- The Washington Times - Thursday, April 2, 2009

House Republicans on Wednesday offered up their alternative to the budget of President Obama, insisting their blueprint would cut the government’s projected red ink by more than $1 trillion over the next decade.

But while Republicans said their plan is much more responsible in terms of spending and entitlement reform, their budget plan would still generate cumulative deficits totaling $6 trillion over the next 10 years.

“Our budget alternative provides a path out of our current crisis by restoring economic growth and job creation, [by] controlling spending and deficits and by lifting the crushing burden of debt and taxes from future generations,” said Rep. Paul D. Ryan, Wisconsin Republican, who drafted the budget.

By 2019, the Republican budget plan would add $7.4 trillion to the $6.3 trillion in publicly held debt that accumulated from George Washington through George W. Bush.

According to the Obama budget blueprint, deficits would total $7 trillion over 10 years. But the Congressional Budget Office concluded the president’s plan would produce $9.3 trillion in deficits through 2019. CBO has not reviewed the Republican alternative.

House Republicans say their plan would slash the top tax rates for individuals and corporations, radically restructure the federal health care programs for the poor and the elderly, return Social Security to long-term solvency and put the brakes on much of federal spending.

Liberal budget analysts immediately attacked the Republican budget’s priorities.

“The House Republican budget would cut taxes for the most fortunate, slash spending for the most vulnerable and increase the depth and length of the recession,” said Paul N. Van de Water, a senior fellow at the liberal Center on Budget and Policy Priorities.

The Republican budget would reduce the top corporate tax rate from 35 percent to 25 percent. It would permanently extend all the 2001 and 2003 tax cuts, including the repeal of the estate tax.

The Republican plan also offers an alternative tax system for individuals that would have just two rates: 10 percent and 25 percent. The 25 percent rate begins at $50,000 for singles and $100,000 for couples. The new system would eliminate nearly all tax deductions except the personal exemption ($3,500) and the standard deduction ($25,000 for couples and $12,500 for singles). A family of four would owe no income tax on the first $39,000 of income.

“These are humongous tax-cut numbers, big, scary numbers,” said Len Burman, director of the Tax Policy Center. Even if the Bush tax cuts are permanently extended and the alternative minimum tax is permanently “patched” so it snares no more taxpayers, the Republican tax plan would reduce revenues by an additional $3 trillion to $4 trillion, Mr. Burman said.

For the 2010-2014 period, it would freeze spending on nondefense programs (excluding veterans) that Congress must fund each year. Then it would allow “moderate” increases.

For mandatory entitlement programs like Social Security, Medicare and Medicaid, the GOP plan would slow the average growth from 5.3 percent per year to 3.9 percent.

In an effort to reduce health care costs, the plan would make Medicare much more market-oriented by offering only private insurance plans for those under 55 today and by eliminating fee-for-service health care for the same group, a Republican budget committee staffer said.

“I can’t see any politically palatable spending level that would allow Republicans to cut taxes this much and reduce the budget deficit,” said Marc Goldwein, the policy director for the bipartisan Committee for a Responsible Federal Budget.

Nevertheless, he said Republicans deserved credit for offering their budget. “This could be the starting point for serious negotiations,” Mr. Goldwein said.

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