54 p.m.
Budget Veers Slightly From Last Year
By Paul M. Krawzak and John Cranford, CQ Staff
House Budget Chairman
The plan, intended to provide a unified Republican vision for federal tax and spending policy, is expected to closely resemble the “Path to Prosperity” blueprint that Ryan, R-Wis., offered a year ago, with several important variations.
Two of those differences include a proposal to set a lower level for discretionary appropriations than lawmakers agreed to last August in negotiations with the White House, and a plan for replacing the spending “sequester” that most lawmakers would like to avoid, if possible.
Both ideas are sure to draw fire from Democrats, however, and are unlikely to prevail unchanged in budget negotiations over the balance of this year.
Senate Budget Chairman
In a letter to Speaker
Tax Plan Similar
One section of the budget proposal that will be very close to last year’s plan is a call for overhauling the federal tax code to reduce tax rates for all Americans and corporations, and to eliminate many tax breaks to avoid deep reductions in revenue collections.
But the tax proposal also is more explicit than a year ago in many respects. For instance, the plan calls for two tax brackets for individuals, with levies of 10 percent and 25 percent. Last year, Ryan called only for a top individual rate of 25 percent.
Also, Ryan’s plan this year embraces a proposal advanced by House Ways and Means Committee Chairman
Ryan also calls for repeal of the alternative minimum tax, while a year ago his budget assumed “that Congress will not let the AMT ensnare growing numbers of middle class taxpayers.”
As was the case last year, the tax proposal is strictly notional, however. The budget offers no method for how the tax overhaul might be enacted.
Cuts Draw Fire
Budget Veers Slightly From Last Year
Ryan’s proposed budget is expected to have a fiscal 2013 discretionary limit of $1.028 trillion, $19 billion less than the $1.047 trillion cap set by the August debt limit law (PL 112-25).
And in the face of objections from the White House, Ryan also will propose a way to avoid some or all of $98 billion in automatic discretionary cuts slated to kick in next January.
The budget will propose offsetting the sequester in part with large entitlement savings, according to sources close to the House Budget Committee. Ryan’s budget will call for authorizing committees to report legislative language to achieve those savings through the budget reconciliation process, sources said.
The authorizing committees would be told to report by the end of April and the bill would be brought to the House floor in May, under Ryan’s plan, sources said.
It is unclear how that process might work, however, because Senate Majority Leader
The entitlement savings might be sought from the food stamp program and from the mortgage financing operations of Fannie Mae and Freddie Mac, sources said. And the savings would be achieved over 10 years.
The $19 billion reduction in the discretionary appropriations cap would also count toward limiting the automatic spending cuts, and additional savings would be counted from reduced interest payments on the federal debt, sources said.
Ryan’s budget also will seek to protect defense spending by setting a $554 billion cap on the Pentagon for fiscal 2013, roughly the same as the $555 billion allocated for the current fiscal year. Removing the sequester would also protect defense, since half of the automatic cuts would come out of the Pentagon’s budget.
Ceiling, Not a Floor
Ryan and other GOP leaders have defended the plan to impose a lower discretionary cap by insisting the limit enacted in August was an upper limit on spending, not a lower boundary.
Conrad and Inouye object to that definition, however, saying it undermines the agreement that created the debt limit law. That law was “the successful outcome of several months of negotiations between the administration and leaders of both parties of the Congress,” the two said in a letter to House leaders. Besides setting a requirement to reduce the expected deficit over the next decade, the law set parameters for fiscal policy decisions that allowed the appropriations process last year “to move forward, thus avoiding a government shutdown.”
Conrad plans on Tuesday to file with the Senate the fiscal 2013 discretionary spending limit provided by the law, as well as allocations for other committees and aggregate spending and revenue levels required by the debt limit law. That will allow Senate appropriators to begin considering spending bills, a process expected to start in April.
Conrad’s action will occur at about the same time that Ryan is releasing his budget proposal. Conrad plans to announce the filing at a press conference at a 10 a.m. news conference, while Ryan has scheduled a news conference for 10:30 a.m. to release details of the Republican plan.
Budget Veers Slightly From Last Year
The House Budget Committee is supposed to meet on Wednesday to mark up the budget resolution for floor action next month.
Sam Goldfarb contributed to this story.